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I have two mortgages... which should I pay off first?
Posted on 5/15/18 at 11:29 am
Posted on 5/15/18 at 11:29 am
I have a 15 year at 3.5%, 11 years left. I also have a 20 year at 3.25% with 18 years left.
I know those are excellent rates, and I know the typical reaction is to invest for better returns. But I am satisfied with what I have in the market (retirement accounts maxed), and I’d rather just put the bonus my wife got into something guaranteed, even if the return isn’t great (but at least it’s guaranteed, and I’m that much closer to paying off the house). I appreciate your advice, MB gurus.
I know those are excellent rates, and I know the typical reaction is to invest for better returns. But I am satisfied with what I have in the market (retirement accounts maxed), and I’d rather just put the bonus my wife got into something guaranteed, even if the return isn’t great (but at least it’s guaranteed, and I’m that much closer to paying off the house). I appreciate your advice, MB gurus.
6
Posted on 5/15/18 at 11:43 am to AndyJ
Look at your payoff schedule for both. The one with the higher interest amount in your payments is the one I would put the money toward to. The less amount you owe, the higher the amount of your payment will be applied to your principal.
Posted on 5/15/18 at 11:57 am to AndyJ
quote:
I have a 15 year at 3.5%, 11 years left.
more attainable goal to get rid of first imo. depending upon loan values obviously.
Posted on 5/15/18 at 12:01 pm to AndyJ
I assume you're itemizing deductions with two mortgages, which lowers your effective rate even more. With rates that low your ROI might actually be around zero once you take inflation into account.
I wouldn't do it - not because you have better options elsewhere but because it could wind up having zero return. Why invest in something that literally pays nothing?
I wouldn't do it - not because you have better options elsewhere but because it could wind up having zero return. Why invest in something that literally pays nothing?
Posted on 5/15/18 at 12:19 pm to foshizzle
I would look at those interest rates as being the same....
Which one do you think you should knock out first?
Which one do you think you should knock out first?
Posted on 5/15/18 at 12:19 pm to AndyJ
Pay off the higher interest rate.
It allows you to keep more of your money faster.
You obviously aren't hurting for cash flow. So knocking out the smaller one doesnt provide a ton of value unless that also happens to have the higher rate.
Good luck.
It allows you to keep more of your money faster.
You obviously aren't hurting for cash flow. So knocking out the smaller one doesnt provide a ton of value unless that also happens to have the higher rate.
Good luck.
Posted on 5/15/18 at 12:51 pm to AndyJ
I would pick the one with the lower balance left on the note.
Posted on 5/15/18 at 1:00 pm to AndyJ
quote:
I know those are excellent rates, and I know the typical reaction is to invest for better returns.
This is the correct answer. But if you insist then you should
quote:quick spreadsheet should solve this.
Look at your payoff schedule for both.
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