Is is a good idea to pay off your home loan if your payment is only 300.00 a month or to keep paying and taking the interest off of your income taxes? We have almost enough in savings to pay off home but would lose our savings and not have much if a emergency occurs. We'll need a new car in about 1 year and am thinking that we need to make a good down payment to keep payments down low. Any advice would be great from a money savvy person. Thanks!
2007-02-09 15:13:11 · 5 answers · asked by anjoek5859 3 in Business & Finance ➔ Personal Finance
I would keep the tax write-off.
While you aren't making a lot of money in any savings accounts right now, you can use that money for other things. There are many banks offering rates of 5% or more for limited amounts of time if you keep your money with them for at least 9 months.
In particular, I would never leave myself w/o emergency money.
"they" say you should have about 6 months worth of regular living expenses in case of emergency on hand. (I would also include the cost of COBRA insurance for family in that number).
2007-02-09 15:24:56 · answer #1 · answered by Amber Eyes 4 · 0⤊ 0⤋
keep making your house payments and write off the interest. save the savings for emergencies. you might want to think about other options on your savings like a CD, mutual fund etc. if your credit score is good enough you can get a new car with a zero % interest rate. and a down payment would even lower your payments more. when you are done with the house payments that's an extra $300 a month. good luck!
2007-02-09 15:52:03 · answer #2 · answered by Mr.Gifford 3 · 0⤊ 0⤋
You should have 3-6 months of expenses in an emergency fund. If you have more than that in savings put th rest towards paying off the house.
While the tax deduction is nice while you are paying the house off, I don't think it's a reason to stay in debt. For example, you pay 10,000 in interest to the mortgage company to avoid paying the govenment $2500 on the income you would have to claim otherwise.
You're paying a lot more money to the mortgage company than you would need to.
2007-02-10 06:07:39 · answer #3 · answered by Jen G 5 · 0⤊ 0⤋
Cash is King.
If an emergency came along, you would need to borrow money against your house in order to handle it. Besides you get the tax break from the interest. And if you invest your money in a high yield money market account (you can get around 4%), you might have enough to make your car payment (Depending on the amount you have). If it were me, I would keep the cash and make the payment.
2007-02-09 15:22:51 · answer #4 · answered by Sassy 3 · 0⤊ 0⤋
Welll how about taking half of it instead of all of it and paying a huge chunk on your house and try to get your mortgage payments lowered as well. You will still have money for emergencies and I would suggest saving more for a car because you are really using the car to get from point A to point B and it doesn't have to be brand new either.
2007-02-09 15:18:43 · answer #5 · answered by l'il mama 5 · 0⤊ 1⤋