I refinanced my home in June. There is a 3-year prepayment penalty equal to 6 months interest (roughly $9000).
The home is valued at the same price as the loan. I'm paying $1800 a month on a $270k loan.
Should I sell my home now to get rid of the debt or wait until the 3 years is up so that I don't have to pay the prepayment penalty?
My wife and I have separated so there is no reason to keep the house.
2006-10-24 08:28:46 · 7 answers · asked by subliminal1973 2 in Business & Finance ➔ Renting & Real Estate
You don't say where the house is.
Some believe that there is a housing bubble in certain areas. If you are in one of those places, then you may want to get out before the bubble bursts. If not, it might be better to hold onto it for awhile.
Another possibility is to rent out the house. If you did that, you would have to declare the rent as income, but you would be able to deduct all the interest on the house. You can also amortize the value of the house, taking another tax deduction from that. In addition, any costs associated with upkeep or marketing the house are deductible -- as are taxes or association fees. You may actually be ahead of the game even if you can't rent it for the full $1800. If you aren't in an area with a housing bubble, the value could appreciate while you hold onto it.
2006-10-24 08:38:54 · answer #1 · answered by Ranto 7 · 0⤊ 0⤋
Well, when the house sells, is she entitled to 1/2 of any profit? If so, sell it and move on, she eats 1/2 of the penalty also.
If the house is legally yours and you don't have a compelling reason to prepay and sell, I would stay put till 6/09, because 9K is still a pretty stiff kick in the butt.
If you have the money, why not put it in a 5% money market and extract some cash monthly to help pay the mortgage.
2006-10-24 08:45:06 · answer #2 · answered by wanderlustgettingtome 3 · 0⤊ 0⤋
i would wait the three years ure already going through alot can you handle the 9000 deficit? Its more of a personal choice. The right financial choice would be to hang on to it until its done unless if ure in a bind where u cant afford the mortgage than def get rid of it.
2006-10-24 08:38:44 · answer #3 · answered by toolate 3 · 0⤊ 0⤋
Don't base your major life decisions on a prepay penalty. If you need to get on with your life and get your ex out of your life, do what you need to do.
2006-10-24 11:43:16 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Keep the house, your payment is fairly resonable, and real estate is always a good investment.
2006-10-24 08:36:29 · answer #5 · answered by missyhardt 4 · 0⤊ 0⤋
If you can write off the $9000 (it's prepaid interest) go for it.......
2006-10-24 13:06:13 · answer #6 · answered by ron d 3 · 0⤊ 0⤋
if you live in California I can help just email me.
2006-10-24 09:57:50 · answer #7 · answered by Ricky 2 · 0⤊ 0⤋