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Old 09-07-2017, 10:46 AM   #1
2014FusionM
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Default 30 Year Mortgage To A 15 Year

I have been thinking recently about refinancing my house loan from a 30 year to a 15 year mortgage. Some of you might recall that my wife sales new homes and well the DFW market has been booming, and that has been good for the pocket book.

We have been putting back money and we both have the cars that we want, live in a house we really like, along with a good school district. We make extra payments now on the house which would probably add up to what a 15 year mortgage would be but we also like the flexibility of if times were to get tight we still have a low payment.

that being said would it really be worth moving to a 15 year mortgage? we already have a 3.25% interest rate on our 30yr and are only about a year into it. could anyone give me the numbers along with a round about cost for all the fees to close on a 15yr?
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Old 09-07-2017, 10:51 AM   #2
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I did it in 2005. Reduced mortgage rate and the payments stayed about the same. I had 23 years left of the 30 year mortgage so I cut 8 years off. Will have it paid off in 2020 and I don't regret the decision. I can't remember what the closing costs were.
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Old 09-07-2017, 10:55 AM   #3
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My credit union let me go from a 30 to a 15 for $1000. They called it a modification not a refinance so the paperwork was very easy. I went from around a 4% to a 2.875.
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Old 09-07-2017, 10:59 AM   #4
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Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
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Old 09-07-2017, 11:00 AM   #5
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My credit union let me go from a 30 to a 15 for $1000. They called it a modification not a refinance so the paperwork was very easy. I went from around a 4% to a 2.875.
this - check and see if you have the ability to do a modification instead of a re-finance. Outside of that it depends on what type of costs you are going to be charged to do the transaction as to whether it is smarter to keep your non interest expense money (fees cost) in your pocket and just put extra towards each payment or go ahead and re-finance or modify.
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Old 09-07-2017, 11:04 AM   #6
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cutting years always saves you money, but I believe 15 year rates today are around 3%. the 3.25% 30 year you have is a good 30 year rate.

if your mortgage was $100k on a 30 year and you still had 30 years left and you went down from 3.25 to 3% on a 15 year you save around $5k total.
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Old 09-07-2017, 11:07 AM   #7
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Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
Agreed! Best advice I received when going through the mortgage process!
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Old 09-07-2017, 12:24 PM   #8
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Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.


This...
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Old 09-07-2017, 01:20 PM   #9
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cutting years always saves you money, but I believe 15 year rates today are around 3%. the 3.25% 30 year you have is a good 30 year rate.

if your mortgage was $100k on a 30 year and you still had 30 years left and you went down from 3.25 to 3% on a 15 year you save around $5k total.

You need to brush up on your amortization skills.
$100,000 at 3.25% for 30 years ... total P&I payments = $156,674
$100,000 at 3.00% for 15 years ... total P&I payments = $124,304
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Old 09-07-2017, 01:27 PM   #10
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Originally Posted by lnester View Post
Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
x2
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Old 09-07-2017, 01:35 PM   #11
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Another thought - because your rate is already really low - take that extra money you would put towards your mortgage and invest it. As long as your disciplined and continue to invest, you can build your savings and have the liquid funds available should you ever need them. This way you aren't forced to pay a higher monthly mortgage payment should hard times hit or be forced into another cash out refi in the future should you need access to these funds for any reason.
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Old 09-07-2017, 01:39 PM   #12
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some of yall got it going on and are smart...others not so much lol
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Old 09-07-2017, 01:41 PM   #13
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Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
This is what I do.
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Old 09-07-2017, 02:53 PM   #14
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Originally Posted by Texastaxi View Post
You need to brush up on your amortization skills.
$100,000 at 3.25% for 30 years ... total P&I payments = $156,674
$100,000 at 3.00% for 15 years ... total P&I payments = $124,304
your right that was just the rate change. didn't change the number of years
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Old 09-07-2017, 03:08 PM   #15
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We went from a 30 to a 15 year mortgage a few years ago and my wife told that we should have house paid off in 2 more years. We have been in our house for 13 years total, my wife is pretty awesome when it comes to our financial situation, even though sometimes I want to go do things and she says we are broke, there is always a method to her madness.
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Old 09-07-2017, 03:41 PM   #16
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Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
right here
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Old 09-11-2017, 11:44 AM   #17
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Originally Posted by lnester View Post
Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
I think this is what we are going to go with. We may pay a little more in interest but we will have the flexibility of going down on the payment.

We are putting about 18% back into savings each, that includes company matching. We have also stacked up our savings pretty good. We are truly blessed and hope it keeps coming.
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Old 09-11-2017, 11:48 AM   #18
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Originally Posted by lnester View Post
Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
This. Don't make it complicated.

