Your opinion sought on mortgage payoff

[fern]

Getting a home equity loan is a perfectly good idea but i'm generally debt-averse. I can see how a HELOC could save me money, but i'd rather just focus on getting rid of the debt asap. Perhaps this a character fault of mine, I don't know. Although I wonder if having an open line of credit, possibly even one that's untapped, could boost my credit score. Cus after I pay off the mortgage, i my current sterling score (801, last i checked) could drop a little with the elimination of installment debt.

[omni550]

fern,

I haven't read all of the responses you received. Here's an article I found in the NYT the other day. Perhaps you might find it useful.

A Little-Known Strategy for Cutting Mortgage Payments
http://www.nytimes.com/2011/01/02/re...me&ref=general

omni

[fern]

very very interesting.

So recasting would lower my monthly payments but elongate the time til i paid it off, whereas just throwing prepayments at the mortgage would shorten the time til i paid it off but not lower monthly payments.

[sheehs1]

Fern...I was talking about an equity line.. used to pay off your primary mortgage. You would eliminate your first mortgage and be left with just the equity line....so basically the same amount of actual debt. The rate on your equity line could be less than your current mortgage..so you are throwing more net dollars towards your principal every month. Only works if the equity line rate is less than your current mortgage rate. Only works as long as rates stay below your current mortgage percentage.. etc.etc.
As you said also...the unused portion could sit out there not being used but is available in the event you need it.
Haven't read the recasting link....yet.

[veremchuka]

fern i'm confused. your balance on the mortgage is $30k and you are 15 years into a 30 year loan. you're paying $5k+ in interest? at 15 years i'd think your interest would be low with only $30k owed?

preserve capital because you are not working. as it was stated many times what ifs happen and you're better off with extra cash for expensive problems that can happen vs having no mortgage and less cash.

if your choice is taxable account money vs tax deferred i'd use taxable, delay paying taxes as long as possible.

i paid off my mortgage in june of last year in year 7 of a 30 year loan. i am retired and like you was tired of having to dip into savings to cover monthly expenses, i lbmm too. so i depleted virtually all my cash and i wonder if i did the right thing. my payment with taxes was $1225 a month but i still have to pay $480 in taxes a month so my savings is $745 a month. i was disgusted paying $6400 in interest each year. if something big happens i only have $5800 in cash and taxes for 6 months are due in 3 weeks dropping that to $3560. i say all this because while you have a lot more in cash vs the loan balance than i do there is a lot to be said about having cash just in case.... especially if you don't have a job.

[Pete]

Normally I would be in favor of you holding onto your money, but 32K is more like a car note. Pay it off, have peace of mind, and save some money monthly.

[mau]

30K * 6% = 1800/yr?

[REWahoo]

Quote:

Originally Posted by veremchuka fern i'm confused. your balance on the mortgage is $30k and you are 15 years into a 30 year loan. you're paying $5k+ in interest? at 15 years i'd think your interest would be low with only $30k owed?

I believe the OP is saying paying off the mortgage would save $5k+ in interest over the remaining life of the loan.

[fern]

Yes, that's right wahoo, I would save a total of $5,453 if I paid off the entire loan now vs. just making the usual payments until May 1, 2016.

[mau]

Thanks for the explanation. If it were me, I would probably put an extra 5-10K now on the mortgage (assuming no penalty). Then at least your future payments will be paying more principal. You can always pay more off as you feel comfortable.

[veremchuka]

Quote:

Originally Posted by fern Yes, that's right wahoo, I would save a total of $5,453 if I paid off the entire loan now vs. just making the usual payments until May 1, 2016.

gee fern with that the case and 15 years of keeping your money especially since you don't have a job, personally i'd keep the mortgage. should you get a good secure job then consider paying it off. you owe so little and the interest is minimal it just seems like this is a debt that may be worth just keeping. in the end you have to decide what you want to do.