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42 votes
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Which mortgage should I pay off first? Same interest rate and mortgage length

You haven't accounted for what happens when the small loan is completely paid off. Seven years into the aggressive payoff schedule you need to shift all original principal and interest payment and the ...
mhoran_psprep's user avatar
31 votes
Accepted

How could someone refinance an existing mortgage?

You wouldn't refinance the existing mortgage. You would pay off the existing mortgage in full using the money from the new one. Suppose you have a house valued at $100K, and a mortgage of $90K, that ...
Simon B's user avatar
  • 10.4k
19 votes

Should I pay off mortgage or invest in CD?

Assume I have $50,000 loan that I could pay off (2.875 rate) which I could invest in CD with 5.5 rate for 12 months, could anyone please tell me what would be the correct calculations? Thanks! ...
Hart CO's user avatar
  • 70.5k
18 votes

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

I am not checking your math. I as assuming that you feel confident that if you start with 50K, add 5K a month, that in 10-15 years you can have $1,000,000 after taxes. All this is to be able to put $1,...
mhoran_psprep's user avatar
16 votes

Is a buyout of an inherited house in a trust an option?

It's a question to an estate attorney. The whole point of trusts is to avoid probate, which includes these kinds of issues. The property is owned by the trust, and as the trustee your job and legal ...
littleadv's user avatar
  • 176k
13 votes
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How Much Rehab/Partial Rebuild Can Be Done While Keeping Existing Mortgage?

Two important aspects to consider are habitability and collateral. Many mortgages (or the insurance policy required by the mortgage) stipulate some kind of occupancy requirement, meaning that the bank ...
Nuclear Hoagie's user avatar
12 votes

How could someone refinance an existing mortgage?

These mortgages had very little equity, and they effectively were negatively amortized, in that the initial interest rates were lower than the actual market rates. But if housing prices increased ...
Acccumulation's user avatar
11 votes

Which mortgage should I pay off first? Same interest rate and mortgage length

However, I just started thinking, and because of the nature of amortized loans, I'm obviously paying quite a lot of interest in the beginning.... This is a common point of confusion, the portion of ...
Hart CO's user avatar
  • 70.5k
11 votes
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How’s the interest adjusted for additional Principal payment?

The interest portion of your payment is calculated as the outstanding principal amount times the monthly interest rate (7%/12 or 0.5833% for you). On May 1st, your principal balance was ~$200k after ...
D Stanley's user avatar
  • 136k
9 votes

Does it make sense to sell stocks to pay off part or all of my mortgage loan?

With the exception of certain kinds of retirement accounts, investment gains are taxable. In other words, if you buy $100,000 worth of stock and sell it for $120,000, you owe taxes on the $20000 gains,...
keshlam's user avatar
  • 47.5k
8 votes

Should I pay off mortgage or invest in CD?

I think you have a decided advantage with the limited duration of 12 months on the CD. The difference between the rates is minor, but not insignificant, especially when you consider the return on ...
fred_dot_u's user avatar
8 votes

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

You are essentially short a house (that is, your financial picture is negatively correlated with housing prices). Therefore, your portfolio should aim for a greater positive correlation with housing ...
Acccumulation's user avatar
8 votes
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Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

Maybe Buy Sooner Starting with 50k, and adding 5k a month, you get to 200k in 30 months (2.5 years). Using this calculator, I assumed 7% interest rate, 1M home value, and 200k down. The $5,300 monthly ...
codeMonkey's user avatar
  • 1,639
8 votes

How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

It depends on how the loan is set up and the lender's policy towards early payments. If the loan is set up with a monthly payment then the payment amount can be computed based on that formula where n=...
D Stanley's user avatar
  • 136k
7 votes

is it risky to rely on tenants to pay for mortage?

Mortgage lenders will evaluate your debt to income ratio (DTI), conventional lenders will not exceed 50% back-end DTI (DTI including new mortgage). They might consider up to 75% of the potential ...
Hart CO's user avatar
  • 70.5k
7 votes
Accepted

Why would I ever buy a house vs. just renting and invest the rest?

