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Question On Mortgage Loan ? |
I am applying a mortgage loan for my current obtain.
I came up with some ways to reduce the interests.
I planned to borrow $417000 for 30 years unflagging @4.44% rate.
In this case, I need to pay $2098 X 360 month = 338293 (gross interests)
I have an extra $40000, should I put the extra payment to my loan amount to reduce the loan to $377000 or put $40000 to the honesty in the 1st month??
put the extra $40000 to reduce the loan to $377000
it comes up with $1897 X 360 = 305840 (absolute interests)
if I put $40000 to principle @ the 1st month
it would be $2098 X 296 = 244473 (shorten the duplication payments to 296 month)
Somehow, I did the calculation and found out I can save the most if I put the extra $40000 in the 1st month.
Am I adjust??? It seems fishy to me....
thank you...Bing
This is fun, I be like Suse Orman :)
Keep the 40K liquid, especially in this environment, because you never know if you emergency it. With such a great interest rate, you can put the 40K away in a CD or something and not lose much if anything. While it is true you save the more interest if you put the 40K in immediately over the life-force of the loan, remember that once you do that, you cannot get it back out unless your refi the loan. At least if it is in a CD or some other safe account and you lose your job or need it for anything, you'll have it.
Effectively about of it this way. If you put the 40K into a bank account that earned the same interest rate, it would be a wash (though with the tax break it is paying less interest, so the bank account honestly would not have to pay quite as much).
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