Mortage, extra payments or save up to refinance?
Ill have extra income every month and I would like to get my house paid down enough to refinance in 3-5 years to rent out. I calculated that if I put an extra 800-1200 amonth towards principle I could do this. But then I questioned what I have to go thru to refinance as I have never done this. Woudl it be better to save that extra money every month to put down to refinance?
Public Comments
- Your best bet would be to start making extra payments toward the principle NOW. The reason being is that you will save a ton of money on interest. Mortgage interest is calculated daily against the remaining balance. If you decrease the balance gradually, you will decrease the amount of interest you pay each month. Furthermore, more of your monthly mortgage payment will go to principle. By not paying extra now, you will have thrown away 3 to 5 years of unnecessary interest payments. Then, lump that in with the costs of a refinance and you will be chin deep in unnessary expense.
- Make the extra payments regardless. Nothing bad will happen. Worse case scenario is that your house is paid off quicker and have more equity quicker! Is that really a terrible thing?
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