Mortgage Advice..What Would You Do?

[many houseapes]

We have 57,781.38 left on our mortgage....locked in at 6%...no way to refinance in Texas b/c of previously doing so about 10 yrs ago, so not an option there. After fully funding different EF's, building up a stockpile on a variety of things, there is 7,500.00 that we could either hold onto or plunk down on the mortgage. The way I see it, is that if our currency is continually being devalued, it might be better to invest it now in trying to pay on the mortgage...if we were to hold onto it, it might not be worth toilet paper later......but then there is that nagging feeling that even though dh's job is pretty secure (at least we hope it is)....what if we find ourselves unemployed again & we would need that 7,500? (if it isn't TP then). We have been through unemployment and its a scary thing & we somewhat prepared last time. We have been trying to put as much toward the mortgage as possible in addition to our usual monthly payment to try & pay off the debt.......what would you do with the extra 7500?? Russ & Greebo, you're pretty knowledgable able things like this...any suggestions?

[Greebo]

We have 57,781.38 left on our mortgage....locked in at 6%...no way to refinance in Texas b/c of previously doing so about 10 yrs ago, so not an option there.

What? There's no restriction on refinancing based on a loan being *too* old. You would have a hard time getting a refi, however, because you have a fairly small loan.

The way I see it, is that if our currency is continually being devalued, it might be better to invest it now in trying to pay on the mortgage...if we were to hold onto it, it might not be worth toilet paper later......

Really? You think in 10 years our money will be worth poo paper?

but then there is that nagging feeling that even though dh's job is pretty secure (at least we hope it is)....what if we find ourselves unemployed again & we would need that 7,500? (if it isn't TP then).

Question 1: Do you have any other debt?
Question 2: Do you have a large emergency fund?

If the answer to either is "Yes", fix both, in order, before worrying about extra on the mortgage.

[many houseapes]

What? There's no restriction on refinancing based on a loan being *too* old. You would have a hard time getting a refi, however, because you have a fairly small loan.


Really? You think in 10 years our money will be worth poo paper?


Question 1: Do you have any other debt?
Question 2: Do you have a large emergency fund?

If the answer to either is "Yes", fix both, in order, before worrying about extra on the mortgage.

No other debt.
1K medical EF
1K EF
200 pet EF
800 house EF
2K savings
7500 to either live off of in case of unemployment or put on the mortgage

[Greebo]

No other debt.
1K medical EF
1K EF
200 pet EF
800 house EF
2K savings
7500 to either live off of in case of unemployment or put on the mortgage

With no other debt but house debt, your next focus, in my opinion, should be on building up a fully funded 6 month EF.

[Russ]

How many years left on the current mortgage?

[mndtrp]

With no other debt but house debt, your next focus, in my opinion, should be on building up a fully funded 6 month EF.

Yeah, $1000 isn't much for an emergency fund. All emergency funds only totals $5000. While that's better than a lot of people, it likely wouldn't last very long.

[many houseapes]

How many years left on the current mortgage?

20 yrs left

[KeithBC]

I'm not trying to talk you out of building up your emergency fund, but with 20 years left on the mortgage, putting extra money into the mortgage is a really, really, REALLY good thing to do. Every dollar you put into the mortgage now will save you multiple dollars over the life of the mortgage. It is one of the best investments you can make.

[craftypam]

I don't live in your state so I don't know how it works, but I got a fixed rate home equity loan (not line of credit) to pay off my mortgage 7 years ago. The line of credit has a lower interest rate, but can go up. I was going to check with the bank, but it won't make any difference if your state has different rules.
My dh has had a seasonal job for 36 years and I would never spend (paying down mortgage) all the money; what would you do if something happened to your dh's job?

You just never know in this economy. Of course; you know your situation first hand and we don't know every detail.

[many houseapes]

I'm not trying to talk you out of building up your emergency fund, but with 20 years left on the mortgage, putting extra money into the mortgage is a really, really, REALLY good thing to do. Every dollar you put into the mortgage now will save you multiple dollars over the life of the mortgage. It is one of the best investments you can make.

since June of last year, we have been adding anything we could to the principal, whether it be $25 or $300 each month & are encouraged to finally see some results....but I am hesitant to dump what we have set aside for our "unemployment insurance" into the mortgage. It is tempting to do b/c we want to be rid of this debt so badly.

[KeithBC]

That's great that you have been doing that.

So you would have some numbers to go on, I ran your numbers through an online mortgage calculator. Right now, about 75% of your monthly payment is interest, and 25% is principal. That means every dollar extra that you put into it takes $4 off the total you pay over the life of the mortgage. One extra monthly payment takes four months off the life of the mortgage.

[TheRootedNomad]

With no other debt but house debt, your next focus, in my opinion, should be on building up a fully funded 6 month EF.

I agree with Greebo on this one. I think your EF needs to cover a minimum of 6 months worth expenses, all expenses, before plunking down on the mortgage. We just went through a VERY unexpected 6 month job loss period and the haveing the security of the 6 month EF in place made a world of difference.

What? There's no restriction on refinancing based on a loan being *too* old. You would have a hard time getting a refi, however, because you have a fairly small loan.

From my own personal experience in the re-fi world I would also agree with this. I think you may still be able be able to find a re-finance for a 15 year however, the lower you drop the harder they are to come by. When we dropped to $50k we could still find 15 year fixed but were looking for a 5 or 10. We didn't find anything that made it worth the switch as most places wanted us to take additional money out to give us lower intrest rates for a 10 and the 5 was a lost cause all together unless we wanted to switch to a different type of loan.

[Russ]

(ROUGH MATH)

At todays rates, if you refinanced, you would save approximately $58/month on a 20 year loan.

Adding $50 average/month extra to your current mortgage knocks off almost 44 months if you started this month.

If you waited 1 year while building your FFEF and then put $100 (average/month) you would knock about 69 months off your current mortgage.

[Greebo]

Saving money on the mortgage long term is good.

Not losing the house in an emergency cause you have money stock piled is better.

These are rocky times - build up a secure EF to ensure you can keep up payments if things go south FIRST, then worry about saving money in the long run.

Losing the house to foreclosure in a rough time will cost you a lot more than the interest saved by paying early w/o an EF.

[dinah]

i'm not an expert at stuff like this at all, but my first thought was that you should keep 5K for an EF and put the remainder, about 2500 on the mortgage.

these are rocky times and it's good to have savings.