Thread: Best Mod EVER...
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Old Apr 17, 2013 | 10:51 AM
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onehundred80
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From: Ontario
Default Re: Best Mod EVER...
Originally Posted by West Peterson
I understand if you have a house payment interest rate that is rather high, but if you have a house loan with an interest rate of under 3%, does it make a whole lot of sense to pay it off early? I refinanced for 2.75, and plan on holding that loan for as long as I can. If you do not plan on financing ANYTHING else in the future, then go ahead and pay it off, but if you plan on financing relatively large purchases in the future (where the interest rate will be significantly larger), it makes better sense to use that money to either buy without financing, or to lower the amount to be financed.

I have always been told that paying down the mortgage is better than paying off the car. That is because the total interest paid is much greater.

When I was paying off my mortgage I had a formula that told me how much I owed that day. When you have this formula and others similar to it you can see the benefits of even paying off a small sum as the next payment you make will have less interest and more principal payoff in it.

Paying off 10% of your mortgage every year will discharge the mortgage in a little over seven years. With huge savings on the total interest paid. Adding to your mortgage is a huge mistake, but banks love it.

When the time came to make the final lump sum payment I told the bank loans manager that by my calculations I owed them 25 cents more than they asked for. The loans managers name was Penny Moore, which I found rather hilarious.
 
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