Which loan do I pay first??

[anonymous]

I owe abour 25K on my house and now 50K on the new loan. Both interest rates are about the same and I can, I think, claim the interest on both on my income taxes. Which one should I put the most money into??

[Jacklad]

Originally Posted by anonymous

I owe abour 25K on my house and now 50K on the new loan. Both interest rates are about the same and I can, I think, claim the interest on both on my income taxes. Which one should I put the most money into??

I'd pay the minimum on both, but put any extra against the mortgage. You didn't mention the length of either debt, but paying off mortgage debt can often save you more because of the length of the amortization.

My recommendation goes double if the loan is unsecured, or even if it's a vehicle loan. If the worst happens, you can manage without a vehicle - but everyone needs somewhere to live. You also want to protect and not risk the equity you've already built up.

Jackie

[safari]

Are the interest rates fixed or variable? You should put more money toward paying off the loan with a variable interest rate. If the interest rates are the same and you can deduct the interest on both loans from your income taxes, then it doesn't matter which loan you pay off first. Essentially, you can consider it a single $75K loan.

[anonymous]

Thanks for your responses! It is a mortgage and a 2nd mortgage. They are both fixed. The 50K is 0.76% more than the 25K. The 50k is a 10 year, not sure about the 25k.

[Tree0164]

I would concentrate on paying off the 2nd mortgage first.

[LuxLiving]

Actually if you owe for a car as well, the interest rate is likely to be higher than either one of your mortgages and that is what I would pay first....but if you don't then next comes CCs and then the mortgages as above with any variables going bu-bye first! Good luck!!