Refinances (or any mortgage process) is a pain so stick with what you have and pay down extra. Any refinance is going to cost you, whether you pay out of pocket or they roll it into the note.
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Old 09-11-2017, 11:58 AM   #19
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Some of you mortgage whizzes on here, I have a question. I have a 30 year mortgage. I pay 1/2 of my monthly mortgage every 2 weeks when I get paid. This results in 26 payments each year. Since I pay 1/2 every 2 weeks, does this reduce the number of years until payoff? Also how does paying an extra payment a year effect payoff? Thanks in advance.
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Old 09-11-2017, 12:04 PM   #20
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Some of you mortgage whizzes on here, I have a question. I have a 30 year mortgage. I pay 1/2 of my monthly mortgage every 2 weeks when I get paid. This results in 26 payments each year. Since I pay 1/2 every 2 weeks, does this reduce the number of years until payoff? Also how does paying an extra payment a year effect payoff? Thanks in advance.


Yes paying half of a payment every 2 weeks will cut down the length of the term since you will essentially be making 13 "monthly" payments per year. You will pay less interest overall saving you money.


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Old 09-11-2017, 12:07 PM   #21
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Yes paying half of a payment every 2 weeks will cut down the length of the term since you will essentially be making 13 "monthly" payments per year. You will pay less interest overall saving you money.


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Thanks! This is what I figured. Do you know approximately how many years it cuts off or a calculator that shows?
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Old 09-11-2017, 12:09 PM   #22
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Wife and I are both self employed for the last 6 years.

30 year mortgage what's that? lol

Hard to qualify for secondary market loans with business debt and a bunch of commercial real estate.

We are used to having to do 15-20 years with 10-20% down.

Actually is pretty nice when you get accustomed to it.
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Old 09-11-2017, 12:09 PM   #23
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Originally Posted by ACook View Post
Some of you mortgage whizzes on here, I have a question. I have a 30 year mortgage. I pay 1/2 of my monthly mortgage every 2 weeks when I get paid. This results in 26 payments each year. Since I pay 1/2 every 2 weeks, does this reduce the number of years until payoff? Also how does paying an extra payment a year effect payoff? Thanks in advance.
1 extra full payment per year(on top of principal) will lower a 30 year note almost 1 year. because all of that payment is going towards principal and no interest.

You are stilll paying the regular amount on your monthly mortgage so that will not positively affect anything.
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Old 09-11-2017, 12:13 PM   #24
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Yes paying half of a payment every 2 weeks will cut down the length of the term since you will essentially be making 13 "monthly" payments per year. You will pay less interest overall saving you money.


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If your paying a normal mortgage monthly amount it does not matter how many payments it takes you to reach that amount.

For example, if you owe $1000 a month. If you pay 1 payment of $1000 or 10 payments of $100 it is still $1000. SO your not saving any money. YOu only save money when you pay over the amount as that goes directly to principal. IE that extra monthly payment
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Old 09-11-2017, 12:14 PM   #25
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Originally Posted by lnester View Post
Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.


+1

Last edited by 300rem7; 09-11-2017 at 12:17 PM..
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Old 09-11-2017, 12:17 PM   #26
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If your paying a normal mortgage monthly amount it does not matter how many payments it takes you to reach that amount.



For example, if you owe $1000 a month. If you pay 1 payment of $1000 or 10 payments of $100 it is still $1000. SO your not saving any money. YOu only save money when you pay over the amount as that goes directly to principal. IE that extra monthly payment


Yes if you go back and actually read what I said you will probably see that we have said the same thing. Paying and extra monthly payment per year will cut down the overall interest paid which does result in saving money in the long run. The only money to be saved is by paying less interest.


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Old 09-11-2017, 12:18 PM   #27
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Yes if you go back and actually read what I said you will probably see that we have said the same thing. Paying and extra monthly payment per year will cut down the overall interest paid which does result in saving money in the long run. The only money to be saved is by paying less interest.


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well this is what you said below....which is wrong on the 1st question he had

Yes paying half of a payment every 2 weeks will cut down the length of the term
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Old 09-11-2017, 12:19 PM   #28
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well this is what you said below....which is wrong on the 1st question he had



Yes paying half of a payment every 2 weeks will cut down the length of the term


Ok and please explain, in detail, how this is wrong? His initial question did not state that he makes an additional principle payment each year. Just that he pays 26 payments every year instead of 12.


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Old 09-11-2017, 12:20 PM   #29
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cutting years always saves you money, but I believe 15 year rates today are around 3%. the 3.25% 30 year you have is a good 30 year rate.

if your mortgage was $100k on a 30 year and you still had 30 years left and you went down from 3.25 to 3% on a 15 year you save around $5k total.
This is the best advice you are going to get.
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Old 09-11-2017, 12:21 PM   #30
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You need to brush up on your amortization skills.
$100,000 at 3.25% for 30 years ... total P&I payments = $156,674
$100,000 at 3.00% for 15 years ... total P&I payments = $124,304
TRUE, but if OP pays at the 15 year amortization on his 30 year mortgage, difference in cost of rate (3 vs 3.25) is only $2K over that 15 year timeframe.
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Old 09-11-2017, 03:38 PM   #31
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we didn't change mortgages we simply set up payments against our paychecks so we were making two payments every 26 weeks.

we paid ours off in literally no time.
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Old 09-11-2017, 03:48 PM   #32
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Just ask your lender to calculate how much extra principal you'd have to make every month to pay your mortgage off in 15 years instead of 30 and then pay that amount extra. Make sure you designate the extra as "principal payment" when you do, otherwise it messes with their heads and they'll put it in your escrow account. Ask me how I know.
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Old 09-11-2017, 04:02 PM   #33
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I think this is what we are going to go with. We may pay a little more in interest but we will have the flexibility of going down on the payment.

