Extra $10,000: finish paying off truck or put towards down payment on a house?(Updated)

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

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.

Unless your truck loan is 0% interest, pay that down first.

You should get great advice with all those details you provided

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but I can liquidate some extra dough to do that.

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best option

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.

What does truck depreciation have to do with anything? The truck is gonna depreciate no matter what

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

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why would you do a 15 year mortgage when the 30 year is at historic lows?

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This x 100

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Personal finances for some folks is more psychological than math. I do find it interesting how people evaluate risk differently.

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because interest

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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%.

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.