Help Me Get That Garage A Little Quicker

[Paul M]

Not really a post on home repair but what the heck .. Maybe it'll help me build that two car garage a little quicker 8)

I have recently purchased my very first home and really need to learn a LOT about the ins and outs on mortgages and such!

Heck, I'm not even sure if I have spelled Mortgage right and .. I now have one! LOL

Here is what I would really like some feedback on .. from the experts and from the working slobs Like Me 8)

My payments are $855.00 a month right now. After adding up all of my bills along with the house payment for the month, I will have, at least an extra $500.00 left over.

The Question: Do you think that it would be better to put that $500.00 on the principle every month (bank allows it) or just put it into my savings account?

I don't know if you need any other information than what I have just given? My interest rate is 6.5% on $113,000. (I put $65,000 down so as not to pay PMI)

If anyone has any experience in this, and wouldn't mind sharing your thoughts .. I would be Forever in your debt and Hopefully .. Not The Banks!! LOL

Thanks Everyone,

PM

P.S. Not sure if this info will help: House sits on a 3/4 acre cul-de-sac. (lots of trees and well landscaped ) (No side by side houses here),

Close to interstate and the best schools. Quiet and secluded neighborhood. Value of homes seem to be going up and up.

[John Harlow]

The Question: Do you think that it would be better to put that $500.00 on the principle every month (bank allows it) or just put it into my savings account?

Any payment to offset the principal will have a tremendous effect on the loan term. For example, by simply paying the equivalent of 13 payments a year, a 30 year loan will be reduced by *10 or more years *.

Paying down mortgage will by far exceed any interest gained in a savings account.

[Larry Caldwell]

Both. First, you need a six month cash cushion in case of emergency. Build a savings account of some sort that is fairly liquid, like a 6 month CD. That way, if you get into a car accident and spend a month in the hospital, and several months convalescing, you won't lose everything. Or get laid off. Or whatever.

Then pay off all your consumer debt. If you carry a credit card balance, don't. If you are making car payments, don't. Consumer debt is for suckers.

Then you can start retiring your mortgage faster.

[bumtracks]

yea, what Larry said is what I would suggest too. I religiously paid an extra principle each month of a 30yr mtg, even paid whole yrs at once on principle early on. Mortgage allowed extra principle once monthly in the payment coupon but had to be exacting from next amortization principle schedule so it took a bit of monthly scribbles. Did have a downside,,, married / divorced at just under 10yrs, helped her get a bigger chunk, 50/50 equity split - luckily down payment was taken off top of final proceeds for my pocket, and I had to prove that amount and where it came from with old banking statement showing amount of money withdrawn for down payment matching original sales contract.

[Paul M]

Thank You for your responses.

I guess that I should have added a little more information in my post.

I should have added that I have $5000.00 in savings already.

When I said that I would have $500.00 left to play with, after my bills and mortgage payment .. That is After putting $500.00 dollars into savings and an extra $500.00 on the mortage.

I would still have around $500.00 left.

Should I put That $500.00 into the principle too?

Hope this makes sense?

PM

[JerryMouse]

Sure. You're saying you have $500 at the end of the month for discretionary savings.

A. Put the $500 against anything that is costing you more than 6.5% that the mortgage charges (Visa, Sears, etc.). B. If you can find an investment that pays more than 6.5%, put the money there. Ignore all such opportunities that you learn about from email. C. If you ever travel out of the U.S., or plan to, open an ex-patriot account at a foreign bank using cash or traveler's checks. Your 'get out of town money.' Keep it quiet. Really quiet. Even from your spouse. Especially from your spouse. D. Evaluate the housing market in your neighborhood - talk to realtors. If there is any chance the housing market in your neighborhood will crash (economic downturn, for example), be sure to consider this tendency. E. After all is said and done, paying down the equity is USUALLY a good idea.

[MUADIB®]

Who says He's Married?

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MUADIB®

one small step for man,..... One giant leap for attorneys.

[Paul M]

I am fortunate not to have any credit card, automobile payments or other debts.

Have a 2001 Grand Cherokee limited with only 42,000 miles (paid off)

2001 Chrysler Sebring 24,000 miles (paid off)

NEVER believed in credit cards!!

I only have the normal bills that all of us have, food, electric etc. etc.

My biggest mistake (maybe) is that I never invested into any type of IRA and I am now 52 years old. Maybe a little late to start now. Most companies that I have worked for over the years either never offered any or didn't help out on them. I hope to be starting a new career next week with a very good paying company. It is a subsidary

[Paul M]

Whoops

If you happened to have clicked on the Home link .. Some of the pictures are of my Thomas Kinkade paintings. (the victorian home looking ones)

The lamp is a 120 year old museum piece and that half-bath is in there only to show the wainscot that I put on the walls.

[MUADIB®]

I guess the Lamp is the Crystal one huh?..........very nice piece. I watch for deals on such things also, but no Museum Quality stuff in my house yet..........

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MUADIB®

one small step for man,..... One giant leap for attorneys.

[Andy Asberry]

You have gotten some good ideas. But here is the only one you should follow: talk to an accountant. And not one that has something to sell you.

You are way ahead of many people with $500 a month free to invest. You have many options. One being to buy some rental property if your area is booming. Start a part time business.

[Paul M]