Buying a house later this year (hopefully)
#61
If you pay an extra $40,000 into the loan toward principle after the loan is created, then you have just shortened the length of the loan, but not modified the terms while active. You will still pay the $810 in interest the first year, $790 the second, and $770 the third regardless of whatever extra you have put toward principle. The only thing extra principle does is shorten the loan.
If anyone is interested (I won't type it all out if no one asks for it) I can show you guys how we did it. Pretty easy method that starts out relatively painless.
#62
That is exactly how a mortgage works. If you take 10 years to pay off a 30 year loan, you still pay the interest on the schedule for the first 10 years. Whatever extra you pay in goes toward the end of the loan and removes payments as you pay off principle scheduled for them. A bank would never allow you to use it toward the payments in the beginning as that would cut to deep into their margin.
Based on what you are saying, if you sold your house you own for $60,000 and bought another house for $100,000 on a 6% loan, you should only put $10,000 down and in the first month put the additional $50,000 to skip ahead to whatever the future payments are scheduled to be at that principle balance. Since this will knock out the majority of the interest payments and you will be paying a significant amount less interest, your loan rate would basically be 3% on a $40,000 loan. Is this the general idea of what you are saying?
You pay interest on the original loan amount on a set schedule until the loan amount is paid up.
Based on what you are saying, if you sold your house you own for $60,000 and bought another house for $100,000 on a 6% loan, you should only put $10,000 down and in the first month put the additional $50,000 to skip ahead to whatever the future payments are scheduled to be at that principle balance. Since this will knock out the majority of the interest payments and you will be paying a significant amount less interest, your loan rate would basically be 3% on a $40,000 loan. Is this the general idea of what you are saying?
You pay interest on the original loan amount on a set schedule until the loan amount is paid up.
#63
I'm thinking I'll be in a lower tax bracket when I'm old and can finally use the money.
#64
Can we have a Traditional vs Roth debate? I rolled a 401K over last year to a Traditional. Was going to convert to Roth but didn't really feel like paying the taxes though I could afford it as the balance is rather modest.
I'm thinking I'll be in a lower tax bracket when I'm old and can finally use the money.
I'm thinking I'll be in a lower tax bracket when I'm old and can finally use the money.
#71
I'm with rharris19 on the paying a historically lowest 30 year fixed interest rate off early. It's an emotional decision vs a financial decision.
http://www.ricedelman.com/cs/educati...ong%20Mortgage
Granted the article is assuming greater returns on investment than are currently available, but it is also assuming a higher mortgage rate so both numbers can be adjusted to reflect current rates.
http://www.ricedelman.com/cs/educati...ong%20Mortgage
Granted the article is assuming greater returns on investment than are currently available, but it is also assuming a higher mortgage rate so both numbers can be adjusted to reflect current rates.
#72
I find myself leaning toward paying off the house earlier, both for the emotional satisfaction and also because I read the Market Ticker and I don't see market investments paying off an easy 8-10% like it always has in the past.
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09-30-2018 01:09 PM