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06-13-2020, 04:09 PM
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#21
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,363
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Answer the questions in post #10 and read the link and you'll have your answer.
Or framed another way, if you pay $x per month towards the mortgage for the next y months, you'll pay off more principal at 3.25% interest than at 3.5% interest. The only difference is that with the mortgage you must pay at least $1,032/month.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-13-2020, 05:15 PM
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#22
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Recycles dryer sheets
Join Date: Sep 2016
Location: Rain City
Posts: 113
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 Quote:
Originally Posted by cyber888
It makes sense, because this is a reverse compounding interest. I lower monthly payments by $600/month and pay more towards the principal. And every month, I can lower $50/month and increase more principal payment thereby paying it twice as fast ... just watch the video .. the math works if you have the discipline. The .25% rate is irrelevant .. because it gives you better cashflow
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Not quite. The majority of the HELOC payments are interest. Only ~$275 or so of your monthly mortgage payment is interest (@ 3.5% on $100k). The rest is principal and possibly property tax and insurance. If you still have P&I on escrow then you will have to pay that directly as well.
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06-13-2020, 09:44 PM
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#23
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,363
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Quote:
Originally Posted by cyber888
It makes sense, because this is a reverse compounding interest. I lower monthly payments by $600/month and pay more towards the principal. And every month, I can lower $50/month and increase more principal payment thereby paying it twice as fast ... just watch the video .. the math works if you have the discipline. The .25% rate is irrelevant .. because it gives you better cashflow
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No, it doesn't make sense. With payments towards the debt being equal the more you pay in interest the less you pay in principal, and vice versa.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-13-2020, 10:03 PM
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#24
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by pb4uski
No, it doesn't make sense. With payments towards the debt being equal the more you pay in interest the less you pay in principal, and vice versa.
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Quote:
Pippin:
The closer we are to danger, the farther we are from harm. It's the last thing he'll expect.
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__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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06-13-2020, 11:11 PM
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#25
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Recycles dryer sheets
Join Date: Oct 2015
Location: Bozeman
Posts: 194
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Isn't your current mortgage a tax deduction? HELOCs on your residence are not. How much is your tax burden reduced by your mortgage deduction?
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06-14-2020, 06:06 AM
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#26
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Thinks s/he gets paid by the post
Join Date: Mar 2012
Posts: 3,931
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Quote:
Originally Posted by l8_apex
Isn't your current mortgage a tax deduction? HELOCs on your residence are not. How much is your tax burden reduced by your mortgage deduction?
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Most folks no longer take mortgage deduction as there's no benefit to itemizing since standard deduction was raised.
With $100k remaining, on a 3.25% mortgage, that's $3250/year interest - not close to $12k/$24k. Even adding in SALT deductions most folks will not breach the standard deduction.
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