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Thanks everyone, we have a pretty decent emergency fund already so we are covered there. We do already pay double on our car payments and an extra $500 per month on our mortgage. We will be going over all the suggestions here to decide what to do with the money. I appreciate all the insight.
1. If car interest rate is above 4%, just pay off car
2. Find out how much closing cost and refinance rate you would get. And also think about time & effort you would need to input for refinancing. It could be quite a lot of time & money. Paying 20K into principle will substantially reduce the interest, which will be equivalent or better than refinancing if closing cost+time is really high. You need to do little homework to find out which one works better for you.
Good luck and good job!
Define "decent" for your savings. Are you maxing out your 401K options, do you have 12-18 months living expenses saved? What other investments do you have.
Refinance..you should be able to get to the 3% range and with 85K left, put that on a 10 year note, max.
Put the 20K into a retirement fund or other investment. Put the extra $500/month toward your cars since your mortgage rate will be so low. Once you pay off the cars, put those payment amounts into savings for your next car and start paying cash for cars. Put the extra $500/month you are making toward those car payments into retirement/investment accounts.
My husband and I are in need of some financial guidance. We are 32 and 33, both work full time and we make a comfortable living.
We currently own our home and owe aprox 85k on the loan, the house is worth aprox 155k. We have two car loans one for 8k and one for 12k, rates are really low on the car loans. We have no other dept aside from the home and car, we have no credit cards.
My husband will be getting a large bonus of aprox 20k at the end of January. Please tell me which scenario you would do.
1. Refinance the mortgage current rate is 5.875%, use money to avoid PMI and for closing costs
2. Put a large chunk down on the current mortgage
3. Put the money is savings
I'd take out a fixed-rate equity loan to pay off the mortgage at a lower rate. Some banks/credit unions offer rates below 3% for 10-year terms. If you have already established your emergency fund then I'd invest the balance. If you have any extra money after refinancing at a lower rate you can make extra payments on the car loan and work to eliminate one of them quicker which would free up the cash to pay off the other one.
My husband and I are in need of some financial guidance. We are 32 and 33, both work full time and we make a comfortable living.
We currently own our home and owe aprox 85k on the loan, the house is worth aprox 155k. We have two car loans one for 8k and one for 12k, rates are really low on the car loans. We have no other dept aside from the home and car, we have no credit cards.
My husband will be getting a large bonus of aprox 20k at the end of January. Please tell me which scenario you would do.
1. Refinance the mortgage current rate is 5.875%, use money to avoid PMI and for closing costs
2. Put a large chunk down on the current mortgage
3. Put the money is savings
If you owe on a house 85K and is valued at 155K, you should not be worrying about PMI. Depending where you are on the life of the loan, you should save a bunch by just refinancing without paying any money. Ask for "no-cost" refi (cost rolled into the rate) for the exact time you are left paying, say 10 or 15 years. If they come below to what you are paying now, take it.
You said you are already paying 500 extra every month on the mortgage.
You have enough emergency saving..
Then I guess pat yourself in the back and use half of it to get a nice treat (vacation) perhaps oversee to one of those dream destinations and put the rest in the market...
The way I see it -- a house is an asset and should go up in value, a car is not an asset at all but a quickly depreciating item. I wouldn't like to owe more than something is worth so I would pay off the car loans.
1. If car interest rate is above 4%, just pay off car
2. Find out how much closing cost and refinance rate you would get. And also think about time & effort you would need to input for refinancing. It could be quite a lot of time & money. Paying 20K into principle will substantially reduce the interest, which will be equivalent or better than refinancing if closing cost+time is really high. You need to do little homework to find out which one works better for you.
Good luck and good job!
It takes too much time is the worse excuse I've heard for not refinancing but it is commonly an excuse given when there are other issues.
Quote:
Originally Posted by malamute
The way I see it -- a house is an asset and should go up in value, a car is not an asset at all but a quickly depreciating item. I wouldn't like to owe more than something is worth so I would pay off the car loans.
Why would you put good money after bad. Why does it matter if you are upside down on your car.
It takes too much time is the worse excuse I've heard for not refinancing but it is commonly an excuse given when there are other issues.
Why would you put good money after bad. Why does it matter if you are upside down on your car.
It would matter to me -- but I never buy cars if I have to take out loans for them in the first place. I just pay cash so have no car payments or interest rates and I don't have to pay for comprehensive insurance on them.
My husband and I are in need of some financial guidance. We are 32 and 33, both work full time and we make a comfortable living.
We currently own our home and owe aprox 85k on the loan, the house is worth aprox 155k. We have two car loans one for 8k and one for 12k, rates are really low on the car loans. We have no other dept aside from the home and car, we have no credit cards.
My husband will be getting a large bonus of aprox 20k at the end of January. Please tell me which scenario you would do.
1. Refinance the mortgage current rate is 5.875%, use money to avoid PMI and for closing costs
2. Put a large chunk down on the current mortgage
3. Put the money is savings
How much longer on the mortgage?
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