Im closing on my first house next week. My husband and I are both 30. I checked I mortgage caculator and found out if we make a payment of $3500.00 1 x a year in addition to our regular payments then we will pay the loan off 10 years earlier. Is that a good thing to do with our money or should we be putting it into some sort of stocks for retirement.
2007-09-21 09:40:13 · 7 answers · asked by formula11e2000 2 in Business & Finance ➔ Personal Finance
While paying off the mortgage early would be a good thing, you should also put money into retirement.
You can still pay your mortgage off faster by paying as little as $10 extra every month earmarked for principal. You don't have to have a big lump sum payment
2007-09-21 10:24:36 · answer #1 · answered by bdancer222 7 · 0⤊ 0⤋
There was a study(sorry not sure of the reference) that determined that people were better off putting money in a tax deferred account, than paying off their mortgage early.
You definitely do not want to be in a position at 50 where you are house rich, but have little retirement savings. If you are making the contributions to get the company match for a 401k and both doing ROTH IRAs(or maxing your 401K if not eligible). Then your retirement savings should be on track and an extra house payment may not be a bad idea.
2007-09-21 10:11:48 · answer #2 · answered by VATreasures 6 · 0⤊ 0⤋
It depends on the other investment.
A high-risk, high-yield stock would probably be better in the long run, but you'll save a lot in interest if you pay off the loan.
If you're investing for 20+ years, go for the stocks. If you plan to pay the mortgage in 15 or less, pay that.
2007-09-21 09:48:59 · answer #3 · answered by Anonymous · 1⤊ 0⤋
If you have any other debt focus on paying that off first. Then save up 3-6 months of expenses and invest in your retirement and kids college funds.
Once those things are in place, then focus on paying off the mortgage early.
God luck!
2007-09-21 12:04:53 · answer #4 · answered by Jen G 5 · 0⤊ 0⤋
I've heard to figure the interest you'd make on the money you'd save if you don't pay off your loan quickly and compare that to the amount that you'd save in interest if you payed the loan off quickly. Essentually compare the interest rates and go withthe higher one. No point in saving money if you end up paying more money than you saved in interest.
2007-09-21 09:48:43 · answer #5 · answered by k monster 3 · 2⤊ 0⤋
It's always best to pay off loans quicker. Do another calculation to see just how much extra interest you would be paying if the loan lasts longer.
2007-09-21 09:47:59 · answer #6 · answered by Anonymous · 1⤊ 2⤋
this depends on how much real estate is appreciating in your area.
A normal investment return is 7-8% per year.
A typical appreciation in real estate is 3-4% per year.
2007-09-21 09:55:21 · answer #7 · answered by greybeads 3 · 0⤊ 0⤋