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Astro7x posted:So a few weeks ago I was talking about paying more mortgage off early and potentially putting $120K towards the home vs paying off the whole thing of close to $166K
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Jan 27, 2020 17:59
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what's the lifetime interest payments for recasting vs. paying off or refinancing to a much shorter term with similar monthly payments?
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Jan 27, 2020 18:00
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Looking for some general advise/confirmation on my retirement situation. I'm 37, make 130k a year, I have 60-65k in my fidelity 401k from previous jobs which I realize is not great at all, so I'm trying to do some catch up. My new job offers 4% 410k matching, so right now I'm contributing 6%, probably will bump that to at least 8 maybe 10 or more. They also offer a Roth 401k which I'm not super familiar with so could use some guidance on that. I've asked HR for information on the exact details on the Roth 401k. In terms of liquid savings my wife and I have about 120-130k in money market accounts. I also have a traditional IRA and taxable brokerage accounts which I've been playing around with using fun bucks at the end of the month. At the moment I'm finding I have a decent amount of cash left over at the end of the month. Right now I'm trying to dump at least 1k-1500 into savings, and then with a few hundred I've been buying dividend stocks and index funds/mutual funds. I think I screwed up a bit by purchasing the dividend stocks in the taxable account instead of the IRA but it's only like $1500 total so not a huge deal. My understanding is those div stocks should go in the Trad IRA. In the Trad IRA I have like $3k in Voya mutual funds so nothing crazy.
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Jan 27, 2020 18:03
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you have way too much cash on hand follow standard workflow assuming that you are focused entirely on maximizing retirement savings 1) emergency fund = x months spend (6 should be fine) 2) contribute to 401(k) to achieve maximum matching 3) max IRA 4) contribute to 401(k) up to max
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Jan 27, 2020 18:12
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SnatchRabbit posted:Looking for some general advise/confirmation on my retirement situation. I'm 37, make 130k a year, I have 60-65k in my fidelity 401k from previous jobs which I realize is not great at all, so I'm trying to do some catch up. My new job offers 4% 410k matching, so right now I'm contributing 6%, probably will bump that to at least 8 maybe 10 or more. They also offer a Roth 401k which I'm not super familiar with so could use some guidance on that. I've asked HR for information on the exact details on the Roth 401k.
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Jan 27, 2020 18:20
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its 130k this year and you may not be negatively impacted, just check
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Jan 27, 2020 18:26
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Hoodwinker posted:You end up paying more overall interest doing this, I believe, is the downside. Somebody correct me if I'm wrong but that was my understanding. Otherwise you would just recast your mortgage after every payment if they would let you. I think you've got it backwards. The two obvious downsides are: money isn't available for investment in other things (which may provide better returns purely based on numbers) and it usually costs some up-front fee for recasting (but usually small compared to benefit if you make a significant extra payment). I'm using a spreadsheet I got from a potential mortgage provider when I was buying my house (nice guy, talked to him for 4-6 hours total but got a loan from somebody else who had better rates - sorry, Bill). Assuming 30 year fixed with 200k principal and 4% interest, you pay in total 144k in interest, roughly, over 30 years. After 5 years though, assuming you just made regular payments, you've paid 19k in principal (181k balance) and 38k interest. If you make a 31k payment to get your balance to 150k and recast, that's the same as taking a "new loan" for 150k at 4% interest with a 25 year amortization. Your payment goes from 955 a month to 792 a month. If we calculate the "new loan" with these terms, you pay a TOTAL of 126k interest over 30 years (includes 38k you paid for first 5 years - it's 87.5k just for the "new loan") Saving: 18k interest over 30 years. In addition, your monthly payment goes down 163 dollars. If you put those 163 dollars towards your principal, your loan is now paid off in 23.5 years with a total of 101k interest paid. Notably, this is exactly the same as making a 31k payment in year 5 without recasting. If you took that 31k and put it towards a TAXABLE investment, assuming 15% LTCG tax rate, you'll need around 5.4% returns to break even. If you took that 31k and bought a bunch of coke and hired some hookers, you'll have a story you can tell for the rest of your life. That's priceless. totalnewbie fucked around with this message at 18:54 on Jan 27, 2020 |
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Jan 27, 2020 18:31
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SnatchRabbit posted:I'm 37, make 130k a year, I have 60-65k in my fidelity 401k from previous jobs which I realize is not great at all, so I'm trying to do some catch up. My new job offers 4% 410k matching, so right now I'm contributing 6%, probably will bump that to at least 8 maybe 10 or more. They also offer a Roth 401k which I'm not super familiar with so could use some guidance on that.
