For those just tuning into Finance Throttle, my wife and I purchased our home with a mortgage of $282,000 @4.5% on January 1st, 2019. Just a short 2 years later, we paid off about $83,000 and now owe about $199,000.
After a long 6 month process, our refinance finally closed in February of 2021. We refinanced our home for $225,604 @2.5% with no cash out option. I used my HELOC to pay for my closing costs, then scheduled a $25,000 principle chunk to continue my Velocity Banking strategy. I usually pay in chunks of $15,000, but I decided to increase it to $25,000 to catch up to my pay off projection. We were falling behind our 7 year plan to pay off our house by 2025 because we delayed velocity banking for over 6 months as we waited for our refi closing date and tax bills.
Since we refinanced, our mortgage was reset to 30 years. This allowed me to get a fresh start on a new Loan Amortization Table. By the way, subscribe here to get a free copy of our Loan Amortization Table. According to our Loan Amortization Table, we would spend $95,303.08 in interest over the life of the loan if I continue making minimum payments for 30 years. With our Velocity Banking $25,000 principle-only payment on May 1st, 2021, we reduced our mortgage to 25.42 years and saved over $25,000 in interest payments over the life of the loan. See our Amortization Table Below:
To chunk $25,000 towards our mortgage, we had to borrow money against our house using the HELOC. We hope to pay off our HELOC before the end of 2021 so we can make another chunk. Our target is to reach a mortgage balance of $180,000 by the end of the year. Again if you want to follow our Velocity Banking journey, subscribe here and get a free copy of our Loan Amortization Table on Google Sheets.
