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Started By
Message
I need help with most efficient way to pay off mortgage.
Posted on 9/18/15 at 3:34 pm
Posted on 9/18/15 at 3:34 pm
I have a 30 year mortgage at 3.625% Note is 1360. I have been paying 2500 and by that calculation I would pay it off in 15 years.
I did some renovation work, and now have an extra 800 monthly note at 7.1% over 15 years.
So I'm still paying the 2500 a month. I have been paying 1485 towards the 30 year note (125 over amount due), and 1015 towards the 15 year note (215 over amount due).
But I am wondering if I would come out ahead putting all the extra principal portion of my payment towards the higher interest rate note, and just paying my regular payment for the actual mortgage until the other is paid off.
I did some renovation work, and now have an extra 800 monthly note at 7.1% over 15 years.
So I'm still paying the 2500 a month. I have been paying 1485 towards the 30 year note (125 over amount due), and 1015 towards the 15 year note (215 over amount due).
But I am wondering if I would come out ahead putting all the extra principal portion of my payment towards the higher interest rate note, and just paying my regular payment for the actual mortgage until the other is paid off.
7
Posted on 9/18/15 at 3:38 pm to BullredsRus
800/month for 15 years at a percent double your mortgage? You should put your extra towards that. The money you save paying extra on your mortgage will be surpassed but the extra interest on your renovation payment.
Posted on 9/18/15 at 3:46 pm to BullredsRus
Yes, you should be paying extra on the 7.1% note and not the 3.6% note if you were going to do one or the other.
I would never pay more than the amount owed on the 3.6% but that's just me.
I would never pay more than the amount owed on the 3.6% but that's just me.
Posted on 9/18/15 at 5:47 pm to BullredsRus
put every extra penny into the higher interest rate note
Posted on 9/18/15 at 8:40 pm to BullredsRus
[img] at 7.1% over 15 years. [/img]
Highest second mortgage rate I've seen since 2005. And I'm a banker.
Highest second mortgage rate I've seen since 2005. And I'm a banker.
Posted on 9/18/15 at 8:55 pm to Teddy Ruxpin
quote:
Yes, you should be paying extra on the 7.1% note and not the 3.6% note if you were going to do one or the other.
This.
quote:
I would never pay more than the amount owed on the 3.6% but that's just me.
Nope, it's me too. Assuming you can deduct interest off income taxes that's really about 3%. The long term rate of inflation is only 2% so the real cost of capital net of inflation is 1%. If you can't invest better than that you're doing it wrong.
Posted on 9/19/15 at 7:12 am to foshizzle
Thanks everyone. Kind of confirmed what I thought. So it sounds like the general consensus is after I knock out that second mortgage I should continue paying just my mortgage and invest the rest of that $1200 over-payment into the stock market.
I get the logic there. But there's something about not having a house note before I'm 50 that sounds really appealing.
I get the logic there. But there's something about not having a house note before I'm 50 that sounds really appealing.
Posted on 9/19/15 at 7:41 am to BullredsRus
quote:
after I knock out that second mortgage I should continue paying just my mortgage and invest the rest
When it only costs 1% in real terms you should definitely invest it somewhere else. Not necessarily stocks, but invest it in something.
Don't worry about having a note at 50, no fortune was ever built without someone else's money. It's all about using someone else's money well instead of poorly.
Posted on 9/19/15 at 1:16 pm to BullredsRus
I would look into getting it reappraised, and then refinancing the whole thing into one loan. Assuming you added a significant amount of square footage and not just a pool/updated kitchen/etc.
Posted on 9/19/15 at 3:08 pm to BullredsRus
quote:
7.1% over 15 years
Did you get a hot tub time machine and go back to 1987 to get the loan?
Posted on 9/19/15 at 6:22 pm to ItNeverRains
Why did your credit score tank? Why do you have a heloan/heloc at 7.1%?
Posted on 9/19/15 at 9:34 pm to SomethingLikeA
quote:
Why did your credit score tank? Why do you have a heloan/heloc at 7.1%?
I also wondered this.
Posted on 9/21/15 at 3:03 pm to foshizzle
My credit score at the time of loan was 791. Got qoutes from thee different banks.
Rate was much better if I did a traditional heloc and had a variable rate, but they all wanted to jump it up a good bit to lock in a rate over a 15 year term.
Rate was much better if I did a traditional heloc and had a variable rate, but they all wanted to jump it up a good bit to lock in a rate over a 15 year term.
Posted on 9/21/15 at 3:25 pm to Teddy Ruxpin
quote:
I would never pay more than the amount owed on the 3.6% but that's just me.
agreed
Posted on 9/21/15 at 10:10 pm to BullredsRus
quote:
they all wanted to jump it up a good bit to lock in a rate over a 15 year term.
That's still ridiculously higher than market rate.
Posted on 9/21/15 at 11:40 pm to BullredsRus
quote:
I get the logic there. But there's something about not having a house note before I'm 50 that sounds really appealing.
Retiring early is more appealing.
The more you can invest in the early years the better. Compound interest my friend. In just a few years 3.625 will be unheard of. Don't pay a dime over IMO.
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