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Jan 27, 2020 18:34
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KYOON GRIFFEY JR posted:you have way too much cash on hand Assuming I had a trad IRA, I should be maxing the $5k per year with, say dividend stocks, funds, correct? My wife was saying that while the account is tax sheltered we wouldn't see any tax benefit to dumping the lump sum this year. Correct? Splinter posted:If you really want to catch up, bump your contribution to 15%. At 15% of 130k you'll hit the 19.5k yearly 401k contribution limit. Roth vs traditional mainly comes down to when you get the tax break. With traditional, your contributions are deducted from your taxes the year you contribute, but you are taxed on withdrawal at normal income tax rates. With Roth, your contributions are made post tax, but withdrawals are tax free. Thank you, this was helpful.
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Jan 27, 2020 18:37
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And yes, I think if you're sitting on 1-1.5k/mo take-home left over, that's easily enough for you to bump your 401k to hit the contribution cap every year. You won't lose as much take-home pay as you think because your contributions are pre-tax. That's your first step before you keep dabbling in any more taxable accounts (assuming your other tax-advantaged space is also filled). The general suggestion is to do 401k + Roth IRA mainly as a hedge against future tax rates. vvv and that totalnewbie fucked around with this message at 18:42 on Jan 27, 2020 |
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Jan 27, 2020 18:39
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tax efficient allocation is a lot less important than maximizing contributions which are $6,000 each for both you and your wife (assuming she has income equal to $6k annually; if less, she can contribute her entire income) trad contributions are not tax deductible at your income level, yes, which is why most people elect to convert their trad ira contributions to roth, which is basically as easy as pressing a button in vanguard at least.
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Jan 27, 2020 18:41
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Astro7x posted:You can also recast as many times as you want. Check the terms, there's likely a minimum amount you have to pay before they'll recast it. Like an extra $1k won't do it, but maybe $20k will. Hoodwinker posted:You end up paying more overall interest doing this, I believe, is the downside. Somebody correct me if I'm wrong but that was my understanding. Otherwise you would just recast your mortgage after every payment if they would let you. In a very specific scenario you're right. By recasting and paying the new, lower minimum payment you will pay more in interest than just paying down principal and continuing to pay the higher original minimum payment. But recasting will end up with less interest paid than had you not put any money in at all and left the loan as-is. edit: also I'm pretty sure that recasting after every monthly payment is functionally equivalent to the original amortization schedule (assuming you're paying the minimum payment). brugroffil posted:what's the lifetime interest payments for recasting vs. paying off or refinancing to a much shorter term with similar monthly payments? While not impossible to generalize, you'd really need some numbers to get any answer that you can understand. Refinancing will likely have closing costs. Whether it does or not, the answer will still depend entirely on the new rate and how much time is left. DaveSauce fucked around with this message at 18:53 on Jan 27, 2020 |
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Jan 27, 2020 18:46
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Boof Bonser posted:Questionable stuff! You've already been dunked on enough but I wanted to give some actual concrete feedback. Trying to improve disadvantaged people's welfare by controlling their behavior has pretty much never worked, even with the absolute best possible intentions. Those who try usually find out in hindsight that they completely misunderstood the reasons for those behaviors in the first place, and that those disadvantaged people are actually acting far more rationally in their situation than what was originally assumed.
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Jan 27, 2020 18:51
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SnatchRabbit posted:Assuming I had a trad IRA, I should be maxing the $5k per year with, say dividend stocks, funds, correct? My wife was saying that while the account is tax sheltered we wouldn't see any tax benefit to dumping the lump sum this year. Correct? What are the actual funds (ticker or name) that you are buying when you refer to 'dividend stocks'? 401ks and IRAs are just containers, and they're as effective as what you're putting into them.
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Jan 27, 2020 18:54
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KYOON GRIFFEY JR posted:tax efficient allocation is a lot less important than maximizing contributions which are $6,000 each for both you and your wife (assuming she has income equal to $6k annually; if less, she can contribute her entire income) I believe if they file MFJ, they should be able to invest $6,000 in both IRAs.
