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re: When does it make sense, mathematically, to accelerate mortgage payments?
Posted on 12/7/23 at 10:18 am to notsince98
Posted on 12/7/23 at 10:18 am to notsince98
quote:
quote:
The bank having more of your money doesn't change your future payments.
It does if you want the ability to recast your current mortgage in a time of need.
Bad assumption imo. If I need to rework my mortgage and I have paid $50,000 extra to my mortgage or I have $50,000 in cash, I'd like to see the argument from a loan officer that the smaller mortgage and more equity is ever better than cash on hand?
Furthermore, you can get a MM account paying 5%. If you pay your mortgage down you earn 0% interest on additional payments. If you put the money into a MM account you can easily get 4% right now. That will help you pay your mortgage off faster.
Cash on hand is king over paying off any loan faster IMO. You can ALWAYS pay the loan off, getting your cash back from the bank COSTS you money.
This post was edited on 12/7/23 at 10:19 am
2
Posted on 12/7/23 at 10:28 am to baldona
Re reading the OP, the real answer is when interest rates are the opposite of where they are currently.
1.) When to pay off - When mortgage loan interest rate is high and investment interest rate is low
2.) When not to pay off - when mortgage loan interest rate is low and investment interest rate is high.
1.) When to pay off - When mortgage loan interest rate is high and investment interest rate is low
2.) When not to pay off - when mortgage loan interest rate is low and investment interest rate is high.
Posted on 12/7/23 at 4:54 pm to baldona
quote:
Cash on hand is king over paying off any loan faster IMO.
But if you pay off the loan you'll have a lot more cash on hand because you've stopped making loan payments No?
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