- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: mortgages additional payments or lump sums?
Posted on 3/31/14 at 5:24 pm to Morgan56
Posted on 3/31/14 at 5:24 pm to Morgan56
See wickowick's comment re: interest rates. If after the tax break on interest payments your effective rate is below inflation, you are better off not prepaying at all.
For example, if your rate is 4.4% and you're in the 25% tax bracket, your post-tax rate is really 3.3%. If you think inflation over the next 30 years will be greater than this, don't prepay.
If you prepay anyway (whether you should or not) then again it depends on the rate. If you shouldn't be prepaying by the above calculation, delay the payment for as long as possible by doing a lump sum at the end of the year. If you should be prepaying, do the lump sum at the start of the year or at least as much of it as you can as early as you can.
For example, if your rate is 4.4% and you're in the 25% tax bracket, your post-tax rate is really 3.3%. If you think inflation over the next 30 years will be greater than this, don't prepay.
If you prepay anyway (whether you should or not) then again it depends on the rate. If you shouldn't be prepaying by the above calculation, delay the payment for as long as possible by doing a lump sum at the end of the year. If you should be prepaying, do the lump sum at the start of the year or at least as much of it as you can as early as you can.
2
Posted on 3/31/14 at 9:04 pm to foshizzle
I love these guys who always say to put it into the market, because the return is better than your house. In this thread there is even some condescension. But can the market crash? Yes? Can it pull a japan and not bouce back ever? Yes. If you become disabled or lose your job, will that money in the market do you much good? Not really. Is paying off your house early a age bet? Yes.
The market is very high right now, so the value of putting your money in the market is not guaranteed.
The market is very high right now, so the value of putting your money in the market is not guaranteed.
Posted on 4/1/14 at 3:05 pm to foshizzle
quote:
See wickowick's comment re: interest rates. If after the tax break on interest payments your effective rate is below inflation, you are better off not prepaying at all.
For example, if your rate is 4.4% and you're in the 25% tax bracket, your post-tax rate is really 3.3%. If you think inflation over the next 30 years will be greater than this, don't prepay.
If you prepay anyway (whether you should or not) then again it depends on the rate. If you shouldn't be prepaying by the above calculation, delay the payment for as long as possible by doing a lump sum at the end of the year. If you should be prepaying, do the lump sum at the start of the year or at least as much of it as you can as early as you can.
with rates as low as they are now, its probably smarter to not pay extra. But, there are emotional reasons to want to pay off early and they are valid.
I would say you shouldn't pay down your mortgage until you max out roth, 401k and have a solid 6-9 month cushion. But after that, its up to the individual.
I do the pay every 2 weeks deal but I max out my retirement options.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News