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Jan 27, 2020 18:54
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Hoodwinker posted:You end up paying more overall interest doing this, I believe, is the downside. Somebody correct me if I'm wrong but that was my understanding. Otherwise you would just recast your mortgage after every payment if they would let you. Yes, you pay more overall interest if you take the loan to the full 30 years. But the plan is to pay it off in like.... 2 to 5 more years. I would never recast and take it to full 30 years. Let me just use some round numbers to make this easy. Don't Recast: Assume $5,000 in interest payments each year on average. My plan is to pay off the mortgage in 5 years. That's $25,000 in interest paid if I just make extra payments and do not recast. Recast: Making that lump sum payment and recasting will reduce my interest payment to $1,200 per year on average. Pay off the mortgage in 5 years. Over 5 years that's $6,000 in interest paid. So I save $19K. totalnewbie posted:I think you've got it backwards. The two obvious downsides are: money isn't available for investment in other things (which may provide better returns purely based on numbers) and it usually costs some up-front fee for recasting (but usually small compared to benefit if you make a significant extra payment). Chase has told me there is no fee to recast, and I can recast as much as I want. I just need to fill out a form. I've read that other banks charge to recast, limit it, or only allow recasting after you have so much left in your mortgage. That is not the case with me. totalnewbie posted:I'm using a spreadsheet I got from a potential mortgage provider when I was buying my house (nice guy, talked to him for 4-6 hours total but got a loan from somebody else who had better rates - sorry, Bill). Yes, you kind get it. Except I am looking to make a much larger lump sum payment and get the mortgage payment reduced much more, and then pay it off much faster. The point is that I want to pay off the mortgage early, and recasting will reduce how much interest I pay over the next few years. Basically, I've had the conversation with my wife of Invest vs. Pay off the mortgage, and she is definitely not comfortable with putting 120K into the stock market. And neither am I. However, I am more likely to do something like... put 80K towards the house/recast and 40K into a taxable stock market account. I just haven't worked out the numbers yet. This recasting thing just threw me for a loop because I didn't know it was possible. We're maxing out our tax free retirement accounts and 529 account for our 1 kid (with no more on the way), I have an employer SEP IRA which gets annual contributions of varying amounts, and she has a $75K pension if she retires at 60 as a teacher. I feel like there is something to be said with peace of mind of having zero debts which would make her more likely to want to use money to invest as our savings builds back up and we essentially have extra cash on hand again. She just got a 10K raise for getting her masters degree (which we have zero debt from), our kid just started kindergarten so we have 20K that we are not paying in daycare costs anymore. And paying off the mortgage will free up another 10K per year. I think we are in a good financial position where I don't need to take a gamble on investing the money. But I'm totally open to hearing takes on why this is a bad idea because I am learning things from you guys
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Jan 27, 2020 19:09
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GoGoGadgetChris posted:What are the actual funds (ticker or name) that you are buying when you refer to 'dividend stocks'? T, MBT, PEGI, AMRN, F, BPY, NLY. Nothing super crazy to my knowledge, really just stuff that I saw on Motley Fool. And the sum total for these stocks are under like $1k or so. This was just me messing around. This is in the taxable account (hence me screwing up) In the Trad IRA I have NMCAX, VYCAX, VYMQX all totaled to like $3k. Both accounts are with Etrade if that makes a difference.
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Jan 27, 2020 19:10
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Ranidas posted:I believe if they file MFJ, they should be able to invest $6,000 in both IRAs. My understanding as well. Sure hope that's right...
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Jan 27, 2020 20:00
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It's called a "spousal contribution." You can contribute the 6k for a non-working spouse as long as you make the income to do so (i.e. you have to make 12k to contribute 12k total - 6k for each person's IRA).
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Jan 27, 2020 20:13
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SnatchRabbit posted:T, MBT, PEGI, AMRN, F, BPY, NLY. Nothing super crazy to my knowledge, really just stuff that I saw on Motley Fool. And the sum total for these stocks are under like $1k or so. This was just me messing around. This is in the taxable account (hence me screwing up) if you're gonna gamble at least make it fun
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Jan 27, 2020 20:37
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KYOON GRIFFEY JR posted:if you're gonna gamble at least make it fun Well, the whole point was to NOT gamble so I guess I screwed up there. I guess the tickers I mentioned should go in the trad ira then?
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Jan 27, 2020 20:57
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SnatchRabbit posted:Well, the whole point was to NOT gamble so I guess I screwed up there. I guess the tickers I mentioned should go in the trad ira then? Do you own any shares of an index fund tracking the total US Stock Market or the S&P 500 Index? Do you own any shares of a "Target retirement 20__" Fund? I got a suspicion you might be at Level Zero retirement planning but you'll be in an excellent spot in no time with your income.
