I'm going to have an extra $350 a month thanks to my lender refinancing my mortgage. Was thinking of using the extra money to pay off my loan early. My car loan is 2.69% with a balance of about $9500. The loan interest is so low that not sure if it worth pay off early but then again, banks are not paying much in interest these days.

So what do you guys think?

 

Take the $350.00 and pay that much more on your refinanced mortgage. You'll save more on interest on a house mortgage than paying off the car. I'll bet if you do that each month, you'll knock off 7 plus years off of your total mortgage, or more if your loan length is 25 years or more. I did the same thing 2 years ago. Refinanced the house to 4.95%, then with the money I was saving from the original 7.9%, I added that to the monthly mortgage payment. I went from a 15 year note down to 11 years so far, If I continue for 3 more years, I'll have the house paid off in 7 1/2 years.

The extra money paid goes directly to principle, lowering your balance. It's great. I hope to live long enough to enjoy the mortgage free life. My son thinks he'll benefit too. He thinks he'll get the house when I kick the bucket. I threaten him with the point that I'll do a reverse mortgage and spend it all before I die!

 

Thanks Bucko.

Thought of that but the thing is I don't see my townhouse as my living place for the next 20 to 30 years - at least hope not.

 

I wouldn't pay a 2.69 loan off early. Counting inflation, that's free money.

Stuff the cash in your reserves. If you use a debit card and online banking, check out 3% at ratebrain.com. I've been using these accounts for several years now racking up better interest than the local banks/cu's.

 

How long do you plan to live there? Even if you plan to stay maybe 2 to 3 more years, by paying an extra $200.00 a month, your equity in that town home will jump when you do go to sell.

Not much other conditions these days that can net you a decent payback on the extra cash you have.

 

Don't know. I'm actually underwater on my property right now thus the reason lender refinance my mortgage.

 

LOL, Bucko; you are a man after my own heart! Is there any possibility that you were stolen away from Indiana by gypsies many years ago?
Just because no one else mentioned it, may I suggest to the Newpony fella that that extra dough would be best spent paying off any credit card debt, if he should have any. That is where the highest outlay of interest is, and there are no tax deductions such as home mortgage interest provides Just my two cents worth.

 

No credit cards debt either. Only debts are my car loan and mortgage.

 

Now you got me thinking.

 

For what its worth... If you have no CC debt that's great! Your home interest is deductible and the 2.69 on the car is not. Pay off the car first then dump that payment along with the 350.00 or so into the house or put some of that into a reserve fund depending on the security of your job. You can put that into an account earning interest but between paying 2.69 and getting 3% and then paying tax on the 3% you would be better served paying off car and freeing up that monthly payment for other investments.

 

If I were on your shoes, I'd pay off the car first since you already decided that you're not gonna stay there for more than 10 years. When you're paid with the car then next project is the house.

 

Good point about the taxes. I'll just pay the car off and be done with it.