O.T. Is it smart to pay down your principal on your house if you will move in 2 years

[Iceman]

I am trying to figure this out and I think it doesn't matter. If you are planning on staying in the house over say 10 years than yes.

If you plan on leaving in a few years than you are in same boat at closing, right.

Anyone know the right answer to this. i am thinking about paying off some of my principal on my home but it seems when I figure it out on paper than I am in the same boat at closing( in 2 years) no matter what route I choose.

Anyone understand this crap

 

[CalRedwood]

If your current rate is decent say 5-7% why not stick the extra cash in an international mutual that should get you 10-20%. I don't know the answer for you-just thinking out loud with ya.

 

[Fishhead]

If your current rate is decent say 5-7% why not stick the extra cash in an international mutual that should get you 10-20%. I don't know the answer for you-just thinking out loud with ya.

International mutual for 10-20%?

Can you give me a few examples of this, thanks.

 

[WVU]

if you don't have 20% equity in your house then you should pay the mortgage down so that you don't have to pay PMI (mortgage insurance)

 

[Fishhead]

if you don't have 20% equity in your house then you should pay the mortgage down so that you don't have to pay PMI (mortgage insurance)

Excellent and sound advice!

 

[TTinCO]

if you don't have 20% equity in your house then you should pay the mortgage down so that you don't have to pay PMI (mortgage insurance)

There are plenty of ways around PMI-just get a good mortgage broker (Check around-there are a lot of crooked ones). I'm lucky enough to have a good friend who is one, so I don't have to worry about getting screwed over.

Don't pay PMI-PERIOD!! It's not a writeoff like interest or takes, it's LOST MONEY that you do not have to pay if you do it right.

I should give him a call & get the details for us--I've never worried about it because that's his gig.

 

[WharfRat+]

I'd be interested in details on how to get around PMI. I'm looking to buy my first house in about 6 months and will probably only put down 10%.

Thanks!

 

[cincy_]

International mutual for 10-20%?

Can you give me a few examples of this, thanks.

I have my 401k in FOSFX (Fidelity Overseas) and it has been earning me close to 20% per year over the last 3.5 years and 25% over the last 3. I don't know how I found it. Just dumb luck.

 

[WildBill]

Many loans now are 80/10/10. You put down 10%, get a HELOC for 10% and then the standard 80% loan. Secret is not to pay anything more than your required payments on a house. Pay equity down as slowly as you can. Home loans are the best thing to carry, only time you pay them off is when you are miles ahead of the game. You have years of emergency money set aside, you have your retirement well funded, you have other needs taken care and still have cash, then you can go ahead and put some extra equity in. Not before doing all that. Last thing you want to do is pay down the loan and then need the money because you lose a job or something like that.

 

[Iceman]

Many loans now are 80/10/10. You put down 10%, get a HELOC for 10% and then the standard 80% loan. Secret is not to pay anything more than your required payments on a house. Pay equity down as slowly as you can. Home loans are the best thing to carry, only time you pay them off is when you are miles ahead of the game. You have years of emergency money set aside, you have your retirement well funded, you have other needs taken care and still have cash, then you can go ahead and put some extra equity in. Not before doing all that. Last thing you want to do is pay down the loan and then need the money because you lose a job or something like that.

my point exactly. We are always told to pay down the principal but if you are leaving after 2 years, what is the point. That money you pay now you are most likely going to have to bring down to the closing table if you wait. What is the difference?

 

[Fishhead]

ICE MAN--my thinking is it comes down to ones personal financial situation at the time.

As just ONE example, if you have money that is immediately availbale to you that is liquid and can be obtained instantly for 3-6 months of living expenses and/or some unexpected tragedy, one may want to throw a little extra towards the principle IF that EXTRA money above this 3-6 month/tragedy line is earning one less than say 3% someplace else currently.

I think in your short time frame of only 2 years, it really makes little difference one way or the other really unless we are talking about a considerable sum of say at LEAST $10,000.........I would just probably take the money and use it to get a bonus offshore of 10-30%.

 

[Fishhead]

ICE MAN--my thinking is it comes down to ones personal financial situation at the time.

As just ONE example, if you have money that is immediately availbale to you that is liquid and can be obtained instantly for 3-6 months of living expenses and/or some unexpected tragedy, one may want to throw a little extra towards the principle IF that EXTRA money above this 3-6 month/tragedy line is earning one less than say 3% someplace else currently.

I think in your short time frame of only 2 years, it really makes little difference one way or the other really unless we are talking about a considerable sum of say at LEAST $10,000.........I would just probably take the money and use it to get a bonus offshore of 10-30%.

Remember, as WB stated, there is no rush to pay down your mortgage if you are a good money manager.........you are probably paying 7.5% interest at tops for your mortgage right?, plus you are getting a nice tax deduction on the interest you pay to even further lower this figure!


Shoot, one year CD's are fast approaching a nationwide average of 5% APR here very shortly nationwide.

 

[TheRightWing]

I'd be interested in details on how to get around PMI. I'm looking to buy my first house in about 6 months and will probably only put down 10%.

Thanks!

very easy, talk to your mortgage advisor and tell him you'd like a 80-10-10 program......1st,2nd/Line of credit mortgage is more cost effective than paying PMI.

 

[Dante]

always pay MORE towards the principal and go with a 15Y loan not a 30...you will save a bazillion in interest refinancing to a 15Y loan

 

[Iceman]

always pay MORE towards the principal and go with a 15Y loan not a 30...you will save a bazillion in interest refinancing to a 15Y loan

believe me I 100% agree with you but if you are leaving in 2 years you will be in the same boat. I figured it out on paper and looks like the true interest doesn't really kick in until you have paid more than the principal of the house. I have no problem paying a big chunk or having no equity at closing knowing I put the money to use doing something else with it.

 

[RapStar]

Over the last several years in Florida we've been blessed with SICK returns on real estate. People are putting 10% down, then 3-6 months later taking that equity plus the 10 - 50k it went up in value, putting it into another property, and continuing. Some people may call this gambling...but people that know what their doing and can actually rent/sell/hold their properties have made a fortune. In this case, going with a small payment for a short term profit (under 5 yeas) makes sense. Why pay down the mortgage if you know in the grand scheme of things you are hardly denting it before you sell? thats the mentality here. Although its slowed down drastically since the hurricanes. Just my two pesos.

 

[NorthernStar]

I'd be interested in details on how to get around PMI. I'm looking to buy my first house in about 6 months and will probably only put down 10%.

Thanks!

You take a first mortgage out for 80% of the purchase price and a second mortgage out for 10%. Or if you want to hang onto your cash which I like to recommend, raise the purchase price and have the seller pay the closing costs and prepaids, and increase the second mortgage to 15 or 20%.

 

[Sportsrmylife]

International mutual for 10-20%?

Can you give me a few examples of this, thanks.

Look at some international funds that target Japanese industries and companies right now. Having your money in oversees markets is a great place to have your money!!!! Some great DD returns the last few years and the US markets have been flat!!