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Jan 27, 2020 21:00
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bro, no stock picking is gambling. keep your retirement in a three fund setup whether that's in your IRA or 401k. i would also get out of etrade and get over to Fidelity or Vanguard for low/no ER index funds. if you want to gamble and pick stocks outside of your retirement, at least do it in a fun way. why are you holding F? what do you know about F?
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Jan 27, 2020 21:00
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quote:Nothing super crazy to my knowledge quote:really just stuff that I saw on Motley Fool These are mutually exclusive stances.  Serious hand-wavey answer though: the problem here isn't where you got the info or stocks chosen from, but that you're looking at individual stocks at all for retirement purposes. You want your retirement money to grow over time with compounding interest, and you want it to be there when you retire. If one stock goes bust and it made up 10% of your investment, you're down a ton of money all at once (and depending on how it went bust, you may never get that money back). If you're heavy in one sector and the sector crashes, that can be even worse. Mitigate individual stock risks with a broadly invested fund. It's what they're there for. If one stock goes bust in a fund that is mimicking/mirroring the S&P500, it makes up a miniscule percentage of your total portfolio. If a sector goes, sure it'll hurt a bit more, but it's not going to wipe you out or leave you with a decade's worth of lost compounding. The easiest thing you can do (after doing some reading and asking questions based on your reading to make sure you understand) is to put your retirement investments into a low E.R target date retirement fund. Whether that's through Vanguard, Fidelity, etc isn't a big deal as much as it is checking the E.R and making sure the fund is broadly invested. Target Date funds (or whatever they choose to call them) adjust for risk as you get closer to your retirement date, so that you go from riskier stock investments in your youth to more bond/cash approaching retirement. Also: For almost everyone in America, investing should be loving boring as hell. Once you figure out the appropriate investments and do your homework, the general reaction should be "Wait, that's it? I just put the money there and ignore it [until major life changes occur] ? WTF would I ever pay an active fund manager for?" Sundae fucked around with this message at 21:44 on Jan 27, 2020 |
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Jan 27, 2020 21:41
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same in europe honestly, just buy ETFs of your favorite funds and that's it.
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Jan 27, 2020 21:58
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Another way to reframe it, individual companies – even big ones – can and do go to 0 (AIG, Enron, WorldCom, Lehman, etc.), but the S&P 500 has always recovered. If the S&P goes down for an extended period of time, the government will probably step in, making it a decent insurance. And if the S&P 500 goes to 0, your wiped-out retirement account will probably not be your primary concern.
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Jan 27, 2020 22:02
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Just be aware that whatever money you put in can have 30% or so lopped off, but it'll most likely recover and more if you wait long enough. The main problem is that 'long enough' can be a very long time
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Jan 27, 2020 22:07
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drainpipe posted:And if the S&P 500 goes to 0, your wiped-out retirement account will probably not be your primary concern. Good post. I appreciate this and read every word of the thread to internalize it into my tiny horse brain. This time I've learned my lesson and will not make the same mistakes. Watch this space while I do amazing whinnies and back-kicks all over the old me's retirement planning. Based on your advice, I've withdrawn all my 401(k) to make sure I don't have it in the S&P500 because it's going to lose everything if it goes to zero. Instead, I've invested in a broad spectrum of REAL AMERICAN STOCK. That is to say, I've invested it 100% in the Daytona 500. I understand that 500 laps gives me plenty for my stock car investments to recover to first place, and in the worst case if things crash and burn spectacularly, at least I've supported the American economy. However, apparently I have very limited opportunities to cash out my investments since Daytona runs only once per year? Now that all my money is tied up in these investments (thanks a lot for the bad advice, guys), I need to figure out how to afford new cloppers so that I can go pull my carts at work and at marathon cart-pulling tournaments. On top of that, there is a marathon cart-race at Daytona this year. I propose that I take a HELOC to buy new shoes, save $3.00 or so to give my foals some salt lick and pizza, and then perhaps I gallop on down to Daytona to check on my investments and maybe compete in the cart race. When I win, I'll immediately pay off the HELOC with my earnings and it'll have been a free trip. Hard to argue with the savings. Also, I've already taken out the HELOC so you might as well just agree with me, okay? My stable is mortgaged so there's not much choice but to hit the ground running and gallop my gallopiest in the name of profit and retirement. Wish me luck, guys! I still don't know why I ever bothered listening to any of you. You never agree with any of my plans and only give advice that makes me feel constrained and limited in what I can afford. You're all a bunch of buzzing flies around my ears, desperate to see me fail and bite my tail. Zaurg But A Horse fucked around with this message at 23:29 on Jan 27, 2020 |
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Jan 27, 2020 23:27
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why did you edit that cringy rear end post
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Jan 28, 2020 00:00
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That post isn't scoring well in the Gallup Polls
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Jan 28, 2020 00:03
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please knock Mom! posted:why did you edit that cringy rear end post Go back to oh wait you can't.
