Renee and i are working out if we should extend our small home or pay as must off the mortage off as possible?

Question

We are unsure to pay more off the mortage in the next two years or extend for more room, if we pay more off the house mortage. then the mortage will go down and the equity of the home would go up, but if we extend we would have a lot more room because our house is very small! Then if we wanted to we could have a baby because the mortage repayments would go down. What should we do, as we are unsure?

Answer 1

Set up a home equity line of credit (HELOC.) It allows you to access the equity in your home to use for whatever you like pretty much, i.e. home improvements, debts, major purchase...
If you use the money for home improvements, you can write the interest your charged off on your taxes in most cases (check with your tax adviser.) HELOCs usually go with prime rate but the moneys there for whenever you need it (emergencies) Its a revolving line of credit so when you put back in what you took out you can use it again.
And you don't have to touch your 1st mortgage. Which I would advise against anyway.

Answer 2

Getting rid of a mortage is great, but then you would have to move because everything is too small for you so you would be right back into debt. The main question you have to answer is if you like the place now, and how much would you like it if you extended.

Money wise you would be better off to extend the house. You can use part of the money you were going to use to pay down the mortage and use that to extend the house. If you need more you can either refinace of take out a second. The value added to your house will most likely be more than the actuak money paid. What you end up doing is making money through appreciation and expansion, and you are using somebody elses money to do it.pp

Answer 3

Do the home extent ion you want to do.If you pay off two years worth of your mortgage it may seem like your paying of a nice chunk of your principal but really all you are paying off is the lenders interest on your loan.Believe me it's an industry secret that most people do not realize or know about and the banking institute is just fine with that because it means more money for them.So go get your renovation done that will probably cost you less then paying off two years worth of mortgage and you won't leave your self depleted financially.

Answer 4

It depends. Do you plan to sell it soon or live in it forever? If you plan to sell, use the money to increase the value of the home. If you plan to live there forever, use the money to increase the size, which in turn will increase the value of your home. :)

Your equity will increase whether you pay down the mortgage or not due to appreciation. As long as you don't over spend in renovations, you should be able to kill 2 birds with one stone.