If you have extra money to make extra payments, should you make extra payments on your current home mortgage or should you make extra payments on your land loan (plan to build a home on the land in the next 1-5 years). If one of the loans has a 1% higher interest rate, is this the one you should try to pay off faster?
2007-02-07 05:42:19 · 6 answers · asked by Home Owner 1 in Business & Finance ➔ Credit
Given your timespan, why are you looking to pay off more of the home loan? There's little to gain.
While we're at it, why would you want to pay off extra principal on the land loan? Knowing what you expect to gain from doing that might shed some light on this.
I'd suggest that you save the extra cash to go towards construction of the new home. You can take out a smaller home construction loan.
Second to that, I'd put the money towards the land loan, since I'm expecting that you plan on living them for many years.
2007-02-07 05:53:17 · answer #1 · answered by Jay 7 · 0⤊ 0⤋
I'd make the extra payments on your current home loan, then ASAP refinance the land loan into a Home Equity Loan or Line of Credit so you can deduct the interest.
2007-02-07 05:48:29 · answer #2 · answered by Wendy S 4 · 0⤊ 0⤋
Pay the one with higher interest. But don't make extra payments...just pay additional principal (no extra interest)
2007-02-07 06:00:36 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I would suggest that you pay on the higher interest loan it would certainly save you the most money in the long run.
2007-02-07 05:59:50 · answer #4 · answered by grizzliesgurl 4 · 0⤊ 0⤋
Whichever one has the higher interest rate and/or the largest balance.
2007-02-07 05:45:57 · answer #5 · answered by zippythejessi 7 · 0⤊ 0⤋
I would go with the higher interest one if it were me.
2007-02-07 05:45:33 · answer #6 · answered by Anonymous · 0⤊ 0⤋