When I got the house, it had 20 years left to pay off. (It was a 30 year loan.) I have been paying extra money every month for 3 years. (That’s how long I have had it). Every extra penny goes to the house loan including extra savings in my bank every month.
In 3 years I have paid off $50,000 off of the principle and owe $33,000 (in principle) left on the loan.
I want to pay it off next year because I want to get pregnant with my first child and would like to be 100% debt free.
If I pay $2350 a month for 15 months I will pay it off next October. Do you think this is a good idea, or should I make the minimum payments instead? The minimum payments are about $600.00 a month. But then I will be paying interest on a house that could be paid off. The interest wouldn’t be worth the money it would save me in taxes.
Some people have told me not to pay it off, but isn’t it best to have no mortgage at all?
2006-07-03 09:51:25 · 10 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
You will surely get alot of different ideas for the answer to this question...The reason is it is a rather personal decision.
There isn't a concrete right or wrong...
My personal answer is PAY IT OFF! You can alway take money back out later if you needed it...To live in a paid off house is a really comforting thing and we all need more places to reduce stress, especially if you are about to have a child...
My house is paid off....and I never regret it...I breathe a great big sigh of relief every time I think about it....I don't know how other people are making it with a mortgage...
Good Luck...You'll be fine what ever you do...
2006-07-03 10:04:36 · answer #1 · answered by ceasefear 2 · 2⤊ 0⤋
If you can get a better return on your investment of $1,750.00 per month (the difference between the required mortgage payment and the amount needed to pay it off in 15 months) than the mortgage interest rate, put the funds in that investment vehicle instead of paying off the loan early.
You should take another look at the tax angle as well. Obviously you're not making minimum wage so the tax impact might be greater in your situation.
I'd strongly suggest that you consult with a CPA or an attorney who specializes in estate planning. You need to make sure that you have sufficient liquid resources on hand to deal with any emergencies. It may not be easy or cheap to pull money out of the house in a couple of years. Interest rates are going up so an equity loan in a couple of years may cost you a lot more than the old paper on the house today.
If you throw every available penny at the house just to pay off the mortgage you are doing yourself a disservice since you won't have any liquidity to deal with a job loss or unexpected medical bills. Since you're planning on starting a family, you should give due consideration to that aspect as well.
The total objective is not necessarily to be debt free but to be comfortable with your cash flow and be able to handle financial surprises without significant worry.
2006-07-03 10:16:52 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
It would seem like a good idea, but I once heard that you should never own your house flat out...because if you get sued for any reason, it could be taken away. If a bank still owns the property (you're paying off a mortgage) that wouldn't happen.
It's up to you, really...if you're pretty well off financially, it seems like paying off any debts would be a great idea...in case you face a financial emergency within the next several years!
2006-07-03 09:57:51 · answer #3 · answered by benny 2 · 0⤊ 0⤋
You have the right idea. Pay that mortgage as soon as possible. It you wait 20 years you will end up paying 2x much because of compound interest. I would definitely pay it of in 15 months in order to save money in the long run.
2006-07-03 09:57:45 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Pay it off if you can afford it. It is best to live debt free. So when you have a child you can spend time an energy on him or her without worrying about money.
2006-07-03 10:09:05 · answer #5 · answered by cooldude_91801 2 · 0⤊ 0⤋
I think you have the figures worked out.
As long as you can afford it then pay it off.
Then you have an asset.
Paying off a debt is always a good thing.
2006-07-03 09:55:53 · answer #6 · answered by seversol73 2 · 0⤊ 0⤋
it depends on your rate of interest. If you have a fixed rate mortage at 5.5% or less it might be in your interest to pay the minimum and find a CD for 6 month at 5% or even a bond that is triple tax free. Please check your mortage interest
2006-07-03 10:04:53 · answer #7 · answered by gglennn@verizon.net 1 · 0⤊ 0⤋
If you want to keep it, pay it off.. If not, sell it...
Debt free is always best. You've done the math, and you're correct..
2006-07-03 10:01:40 · answer #8 · answered by kvuo 4 · 0⤊ 0⤋
It depends! Do you have alot of other things that you can use for deductions? If not, I suggest that you keep paying as you are.
2006-07-03 09:55:03 · answer #9 · answered by Anonymous · 0⤊ 0⤋
if you can pay it off do it.
2006-07-03 09:57:56 · answer #10 · answered by jessi 3 · 0⤊ 0⤋