My first mortgage has a lower interest rate but a much higher amount. The home equity loan is a smaller amount but at a much higher interest rate.
2007-03-02 15:06:35 · 6 answers · asked by Joyce P 2 in Business & Finance ➔ Renting & Real Estate
You did not say how long you had been in your house and if the first mortgage was an adjustable or not, or if it is an interest only loan.
There are a couple of things you should consider before you start throwing your hard earned money around and perhaps for no reason what so ever. You are not paying principal for the first 5 years or so and if you have an interest only loan you will have t figure out if it is in your best interest to pay anything toward the principal.
You might want to sit down with a mortgage professional to see what your options are. It might be that combining the two loans with a refinance is a better 1st option for you. Then once you have accomplished that then start on your principal pay down.
You might consider a 4-1 payment option loan. You have four options to pay your loan and you are not penalized for which ever option you select and you can change your option when it suits you.
I find that most individuals refinance their homes approximately every 5 years for some reason. Of course this also seem to be a regional thing as it happens more often in the western Unites States more so than in the southern United States.
I hope this has been of some use to you good luck.
2007-03-02 16:06:57 · answer #1 · answered by Skip 6 · 0⤊ 0⤋
Always pay off higher interest debt first. Even though you are paying more interest in dollars because of the higher loan amount, it is actually costing you more when you pay a higher interest rate.
2007-03-02 23:12:12 · answer #2 · answered by Brian G 6 · 0⤊ 0⤋
Definately pay off the higher interest rate first. Don't worry about the first mortgage right now. Believe me. Great question.
2007-03-03 00:32:52 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Pay off the higher interest, lower balance equity loan first. You'll save more in the long run, and you'll be able to see the results of your effort sooner.
Good luck!
Rick
http://www.fairwaymortgagelending.com
2007-03-02 23:34:45 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Which loan has the higher interest rate? That is the one you should buy down first.
2007-03-02 23:11:12 · answer #5 · answered by jeanie2048 1 · 0⤊ 0⤋
check your records to see which cost you more interest annually....im betting the higher interest.
2007-03-02 23:12:46 · answer #6 · answered by Anonymous · 0⤊ 0⤋