An individual has a $120,000 30 year mortgage at 6% fixed. This individual also has a floating rate Home Eq - home eq mortgage
A person has a mortgage of 120,000 dollars for 30 years at 6% fixed interest rate. This person also has a variable interest rate home equity line of credit of $ 20,000. The current rate for this loan is 8.5%. Only interest payments are required on the home equity line. Everyone has the discretionary income increased $ 500 per month. Under the assumption that prices remain constant, no longer makes economic sense to pay for the mortgage or home equity loan first?
Wednesday, January 6, 2010
Home Eq Mortgage An Individual Has A $120,000 30 Year Mortgage At 6% Fixed. This Individual Also Has A Floating Rate Home Eq
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2 comments:
It would be better to pay the first HELOC. The closer to the principle of the payment is made minus the minimum amount for payment. If you continue paying the same price (+ $ 500) must be quickly eliminated.
When you extra you pay off your mortgage to fixed rate, payment remains the same, only the low equilibrium.
If your income changes and you need the extra cash flow, payment HELOC before, and you need to get your money back, must be able to withdraw from HELOC. They can not be redeemed the mortgage on the 1st.
HELOC is also a higher rate and may increase further so that will be eliminated sooner the better.
Good luck,
Greg
It would be better to pay the first HELOC. The closer to the principle of the payment is made minus the minimum amount for payment. If you continue paying the same price (+ $ 500) must be quickly eliminated.
When you extra you pay off your mortgage to fixed rate, payment remains the same, only the low equilibrium.
If your income changes and you need the extra cash flow, payment HELOC before, and you need to get your money back, must be able to withdraw from HELOC. They can not be redeemed the mortgage on the 1st.
HELOC is also a higher rate and may increase further so that will be eliminated sooner the better.
Good luck,
Greg
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