Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I haven't found a simple answer to this, maybe someone could help.
We are looking to move to a rural property in the near future (hopefully next summer). We've almost paid off our credit card debt, no auto loans, but have minimal savings right now. We still have a decent chunk of our previous mortgage left, but if we sold today we'd still have enough for a decent down-payment. How much of our excess income should we be stashing into savings before starting to aggressively pay off the mortgage? We've been focusing on the debt so far but now that that's taken care of for the most part, I'm not sure what the wisest next step is.
(ETA: I guess the sort of answer I'm looking for is "loan officers like to see x amount in your account" etc.)
Last edited by emeraldmist; 08-28-2016 at 12:50 PM..
Well, yes, that's the goal, but at some point wouldn't it make sense to pay off some of the old mortgage so you're not paying interest? Right now the majority of our payment goes towards interest...
Well, yes, that's the goal, but at some point wouldn't it make sense to pay off some of the old mortgage so you're not paying interest? Right now the majority of our payment goes towards interest...
No, you are always going to pay interest until the very end months of the loan. Assuming you are going to sell soon, you will not get deep enough into the amortization schedule to be paying substantially less interest before you sell, even if you made extra payments.
Since you have little cash but are looking to buy a new place, you should focus solely on increasing your savings.
Fair enough. That sounds easy enough. Now, to expand on that a little... what sort of cash reserve is ideal from a lender's point of view? Is it a percentage of the house price?
Fair enough. That sounds easy enough. Now, to expand on that a little... what sort of cash reserve is ideal from a lender's point of view? Is it a percentage of the house price?
Most lenders want between 2-6 months of mortgage payments (PITIA) in reserve after the down payment and closing costs are paid, so yes the dollar amount is dependent on the house price since the house price and size of the mortgage will determine the size of the monthly payment. Exactly how many months you need will be dependent on the other factors like credit score and DTI ratios.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