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Jan 28, 2020 00:45
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Astro7x posted:The point is that I want to pay off the mortgage early, and recasting will reduce how much interest I pay over the next few years. Check my post again; I made some edits. You can run through my calculations but if you don't change your payment amount then there is no benefit to recasting after your lump sum payment. If you recast then the benefit you get is that you can reduce your mortgage payment - and then over 30 years, you pay less taxes.
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Jan 28, 2020 03:36
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Zaurg But A Horse posted:Good post. I appreciate this and read every word of the thread to internalize it into my tiny horse brain. This time I've learned my lesson and will not make the same mistakes. Watch this space while I do amazing whinnies and back-kicks all over the old me's retirement planning. Lmao
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Jan 28, 2020 05:24
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totalnewbie posted:Check my post again; I made some edits. Yes, I know that recasting only makes a difference if you make extra payments after you recast. I would never recast and pay the minimum. I'd probably pay off the balance in 2 years at the rate we are saving, especially with having an extra $7,500 each year saved from recasting.
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Jan 28, 2020 06:15
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totalnewbie posted:Check my post again; I made some edits. The benefit in recasting is that you can drop your monthly payment down if/when necessary. While a lump sum vs a recast is functionally equivalent (IF you are paying the same minimum payment), this is a key part of it. You may not need that cashflow now, but unless you can predict the future you never know when you might stumble on to hard times and have to trim down your budget. If it's a handful of forms and zero fees, why NOT recast? totalnewbie posted:If you recast then the benefit you get is that you can reduce your mortgage payment - and then over 30 years, you pay less taxes. OK I REALLY don't follow this part. Can you explain? If you're taking the mortgage interest deduction, then you would pay more in taxes by recasting since you reduce your deduction (but it would be well offset by the interest saved). If you're talking about taxes with regards to recasting vs. investing in a taxable account, then I guess technically yes you're "paying less" in taxes, but you're not earning anything either. You're paying down a known debt, which is a return in and of itself, but taxes on investments are only due on the gains. So as long as your rate of return is at least ~20% higher than your mortgage rate, you're coming out ahead by investing. And of course you can improve that with tax loss harvesting if you're feeling frisky. I'm not advocating that OP invest instead of recast, just trying to clear up what we're talking about.
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Jan 28, 2020 14:01
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DaveSauce posted:
Oh my god, the explanation is so simple. I said taxes but I meant interest. Obviously. (oops)
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Jan 28, 2020 15:32
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I did a big effort post in the home buying thread as I recall about recasting. It nukes all future compounding interest savings from prepayment of principle but gives you a lower monthly obligation. Your payoff date becomes the original one from the mortgage. That's the trade. You can then, outside the recast, choose to pay more than your new payment per month to keep the interest savings rolling while maintaining the flexibility of the lower payment. I haven't read the last few pages though, sick babies are the worst.
