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If you want safe just realize you are going to pay for it.
Well my house has to be paid off ether way. I agreed that when I bought it it for 279k I would pay it back. Its worth 315k now and my statement just came and I owe exactly 183,885
Well my house has to be paid off ether way. I agreed that when I bought it it for 279k I would pay it back. Its worth 315k now and my statement just came and I owe exactly 183,885
I think your plan is good as it would leave you owing nothing on the car and only about $140k on the house. At that rate, you probably don't need to refi, just pay it down aggressively and the total interest will be small.
Or you could put more into tax advantaged retirement accounts and pay off the house more slowly.
Either way you are doing far better than most Americans and are on track to have a comfortable retirement!
I think your plan is good as it would leave you owing nothing on the car and only about $140k on the house. At that rate, you probably don't need to refi, just pay it down aggressively and the total interest will be small.
Or you could put more into tax advantaged retirement accounts and pay off the house more slowly.
Either way you are doing far better than most Americans and are on track to have a comfortable retirement!
Thanks! Ya I ran the numbers and if I plopped about 44 k down on existing loan my interest would drop about 145 bucks a month. But payment would stay the same instead of lowering with a refi. Numbers say it will be paid off in about 9 years.
One factor to consider, with the new tax law, there's little-to-no tax benefit to mortgage interest. Since you are married, you'll be getting a 24k standard deduction. I'm going to go out on a limb and assume you can't itemize over that. In 2017, that interest paid was offset by lowering your taxable income. In 2018 and onwards, it will not.
You said you have a 186k loan. At 3.5% interest (if that's your rate), you will shell out $6500 in interest. In 2017, depending on your tax bracket, you may have "gotten back" about $1200 of that. Effectively, it made your interest rate on that loan 2.85% Not bad. But now, you are paying 3.5% on it. Period. No tax break.
However, if you think you can do better in the market, you may be better off putting your money there instead of paying off the house anyway. I gave you some numbers to chew on. Arm yourself with information to help yourself make a decision.
It seems there is almost always a thread like this on this forum or on one of the other Economics forums. The issue is really not complicated. If you pay off the mortgage, you will reduce your debt and interest payments. For a great many people that "feels" good. On the other hand, if you can afford to pay off the debt, you can save money instead. Historically money invested in a 60:40 stock:bond fund will return about 7.5% per year. That is much, much more than the cost of your mortgage.
Instead of paying off a mortgage, I actually skipped paying cash for a house and took out a mortgage that I did not really need. I have had the mortgage for a bit less than 5 years. It was for $330K at 3.7% fixed for 30 years. The money I mortgaged has now returned about $100K after deducting the mortgage interest and principal payments. If I leave it alone, I could easily come out a million ahead for the 30 year mortgage period. Instead I am starting to spend a portion of those earnings to increase my discretionary spending and standard of living.
There is a downside to this plan. The 7.5% return is not guaranteed and certainly not fixed. The returns are volatile with great returns some years and losses on other years. Investing takes time and patience. Investing wisely largely means ignoring the ups and downs of the market letting the averages and time work for you. Some people just cannot do that. Others know they have that money invested and will spend it instead of maintaining the investment.
Investing is one of the main reasons the rich get richer and the poor do not.
I would build up retirement IRAs and/or 401Ks where ever possible. Having a 100K in a 401K in 20 years will be peanuts. You want your pension and a nice lump some of money in retirement accounts as well.
So I owe about 186 k on my mortgage and about 15k on my 2016 vehicle. If I paid off the car and put about 42k down on the house and refinanced to a 10 year I figured I could save 40 bucks each month in car interest and about 15k ish in mortgage interest over the 10 years.
I'm 33 and have 12 years or so left on current mortgage. I like the idea of saving money in interest. I would still have about $25,000 in liquid savings if i pulled the trigger. I will also be able to save $2500 per month instead of 2000 per month(no car payment/mortgage 160 less p/m)...so I will be able to build up my cash quickly. Starting in spring of 2021 we should be able to save $3500 per month.
We have no other debt. Ill have a police pension. Both of us will have social security. I have an additional savings plan with the pension fund. Wife will have a small 401k with may be 100 k in it at retirement
I plan on keeping my car for 12 more years(granted nothing happens to it). I only put 3500 mpy on it.
We plan on retiring in April 2032.
What say you?
Who much is the refi costing you?
I personally would just round off the monthly payment and make a additional full mortgage payment aplliedcto principal once a year in January. If you can swing it do two payments to principal. You’ll kill your mortgage a lot faster
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