save or pay extra mortgage?

**Aldeya** · 03-31-2006, 03:35 AM

Re: save or pay extra mortgage?

It depends on what is important to you.

Me and my hubby decided that a piece of mind of owning our house is more important to us than trying to invest the "extra mortgage" money.

If you calculate the interest you will save for the life of the mortgage it will give you a tremendous return on your money.

We still have a few years to go but we calculated we already saved THOUSANDS of dollars in interest that we did not have to pay to the mortgage company.

Whatever happens we know we will have a roof over our heads. To us this piece of mind is very important.

**coffeebreak** · 03-31-2006, 12:19 PM

Re: save or pay extra mortgage?

I would go with Option B because it has the highest interest rate. If you owe on credit cards, use it to pay off those for the same reason; high interest rates. Pay the debts/credit cards with the highest interest rate first.

I thought that $511,000.00 was incorrect for Mortgage #2. The new amount looks better.

**CJsoccerchic** · 03-31-2006, 04:22 PM

Re: save or pay extra mortgage?

WOW - almost $4,000 per month on mortgagaes..... yikes.
Personally, I would put the $500 to the higher interest mortgage. Get that mortgage paid off before the 15years, then turn around and pay the extra $500 to mortgage #1. Do this only if you already have a good nest egg for a good couple of months because you gotta be able to cover expenses should one of you get disabled and cannot work, or whatnot. Once you got a good nest egg, then pay extra to the mortgages!

Hope that helps!

**contrary1** · 03-31-2006, 05:37 PM

Re: save or pay extra mortgage?

Gads, I feel blessed my mortgage isn't that high! I agree, I would start chipping away using your Option B, clearing out the highest interest rate account first.
Let us know which you choose & then keep posting so we can see your progress..........

**mbhunter** · 03-31-2006, 06:47 PM

Re: save or pay extra mortgage?

Wow! You live in CA?

It's a good thing that you understand the value of paying your mortgage down faster.

One question: Do you have an emergency fund? As in a good 6 months' of expenses in something liquid (like a money market, cash, etc.)? If not, you might consider building that up to something reasonable before adding payments toward your principal. You'll want the emergency fund there because it's a lot more difficult to pull money out of your house if you actually need it!

If you already have an emergency fund, I'd try to knock down the higher-rate payment first because you'll "earn" 6 5/8% (minus any lost tax deduction) in saved interest for the extra amount you put toward principal on that loan. Then, after the first loan is paid off, you can throw that whole payment at the bigger loan.

**Snoopy2645** · 03-31-2006, 08:31 PM

Re: save or pay extra mortgage?

option b is what I would pick because it has a higher interest rate, I am a firm beliver in paying the mortage off first

**pinkeyy501** · 03-31-2006, 10:07 PM

Re: save or pay extra mortgage?

mbhunter,

You're right. We live in LA.

We have about 40K in savings and 20K in IRA. The only debt we have is the mortgage and my husband's student loan which is 4% fixed and have about 80k to pay still.

I think we will follow everyone's advise and tackle the higher rate mortgage first. Thank you everyone!

**Tree0164** · 04-02-2006, 05:41 AM

Re: save or pay extra mortgage?

How close are you to retirement? Having only 20k in an IRA, you will need alot more. I would atleast take some of the $500 to put in an IRA or increase your 401k contributions.

**Ima saver** · 04-02-2006, 08:10 AM

Re: save or pay extra mortgage?

I would go with option B also. I can't imagine having a mortgage that high, I would not sleep at night! I once borrowed $50,000 to finish building the house I am in now. My payments were $500 a month and that made me nervous. I sold stuff and got it paid off in 2 1/2 years.

**pinkeyy501** · 04-02-2006, 11:42 PM

Re: save or pay extra mortgage?

My husband and I are in our early 30's, so we have a while for retirement. The mortgage is scary, but being in L.A., we are able to make more than most other areas where we could buy a house for much cheaper. We love where we live and we're willing to pay for it. The mortgage is less than 1/3 of our combined income and we have no other debts except for a student loan. I don't think we are stretching ourselves too thin right now...

**CJsoccerchic** · 04-03-2006, 03:05 AM

Re: save or pay extra mortgage?

seems like you have a good nest egg - I would go with taking care and getting rid of the smaller loan with the higher interest rate - then when done with that small loan, whatever that X dollar amount is, plus (+) the extra $500, and put the WHOLE amount (Obtion B loan + $500) and put that towards the BIG loan and clear that huge loan WAY FASTER!!!!

Instead of having that huge mortgage for 30 years, you could cut that down HUGELY!!!!

Good luck and hope that helps

**jmjj215** · 04-03-2006, 01:50 PM

Re: save or pay extra mortgage?

I'm going w/ Tree's advice. Depending on your age, you may need to be at least increasing the priority of retirement contributions as well. Maybe a 50/50 split between the two?

**Tree0164** · 04-03-2006, 03:34 PM

Re: save or pay extra mortgage?

The earlier you save for retirement the less you actually need to save!

If you are not stretching it too much, I would adjust your retirement savings. Max out your 401k if you have it. You probably earn too much for a Roth. I would then take the rest and apply it to the smaller loan.

**CJsoccerchic** · 04-03-2006, 06:04 PM

Re: save or pay extra mortgage?

How can someone earn too much for a roth IRA? I thought roth IRA were for everybody...?

save or pay extra mortgage?