I am a 53 year old single man with very little savings. I paid off all my credit card debt a couple of years ago. Now I have decided to buy a house. My rent has risen to the point that it’s almost as much as a mortgage, which is why I’m buying a home. I am trying to pay off the mortgage as soon as possible.
My credit union credit card allows me to make a balance transfer with 0% no commissions financing once a year. It’s a very high credit limit, and I was thinking about taking it and putting it in the mortgage as a way to pay off the mortgage sooner, rather than making additional payments each month to the mortgage company.
If I do this, I can pay off my card during the year and save a lot of interest on my mortgage. My calculations for paying a weekly principal payment mean the house could be paid off in less than seven years. I think it would be a little better to make a big down payment. I just wanted to know your thoughts on this subject.
Here are my figures: a $ 260,000 30-year mortgage with monthly payments of $ 1,390 a month. If I pay an extra $ 2,500 a month, I can pay them in about seven years. But paying $ 25,000 a year can be a little quicker.
Potential home buyer
Dear Home Buyer,
By taking out a 0% loan on your credit union credit card, you’re stealing from Peter to pay Paul. But in this case, you are both Peter i Pau.
I’m sorry I took everything from Dostoevsky, but you have to be careful how you pay off this loan, as you run the risk of committing to a mortgage and a loan. If you fall behind with the latter, you will probably face significant repayments when that 0% interest is over. In addition, your bank will not accept a credit card payment as a down payment. When you apply for a loan, you will also have a forensic examination of your finances before agreeing on a mortgage.
I’m not the only one who rings the warning bells. “Dangerous curves ahead!” says David Waltzer, a New York-based bankruptcy lawyer. “What happens when you arrive late with a single payment and this zero interest rate goes up to 18%? What happens when you have another difficult period and can’t pay your card on time? Even if you make all payments perfectly to Over time, these credit card companies regularly review your credit. “
Credit card companies have a lot of small print. “You plan to transfer a low-balance debt to another low-balance card. But what happens when this new low-interest offer never arrives? Now you can’t make credit card payments, and you’ll struggle with the mortgage, too,” he added. Waltzer. “I’ve filed tens of thousands of bankruptcies in New York and New Jersey. Many of them were for people who tried to do what you’re describing.”
““You’re stealing Peter to pay Paul. But in this case, you’re Peter and Paul. I’m sorry I took everything from Dostoevsky, but you have to be careful.”
Your monthly base payments seem slightly optimistic. Talk to a financial advisor about your goals and why you became a homeowner. The big piece missing here is your salary and, to a lesser extent, the prospect of an inheritance. Please seek the advice of an advisor before launching. Leave your finances, hopes and dreams bare, especially where you would like to be when you reach retirement age and if you find yourself working beyond the traditional retirement age.
I fully support your desire to buy a home. Suppose you work for another 15 to 20 years, not only will you earn this wealth in your home with your monthly mortgage payments, but your home will probably, or most likely, have increased in value during that time, giving you more options if you want to charge and move to a smaller house. With inflation and, hopefully, a higher salary, you may also find that your mortgage payments become manageable.
You are 53 years old. You don’t to own to repay this loan in seven years and you do not need to incur additional debts. If your mortgage administrator allows it, paying off a regular amount of your mortgage, as you pay interest at the same time, may be more effective than an annual lump sum. For those who can afford to pay more, both are a good idea as long as you make sure you have needs such as an emergency fund.
Waltzer is more circumspect in home ownership than I am. He warns that the interest rate on your mortgage could also exceed 5% if you have a low credit score. “Home ownership costs are always higher than expected,” he adds. “If you’re buying a $ 260,000 home, I guess you’ll reduce it by 10% ($ 26,000). But closing costs will be a little higher. So you’re probably looking closer to $ 40,000. That will be incorporated into the your mortgage? “
Explain all your options: 15 years versus 30 years; the pros and cons of paying more compared to saving that money; insurance and property taxes; home repairs; closing costs; and possible supply wars. The shorter the term, a 15-year mortgage instead of a 30-year mortgage, the lower the interest payment. Still, rates are rising: Monthly mortgage payments with a 30-year mortgage rate and a 20% down payment are about 50% more expensive than a year ago.
And finally, Moneyist is an optimist (most of the time): you may not be single forever.
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