This sounds more like a rant. There are a lot of questions of rent vs buy and which one is better. But, I want to correct your numbers. You assumed 5.5% mortgage rate, and about 1.15% tax rate. You ...
littleadv's user avatar
  • 176k
7 votes

How Much Rehab/Partial Rebuild Can Be Done While Keeping Existing Mortgage?

Talk to the bank. If you have a reasonable income/mortage ratio, and a good plan for the renovations the bank should say OK. After all, the end result will be a house worth more than before and ...
Stig Hemmer's user avatar
6 votes
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Which Debt shall I pay first?

First of all, congratulations for wanting to pay down debt with the 30k instead of buying a new car... You should pay the student loan for three reasons: It has the highest interest rate, and thus ...
D Stanley's user avatar
  • 136k
6 votes

Should I pay off mortgage or invest in CD?

I actually made a google sheet comparing basically what you are talking about a while ago. The sheet isn't perfect and there are some missing variables but you can sort of see what math is involved in ...
jesse_b's user avatar
  • 424
6 votes
Accepted

Does it make sense to sell stocks to pay off part or all of my mortgage loan?

If you are a US taxpayer and the stocks are held in a regular after-tax brokerage account, you'll owe capital gains taxes on the appreciation when you sell. You can't avoid paying capital gains taxes ...
Justin Cave's user avatar
  • 27.3k
6 votes
Accepted

Taxes, personal mortgage loans, and interest. IRS Form 1098?

See the instructions for line 8b on your Schedule A, which exists for this scenario: Seller financed mortgage. If you paid home mortgage interest to the person from whom you bought the home and that ...
littleadv's user avatar
  • 176k
5 votes

How to cash out golden handcuff mortgage

You have a relatively cheap debt secured by your expensive asset. You can't keep the debt without keeping the asset. If you sell the house you'll have to pay off the mortgage first. Banks have no ...
littleadv's user avatar
  • 176k
5 votes

How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

Payment = [P*(r / n)(1 + r / n)^nt] / [(1 + r / n)^n*t - 1] where n = 12, P is the loan, and r is the interest rate. If the periodic rate is given as r / n with n = 12 months, this implies that the ...
Chris Degnen's user avatar
  • 9,837
4 votes

How could someone refinance an existing mortgage?

Usually, rates having dropped since the first mortgage. Plus some competition for your business, though that's a more minor effect. This is a matter of taking advantage of opportunities if and when ...
keshlam's user avatar
  • 47.5k
4 votes

How could someone refinance an existing mortgage?

At least here in the UK, where mortgage affordability rules are significant, you get a better rate on a lower loan-to-value ratio. The original mortgage was priced at 90% LTV. Even if you haven't ...
Chris H's user avatar
  • 2,555
4 votes

Which job offer is better?

To me you have not really investigated which offer is better as you left out three key things: health insurance, vacation, and 401K match benefits. As far as these two housing offers go, I would ...
Pete B.'s user avatar
  • 76.7k
4 votes

is it risky to rely on tenants to pay for mortage?

You can't guarantee that the unit will always be occupied. You can't guarantee that the market will always let you charge the rent you want. You are essentially buying a home and starting a business ...
keshlam's user avatar
  • 47.5k
4 votes

Do lenders consider stocks and bonuses as part of your income?

My experience it that if you can show it to be consistently part of your income, then yes. Some banks have special deals for employees of some larger companies where they wave the tenure requirement. ...
littleadv's user avatar
  • 176k
3 votes

How to calculate principal and future payments on a historically underpaid loan amortization?

A rough way to "settle up" would be to just calculate the total shortfall ($25 * N payments) and give that in a lump sum. The only thing the lender would be out on is the accrued interest of ...
D Stanley's user avatar
  • 136k
3 votes

Optimizing between Mortgage and Bonds

it seems like because mortages are simple interest and GICs are compound, No, mortgages are compound interest. If you were to not make any payments, then the amount owed would grow at an exponential ...
Acccumulation's user avatar

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