| Savings VS Pay Off Mortgage? |
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lcp03o
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| Savings VS Pay Off Mortgage? |
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Hi
I think I know the answer but wanted a 2nd opinion. My situation is as follows.
I currently own a property and I plan to move in 5 years time to a larger property. So in 5 years time I wish to be in the best financial position.
I currently have a mortgage (Lets say 100,000 to pay) which I am paying off over 18 years. I can afford to pay 2 x what I am currently paying for monthly repayments. Do I
1. Put the extra money left over in to a high intrest bank account or ISA ??
2. Pay over payments on my mortgage
3. Change the payment term of my mortgage from 18 years to 8
Thanks
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Wed May 18, 2011 4:04 pm |
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littleroc02us
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My opinion is that you pay off the mortgage asap if you have no other debt and are already investing 15% of our income. I myself am doing the same as we speak. It's so reassuring to see that principle drop each week, meanwhile I'm investing wisely. Not having debt means no payments and unless you enjoy that sort of thing then go for it.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Wed May 18, 2011 4:36 pm |
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oldguy
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Location: arizona
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What is driving the plan to move in 5 yrs? A new job, new location? Want a bigger house? Other?
Is the 5 yr time frame fixed - or could it be 7 or 10 yrs?
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Wed May 18, 2011 8:36 pm |
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clintdavis
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Assuming you have no other debt, you need first to set aside 3-6 months of your living expenses as an emergency fund. Then, you need to be contributing 15% to retirement - 401k and Roth IRA's. If you have children, you need to be contributing at least $2,000/year/child in an ESA for their college expenses. Once all of these are done or in process, you should go ahead and dump any extra money into paying down the mortgage. That will allow you to move in 5 years and put a large enough down payment that you should be able to be completely mortgage free within the same 8 year time frame (or even faster).
Way to go...keep up the good work!
In Freedom,
Clint
http://www.daviscoachingsolutions.com
clint@daviscoachingsolutions.com
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Wed May 18, 2011 9:31 pm |
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oldguy
Senior Member
Cash: $ 309.30
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Joined: 21 May 2006
Location: arizona
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What is driving the plan to move in 5 yrs? A new job, new location? Want a bigger house? Other?
Is the 5 yr time frame fixed - or could it be 7 or 10 yrs?
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Wed May 18, 2011 10:27 pm |
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terrancebrandt
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If you can go on for the next five years as debt free then all is good. Pay the house and invest like others do (and told). In that way, you can have something to help you with in after 5years time.
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Thu May 19, 2011 2:42 pm |
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lcp03o
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quote:
Originally posted by oldguy
What is driving the plan to move in 5 yrs? A new job, new location? Want a bigger house? Other?
Is the 5 yr time frame fixed - or could it be 7 or 10 yrs?
Looking to start a family, Thanks for all your replys guys
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Fri May 20, 2011 4:11 pm |
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elissakay
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If you pay off the mortgage you are only left with the only goal you want to achieve. That would be easier in terms to achieve and save money.
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Tue May 24, 2011 9:37 am |
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ttammie98
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I am in a similar situation and have decided to pay off the mortgage over setting the money aside in a money market, bond, etc. I think it is a personal choice. However, I decided to work on paying off the mortgage to help to eliminate one extra thing that would be holding me back when I want to retire. My plans are to leave corporate America as early as I can. Additionally, the math works in your favor when you have no mortgage.
How To Stay Out Of Debt
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Wed May 25, 2011 2:26 am |
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keshavmish
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Location: india
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Advantages of Paying Off Your Mortgage
* Peace of mind. Rest easy knowing that you no longer owe payments to your lender.
* Money won't go out the window. Enjoy having savings in your pocket versus shelling out additional years of interest payments toward your home.
* More financial flexibility.Not being tied to a mortgage provides financial independence to use income to achieve other goals and dreams.
* Security. Eliminating a mortgage balancesignificantly reduces the risk of losing your home should job loss or unexpected health concerns consume a large portion of your savings.
* Reduce your dependence on Uncle Sam. There's no guarantee that the tax deduction for interest payments and fees won't be eliminated over time.
* Save even more.It's possible that refinancing your home at five or six percent in order to put extra money in a savings account may only yield a less-than-one-percent return.
* Protect against market fluctuations.The more equity you have in your home, the better. If you have $50,000 of equity in your $200,000 home and the housing market goes south (or stays there for a while) and your value decreases to $125,000, carrying a mortgage actually puts you underwater.
http://www.youtube.com/watch?v=6AIstoTbGCI
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Sat Aug 20, 2011 1:18 pm |
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