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Jan 28, 2020 16:00
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H110Hawk posted:I did a big effort post in the home buying thread as I recall about recasting. It nukes all future compounding interest savings from prepayment of principle but gives you a lower monthly obligation. Your payoff date becomes the original one from the mortgage. That's the trade. That's exactly what I am saying. For example, using round numbers for sanity, you have 160K left on the mortgage and 23 years left, make a 120K lump sum payment, then recast. Your monthly payment is now $250 instead of $850, and you owe 40K on the mortgage over the next 23 years, but the years are sort of irrelevant. You're yearly mortgage obligation goes from $10,200 to $3,000. So you're putting an additional $7,200 in the bank each year and have 40K left on your mortgage. Your interest paid each year also goes down from $6,000 to $1,500 per year after recasting during those next few years. You continue to make extra payments, and put that money you banked towards your mortgage as that extra payment. In about 4 more years, you've paid off the mortgage because you've banked about 30K by recasting and making additional payments, and made about 6K in principal payments are part of your regular payment. Putting you at about 36K paid of that 40K left, throw another 4K at it... you're done with your mortgage in 4 years. Instead of paying 24K in interest by not recasting over those 4 years, you paid about 6K by recasting. So you save about 18K in interest by simply filling out a form. Plus you've paid off the mortgage early, and saved another 70K in interest there. Basically... if you know you're going to pay off the mortgage within the next few years, it seems like recasting is a no brainer to save on a interest. If your plan is to take the mortgage out to the full 30 years, there is no financial benefit in terms of reducing interest paid. But Every time this comes up, it also seems like it's assumed that someone will pay off their mortgage with a lump sum and not invest that additional money they are saving by not having a mortgage. It's like a one or the other situation. So lets say I make the lump sum payment of 120K and invested it into some safe mutual fund that grows 7.5% each year over the next 23 years. That's future value is 633K, less the 120K put into it, less the 75K paid in mortgage interest because you're not paying off your mortgage early.... That's 438K earned on that 120K over the next 23 years. Alright, so say I pay off the mortgage entirely and invest 10,000 into the the same safe mutual fund each year for the next 23 years at 7.5%. That would have a future value of 665K, minus the 230K that I put into it , which comes out to 435K in earnings. Anything more than 7.5% means that investing the lump sum was better. Anything less than 7.5% means that paying off the mortgage early was better. So say you did this 23 year ago, put it in something safe and you don't have to think about, like a Vanguard Target Retirement 2020 account. Now you're retiring and starting to cash out... It's averaged 8.3% over the past 10 years. Isn't that close to the break even point of 7.5%? I don't have data on that fund over the past 23 years, but you get what I mean. Astro7x fucked around with this message at 17:36 on Jan 28, 2020 |
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Jan 28, 2020 17:20
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totalnewbie posted:Oh my god, the explanation is so simple. I said taxes but I meant interest. Obviously. (oops) WELP Astro7x posted:Basically... if you know you're going to pay off the mortgage within the next few years, it seems like recasting is a no brainer to save on a interest. So to be clear, in a recast, the ONLY reason you're saving interest is because of the lump sum principal payment that goes along with it. Recasting and paying down principal aren't strictly the same. Paying down principal will save you interest over the long term in all cases. Recasting lowers your minimum monthly payment (because of the lump sum payment), but generally lenders will only recast your loan IF you are making a sufficiently large lump sum payment. But again, those aren't really the same. Simply paying down principal leaves you with the same old minimum monthly payment. Recasting lowers your MINIMUM monthly payment, but you can CHOOSE to pay more than that. In either case, if you continue to pay the exact same monthly payment, then there is ZERO difference in interest savings between the two options. If you recast and choose to pay the LOWER monthly payment, then you won't save as much in interest as if you had continued paying the original payment. But that could be said of overpaying any mortgage, and in any case you're still paying less in interest than if you hadn't paid down the principal. DaveSauce fucked around with this message at 17:51 on Jan 28, 2020 |
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Jan 28, 2020 17:44
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Astro7x posted:You continue to make extra payments, and put that money you banked towards your mortgage as that extra payment. In about 4 more years, you've paid off the mortgage because you've banked about 30K by recasting and making additional payments, and made about 6K in principal payments are part of your regular payment. Putting you at about 36K paid of that 40K left, throw another 4K at it... you're done with your mortgage in 4 years. Instead of paying 24K in interest by not recasting over those 4 years, you paid about 6K by recasting. So you save about 18K in interest by simply filling out a form. Plus you've paid off the mortgage early, and saved another 70K in interest there. If you don't change your payment amount then recasting does nothing for you. The reason is that mortgage payments are already adjusted each month based on how much principal you have remaining. Maybe (I said maybe) this is something you're not taking into account? Before making your lump sum payment, you were paying about 700 principal and 500 interest. After your lump sum payment (without recasting) your payment goes to 1100 principal and 100 interest (all rounded). Because here's the thing - if you make a lump sum payment, the bank isn't going to (well they could, but they don't because it's ridiculous) keep charging you the same amount of interest on money you no longer owe. In other words, recasting makes NO DIFFERENCE (as far as your mortgage is concerned) if you are making the SAME MONTHLY PAYMENT. Pretty sure this means that recasting (with the same payment) is tax neutral. If you make the minimum payment then you get to take less of a mortgage interest deduction but this is not going to be more than the savings from paying less interest itself (literally impossible, as your extra savings from paying more mortgage interest is only a percentage of the extra interest payments itself). totalnewbie fucked around with this message at 17:57 on Jan 28, 2020 |
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Jan 28, 2020 17:47
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