Ryan McFarland

We refinanced the house this summer to buy Lux Boutique.  We also spent a few thousand dollars to divide part of the house for a B&B or apartment.  Because of those two we have additional income going toward the mortgage.  Using the equity in the house (which was up because of all the improvements we have been making) we leveraged money to buy the business outright.  That made it so Cena didn’t need a loan from the bank to buy the inventory or fixtures.  While the business is doing well, it will pay $1,000 toward the mortgage.  That plus the rental income just about covers our entire payment.  But Cena and i are continuing to make our payments to the account also - at the same rate as we had before refinancing.  None of this is news to you if you have been reading my financial posts over the past few months.

I was curious about how much we would save by making the additional payments toward the principal.  This extra payment loan calculator helped me figure it out.   I had to deduct the amount we pay for escrow (property tax and insurance) and do some other number tweaking but the final figures are spectacular.  If we can continue to make payments at the current rate, our 30 year loan will be paid in full after exactly 9 years.  We’ll end up paying $67,680 in interest during those 9 years but not paying $199,197 in interest over the next 21 years of the loan.