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We've knocked off over 12k on the house so far. I don't think I'll get a lower % then what I have already.
Pay off the car or put a dent in student loan?
- Thread starter musclefan21
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We've knocked off over 12k on the house so far. I don't think I'll get a lower % then what I have already.
I got a funky loan called a 10/10/10 loan. I bought the house in mid 2016 and for the first ten years of the loan the percentage is fixed at 3%. Then, after the ten years the credit union has a formula that allows them to bump it up to 6% for the next ten years. Then after twenty, theoretically it could be as high as 9%. It makes no sense for me to pay off one extra cent ahead of my other investments with much higher returns, eg: 401k with matching, company stock purchase plan with discount, Health Savings Account. I am however, banking on significant capital appreciation over the near and long term by living close to Silicon Valley with a rental unit on the 2 acre property.
I got hosed there. My loan was 80% at inception, but I only had 10% down. I was only able to get rid of the $165/mo Private Mortgage Ins by getting it appraised at 75%. It took me about two years of payments and appreciation to get where I was comfortable paying the appraiser $500 to come out.
Could you have just paid cash? That's a lot of money for someone to loan you for less than mortgage rates have been in the past ten years. I remember my folks buying an expensive house with an 18% interest rate. They banked on inflation bailing them out, but that fell and so did interest rates and they were able to refi. Hell at this point they've probably refi'd about 5 times in 35 years. They still owe what they paid for the house, but it's now worth about 10x what they paid.
My two cents:
Track your debts and large assets on an Excel spreadsheet monthly. Make a line chart. It'll visually show you how well you are doing on the debts and it's addicting to make the line go down faster. I went from owing $47k on credit cards and no real assets other than a ten year old truck and a 30 year old Falcon to gaining significant net worth in ten years. I tracked every single month of that time all my credit card debt, car loans, etc. I also tracked my 401k, etc.
Another thing no one has mentioned is the POTENTIAL for some student loan relief from the federal government. Personally, I think the shear numbers preclude a complete forgiveness, but a rate reduction or percentage forgiveness isn't out of the realm of possibility. A risk/reward analysis suggests you might consider this impact on your loan in the planning.
My suggestion is if you're feeling secure in your job, pay off the higher interest loan. If you think you're in an industry where you might get laid off in a year or two as a long rumored recession takes hold, you might pay off the car and gain some flexibility down the road- at a cost illustrated above.
Track your debts and large assets on an Excel spreadsheet monthly. Make a line chart. It'll visually show you how well you are doing on the debts and it's addicting to make the line go down faster. I went from owing $47k on credit cards and no real assets other than a ten year old truck and a 30 year old Falcon to gaining significant net worth in ten years. I tracked every single month of that time all my credit card debt, car loans, etc. I also tracked my 401k, etc.
Another thing no one has mentioned is the POTENTIAL for some student loan relief from the federal government. Personally, I think the shear numbers preclude a complete forgiveness, but a rate reduction or percentage forgiveness isn't out of the realm of possibility. A risk/reward analysis suggests you might consider this impact on your loan in the planning.
My suggestion is if you're feeling secure in your job, pay off the higher interest loan. If you think you're in an industry where you might get laid off in a year or two as a long rumored recession takes hold, you might pay off the car and gain some flexibility down the road- at a cost illustrated above.
You lost me.
Our rate is 3.7x something, and even though we put 20% down on our house, the principal:interest ratio on our payments at the start of our loan sucks.
I guess I'm saying you got a loan at a historically low interest rate. Why complain about that? The lender is taking all the risk.
Because it still sucks when you make a 1500 dollar payment and you know 8-900 of it is toward interest.
Fair enough.
That’s with any loan ever, you always pay the interest up front. That’s so the bank gets their money. Only way (i think) to get around it is to maybe split the payments, or pay earlier in the month?
Some of the resident experts will certainly correct me if i am wrong. Hehehe
No, I’m not suggesting that I don’t know how it works. Just that it’s a giant pile of ass-looting.
I make extra payments toward the principal of about 150 a month, which adds up to well over a payment a year with compounding witch-math.
I make extra payments toward the principal of about 150 a month, which adds up to well over a payment a year with compounding witch-math.
Lol’d at witch math
I would pay the car off so you take one debt out of the way and make double payments on the school debt.
No doubt, we refinanced a few years back to get a 3.5% rate on a 30 and get out of PMI. Even at 75% LTV the amount of interest I pay pisses me off, though it's better than it was prior to refinancing. I do put another $100 towards principal per month and could easily add several hundred more but I try to max out my Roth IRA each year.
Now if I could just do something about the outrageous property taxes around here...
Define crazy property taxes... I'm paying 8300 a year now.
Yea, eff that.
Our home appraises right at 300k and we just had a tax increase that put us just under 2k annually.
What some people pay (as shown above) is unbelievable.
Our home appraises right at 300k and we just had a tax increase that put us just under 2k annually.
What some people pay (as shown above) is unbelievable.
OP. I’d pay off smallest balance first and use those funds to knock off the next. Just as most others have said.
If you’re not at 80% now then you have PMI. Lenders have their own rules for LTV and PMI falling off if you had the loan for less than 5 years.
Edit: Disregard if you’re VA Home Loan insured.
Sent from my iPhone using the svtperformance.com mobile app
If you’re not at 80% now then you have PMI. Lenders have their own rules for LTV and PMI falling off if you had the loan for less than 5 years.
Edit: Disregard if you’re VA Home Loan insured.
Sent from my iPhone using the svtperformance.com mobile app
We paid $5200 last year on a house that is assessed at $240k by the city. I'm not surprised that you paid more but if you live in the Chicago burbs I bet your house is assessed at significantly more than mine.
I've been doing this for the entire 3 years I've owned my house except I add the extra $500 to the principal instead of adding it to the monthly mortgage payment. That correct or should it be the other way around? I've asked this a few times and I've gotten different answers each time.
Wow, that's 5x the property tax rate in Denver.
Wisconsin has the 5th highest median tax rate in the country at 1.76% of property value. Colorado has the 39th highest property tax rate at .6% of property value. Property Tax Rates By State 2019 - Tax-Rates.org
Combine that with being in one of the highest taxed counties and cities and I pay ridiculous property taxes. I'm already cringing when they reassess the house at it's actual market value and my property taxes go up. The really shitty part is the high schools are not good enough to send our son to. We will have to do school choice or if that is not available, we will have to move.
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