We are putting about 18% back into savings each, that includes company matching. We have also stacked up our savings pretty good. We are truly blessed and hope it keeps coming.
Congratulations. Keep working hard.
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Old 09-13-2017, 08:43 AM   #34
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ttt
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Old 09-13-2017, 08:50 AM   #35
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If you were getting a WAY better APR, it might be worth it. Don't think that'll be the case for you. As mentioned, your best bet would be to just double up on payments when you have the chance.
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Old 09-13-2017, 08:54 AM   #36
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Ok and please explain, in detail, how this is wrong? His initial question did not state that he makes an additional principle payment each year. Just that he pays 26 payments every year instead of 12.


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Making 2 half payments a month instead of 1 full payment a month will not benefit you in any way as its the same. You are not paying less interest or paying more towards principal
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Old 09-13-2017, 08:57 AM   #37
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Another thought - because your rate is already really low - take that extra money you would put towards your mortgage and invest it. As long as your disciplined and continue to invest, you can build your savings and have the liquid funds available should you ever need them. This way you aren't forced to pay a higher monthly mortgage payment should hard times hit or be forced into another cash out refi in the future should you need access to these funds for any reason.
Dave Ramsey is that you?!
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Old 09-13-2017, 09:04 AM   #38
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Dave Ramsey is that you?!


Lol Unfortunately no I don't think that's Dave. Dave wouldn't tell you to invest or throw any additional money onto your mortgage until after you've paid off all consumer debt. Then start investing 15% of your annual income into your 401k or good solid mutual funds. Then throw anything you have left onto your mortgage to pay it off as fast as possible.


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Old 09-13-2017, 09:13 AM   #39
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At 3.25% you probably wouldn't save enough to make it worth paying any closing costs again unless you planned to be in the home long term unless your bank offered a streamline refi. As others have said, I would just focus on maxing out your 401k's and paying extra each month.
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Old 09-13-2017, 09:13 AM   #40
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If you are currently paying PMI then it will most definitely be worth refinancing... You have to have a certain amount of equity in your home to get out of paying that...
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Old 09-13-2017, 10:18 AM   #41
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Originally Posted by lnester View Post
Just pay extra principal each month to make it a 15 year mortgage. That way you avoid the fees of re-financing.

Then, if things get tight, your minimum payment is only a 30-year mortgage payment. The best of both worlds.
This... Just double the principal portion of your payment and you'll cut the time in half...
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Old 09-13-2017, 11:09 AM   #42
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This... Just double the principal portion of your payment and you'll cut the time in half...
This isn't true. Since the balance will be lowered with each additional principal payment made, the interest due will go down also.

Making double principal payments would fully amortize the loan in less than half the time.

To the OP, you can download an amortization template and play with the principal payments to see what would be your best option. My gut feeling is the interest saved by going down a 1/4% in interest rate would not make up for the re-fi cost.
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Old 09-13-2017, 11:22 AM   #43
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If you are currently paying PMI then it will most definitely be worth refinancing... You have to have a certain amount of equity in your home to get out of paying that...
We don't have PMI with a Veteran home loan.
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Old 09-13-2017, 11:36 AM   #44
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This isn't true. Since the balance will be lowered with each additional principal payment made, the interest due will go down also.

Making double principal payments would fully amortize the loan in less than half the time.

To the OP, you can download an amortization template and play with the principal payments to see what would be your best option. My gut feeling is the interest saved by going down a 1/4% in interest rate would not make up for the re-fi cost.
Semantics... cheaper than fully refinancing....
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Old 09-13-2017, 12:23 PM   #45
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Dave Ramsey is that you?!
Close, but not quite . I do like being debt free other than my house mortgage though. I don't see the point in paying off the house faster if I can invest those extra funds and make a higher rate of return than I'm paying in interest. The underlying asset still will appreciate (the house and/or land) and your making headway into paying off that mortgage if you wish while allowing yourself the freedom to access that cash if you need it. To each their own though - as long as you're bettering yourself financially, then there's really no wrong answer.
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Old 09-13-2017, 12:29 PM   #46
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There are several mortgage apps that you can use to determine what your payment needs to be to payoff in the time frame you want. Remember to account for escrow if it is included in your payment. Also escow will continue to increase over time so add some additional to account for that increase.
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