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LSUzealot 
New Orleans Saints Fan
Baton Rouge
Member since Sep 2003
45611 posts
| Question about paying off a house loan (Posted on 1/25/13 at 12:16 pm)
With the current market the way it is, would investing 40k into eliminating your remaining house payment be a good investment? Rate is 3.75
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bryso 
Clemson Fan
The Real Death Valley
Member since Dec 2006
26767 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:20 pm to LSUzealot)
loaded question... what else would you do with the 40k?
if you can go get 10% return on it then i have your answer... if you don't want that risk then i have your answer
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BigAppleTiger 
LSU Fan
New York City
Member since Dec 2008
5167 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:31 pm to LSUzealot)
When did you buy the home? How much did you buy it for and what is the current estimated value? 3.75 is a great rate. Do you want to continue living there or looking to move soon?
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LSUzealot
New Orleans Saints Fan
Baton Rouge
Member since Sep 2003
45611 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:31 pm to bryso)
Yea I figured as much. I know jack shite about investing and I don't like the idea of money being held up in high risk investments.
Even low risk to me, the 3% return over a year, 1,200 bucks; big deal to have no access to the funds. I guess I need to look more long term as that interest compounds over time.
40k invested; 3.5% return each year
What's my net gain in 10 years anyone? It's been a minute since I took a finance class 
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LSUzealot
New Orleans Saints Fan
Baton Rouge
Member since Sep 2003
45611 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:33 pm to BigAppleTiger)
2 years ago for cheap. It's a small condo that went as a short sale. I honestly will likely move out before the year is over but will rent it out as I want to keep it bc of the great value.
Did a 10 year loan so I'm still paying heavy interest vs principal. I think I paid out $1,500 in interest alone this year.
Bought it for 65k. Recently a 1 bedroom sold for 75. 2 are on the market now for 90.
This post was edited on 1/25 at 12:35 pm
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jmarto1
LSU Fan
Houma, LA
Member since Mar 2008
10034 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:39 pm to LSUzealot)
If you plan on renting it out it may be a good idea to pay it off and start saving up for any remodeling ,repairs, or contingencies that may come up while renting.
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BigAppleTiger
LSU Fan
New York City
Member since Dec 2008
5167 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:41 pm to LSUzealot)
quote:
2 years ago for cheap. It's a small condo that went as a short sale. I honestly will likely move out before the year is over but will rent it out as I want to keep it bc of the great value.
So you're thinking long term investment. Looking at the rental market right now it is very strong. If you can can cover your payments, insurance, and taxes with a rental payment- I would save the money and start looking for your next property. It is a buyer and landlord's market right now. The market is kind of perfect for your situation at the moment. I am assuming Baton Rouge.
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LSUzealot
New Orleans Saints Fan
Baton Rouge
Member since Sep 2003
45611 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:42 pm to BigAppleTiger)
Yes BR is correct
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BigAppleTiger
LSU Fan
New York City
Member since Dec 2008
5167 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 12:43 pm to LSUzealot)
Although the market is strong in both those two facets right now- end of the year it may not be the same. Likely...but no guarantee.
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foshizzle
LSU Fan
Member since Mar 2008
25054 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 1:15 pm to LSUzealot)
quote:
would investing 40k into eliminating your remaining house payment be a good investment? Rate is 3.75
I do not believe so, especially if you are deducting mortgage interest. If you are in the 25% tax bracket then your rate of return is actually 3.75 times (1-0.25) = 2.8%.
Keep in mind that this is not much better than inflation.
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bryso
Clemson Fan
The Real Death Valley
Member since Dec 2006
26767 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 3:39 pm to LSUzealot)
just curious where is the condo?
ETA: and where did u get a loan for a condo project?
This post was edited on 1/25 at 3:40 pm
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LSUzealot
New Orleans Saints Fan
Baton Rouge
Member since Sep 2003
45611 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 4:25 pm to bryso)
I'm not telling people where I live
I put 20% down. Pretty standard with good credit I thought. 
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bryso
Clemson Fan
The Real Death Valley
Member since Dec 2006
26767 posts
| re: Question about paying off a house loan (Posted on 1/25/13 at 4:47 pm to LSUzealot)
not typically on a condo... but if u put 20% down likely not an issue..
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