depleat savings to payoff/pay down mortgage?
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Hello,
should i use up available cash to pay down, just pay extra or continue to horde cash?
and make improvements on the place
owe $170k @3.75% (7-8 years into a 30) zero down VA
value approx $275-300k
10 year refi ? or do nothing, hope the values continue to climb in my area
fully funding 401k, Roth and wife’s IRA
cash savings north of $100k
only other debt, wife’s car loan, balance $6k @ 0.9%
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Probably not the strongest reply especially at PhatWallet but why not split the difference and just round up your monthly payment so extra can be applied to principal each month?? I suspect at least one other person will lay out the math behind their response more succinctly but this has worked for me. How far you “round up” will be your decision but that way you still have cash and you can see your balance decrease more quickly.
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My simple thinking is let’s say you have $25,000 left on your mortgage with a $600 monthly payment and also $25,000 that you want to invest. In this instance I say pay off the mortgage, thus ending your $600 monthly payments. One couldn’t expect a $600 monthly return on investing that, so I feel it’s a no-brainer.
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The question is, what return can you get with the available cash? If it can earn more than 3.75%, then don’t pay off the mortgage. Also remember, when you pay off the mortgage, that money will be difficult to access versus say being in the stock market. This is always a difficult decision and it comes down to: what makes you feel more comfortable?
