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Extra $10,000: finish paying off truck or put towards down payment on a house?(Updated)
Posted on 7/5/20 at 7:41 pm
Posted on 7/5/20 at 7:41 pm
Which is the better financial decision?
This post was edited on 7/8/20 at 5:55 pm
16
Posted on 7/5/20 at 7:48 pm to Undertow
It would help to know interest rate on auto loan for truck and also how much extra is that 10k going to give you as a down payment
This post was edited on 7/5/20 at 7:49 pm
Posted on 7/5/20 at 7:54 pm to Undertow
If the $10,000 will keep you from paying PMI I’d put it on the mortgage.
Posted on 7/5/20 at 7:59 pm to Undertow
Do you have at least 20% down payment already earmarked for the house? I would want to make sure I'm avoiding paying PMI for the next decade.
What are the interest rates on the truck Vs. House?
How much is the truck note every month? Getting rid of a $500+ monthly obligation is more than likely the better option.
Play with some amortization calculators online. I doubt the extra 10k towards the house would net you as much monthly savings. Plus the peace of mind of having one less bill
ETA: the 10k towards the house may have a more significant long term impact on the interest you pay over 30 years. But IMO, the felixbility of getting rid of the car note will allow you to pay down the mortgage more aggressively, or be more prepared for falling on hard times, take more vacations, etc.
What are the interest rates on the truck Vs. House?
How much is the truck note every month? Getting rid of a $500+ monthly obligation is more than likely the better option.
Play with some amortization calculators online. I doubt the extra 10k towards the house would net you as much monthly savings. Plus the peace of mind of having one less bill
ETA: the 10k towards the house may have a more significant long term impact on the interest you pay over 30 years. But IMO, the felixbility of getting rid of the car note will allow you to pay down the mortgage more aggressively, or be more prepared for falling on hard times, take more vacations, etc.
This post was edited on 7/5/20 at 8:03 pm
Posted on 7/5/20 at 8:03 pm to Undertow
Depends on the rate and how much you’re comfortable losing in opportunity cost in not having that $10k invested
Posted on 7/6/20 at 8:52 am to Undertow
Unless your truck loan is 0% interest, pay that down first.
Posted on 7/6/20 at 9:53 am to Undertow
Whatever it takes not to pay PMI is the smart play.
Posted on 7/6/20 at 9:54 am to Undertow
You should get great advice with all those details you provided
Posted on 7/6/20 at 2:37 pm to HarveyBanger
Truck loan is 3.74%
Home is prequalified at 3.0%.
I wasn’t going to pay the 20% down payment for the house but I can liquidate some extra dough to do that. The 10,000 won’t quite get me there.
Truck note is $300 a month.
Home is prequalified at 3.0%.
I wasn’t going to pay the 20% down payment for the house but I can liquidate some extra dough to do that. The 10,000 won’t quite get me there.
Truck note is $300 a month.
This post was edited on 7/6/20 at 2:41 pm
Posted on 7/6/20 at 2:39 pm to Undertow
quote:best option
but I can liquidate some extra dough to do that.
Posted on 7/6/20 at 2:39 pm to go ta hell ole miss
I don't think you realize how cheap PMI can really be. There's many scenarios you are only paying very low bps and you can invest the difference(earning more than the 0.5% rate your PMI is) and still pre pay your mortgage to remove it in several years.
I see people all the time paying 20%+ on credit cards that are carrying high balances across the board but "I'm not gonna pay PMI.". All because someone told them to never pay PMI and they don't even know why.
I see people all the time paying 20%+ on credit cards that are carrying high balances across the board but "I'm not gonna pay PMI.". All because someone told them to never pay PMI and they don't even know why.
Posted on 7/6/20 at 3:08 pm to Undertow
quote:
Truck loan is 3.74%
Home is prequalified at 3.0%.
the truck is depreciating 250.00 per month. i would assume that the house is not. pay on the house.
Posted on 7/6/20 at 3:14 pm to oldcharlie8
What does truck depreciation have to do with anything? The truck is gonna depreciate no matter what
This post was edited on 7/6/20 at 3:15 pm
Posted on 7/6/20 at 3:28 pm to tigersfan1989
quote:
What does truck depreciation have to do with anything? The truck is gonna depreciate no matter what
This x 100
Posted on 7/6/20 at 4:24 pm to Undertow
sure, the vehicle is a depreciating asset and that is constant
if you pay the vehicle off early you save on interest and end up paying less for the vehicle even though it is depreciating in value
i say pay off the vehicle and save enough money to afford a 15 year fix rate mortgage
if you pay the vehicle off early you save on interest and end up paying less for the vehicle even though it is depreciating in value
i say pay off the vehicle and save enough money to afford a 15 year fix rate mortgage
Posted on 7/6/20 at 5:16 pm to DVinBR
quote:
if you pay the vehicle off early you save on interest and end up paying less for the vehicle even though it is depreciating in value
and you lose the appreciation the $10K could have had if invested
quote:
i say pay off the vehicle and save enough money to afford a 15 year fix rate mortgage
why would you do a 15 year mortgage when the 30 year is at historic lows?
Posted on 7/6/20 at 8:28 pm to iAmBatman
quote:
why would you do a 15 year mortgage when the 30 year is at historic lows?
quote:
This x 100
Personal finances for some folks is more psychological than math. I do find it interesting how people evaluate risk differently.
Posted on 7/6/20 at 10:30 pm to iAmBatman
because interest
Posted on 7/7/20 at 1:02 am to DVinBR
quote:But with interest rates so low (3.25% on 30-year; 2.75% on 15-year) and the spreads between the two quite thin (0.5%), it doesn’t make sense to me to lock oneself into a much higher payment for 15-year (56% higher per month for 180 months) and lose flexibility with that extra 56%.
because interest
For example, in a $240,000 loan, the 30-year loan at 3.25% is $1044.50 per month while the 15-year loan at 2.75% $1,628.69 per month, a $584.19 per month difference (over $7,000 per year). If they really wants to pay off their home, they can put that difference back towards principal, and less than 9 extra payments (little over $13,000).
Or if they want to invest it all, they’ll have over $230,000 if they invested in an 80/20 portfolio based on historical returns (over 9.8% annually). Even a more conservative 8% will put it at about $198,500.
And since it’s not an either/or, they could put some towards their house to pay if off sooner and some towards investing/saving as well. Or they could spend some on things they enjoy as well.
So the flexibility of the 30-year loan with the current rates and spreads just makes more sense to me.
Posted on 7/7/20 at 3:16 am to Undertow
Pay off the truck
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