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     Thedarkknight Pilla Bewarse Username: Thedarkknight Post Number: 558 Registered: 07-2008 Posted From: 183.83.26.5 Rating: N/A |
My advice is below. All of my suggestions require a bit of time and effort but are simple tricks to implement. http://www.bretwhissel.net/cgi-bin/amortize is an awesome website that i had always used for amortization calculations. > Instead of paying closing closts upfront, I would go for higher interest rate. This gives us couple of options => You can save the principal amount ( 3000 ) to invest somewhere else that beats the payment difference ( i.e difference of payment amount between 3% & 3.125% ) => Assalu time ledantey, You can increase the equity of your house by paying that 3k amount and go for higher interest rate ( 3.125 ). It would take at least 11.5 years for the equity breakeven and you are only paying 6$ extra. > I wouldn't suggest going for re-financing to shorter tenure for better interest rate. Just check if you can get better interest rates for the same tenure. => Lets say your current principal is 450k, @4.125, You would pay around 2180 EMI for 30 years @3.125, You would pay around 3134 EMI for 15 years. Basically you are paying 954$ extra every month. All you need to do is figure out ways to invest safely so that the equity accumulated is always more than the difference in your "Principal equity of the House loan" By taking the same example above, at the end of 15 years your payment balance is 0$ in 15 year tenure, Where in it is 292.3k in 30 year tenure. But you are saving 954$ monthly which you can invest in recurring investment scheme that yeilds better than 4.125% of effective compound interest. I haven't explored many options in USA ( 401K roth & mutual funds might be some to consider ) that yield and effective compound interest of 4.125 for recurring investments. Simple recurring deposits in india ( FDs, postal & mutual funds ) can be considered for this purpose. You have the advantages of liquidable equity & also can fare better than investing in the Home loan equity if you can dedicate time & effort. But again, If you don't want to dedicate "Time & effort", you can go ahead and invest in Home Loan equity by opting for 3.125% option. |