Finance - Which to pay first?

[BigAsh]

Moose, stop spoiling the Corgi and put more towards principal!!

[mosesbotbol]

My interest rate is currently 3.8750% and I have 24 years left on the loan. I do about 3 months of additional principal payments a year.

I am trying to avoid a future auto loan, but may do a 50% down auto loan next season. At least I won't ever be upside down on the car.

[kydsid]

8k for a refi. Damn I don't think I would have done that either. We did a refi in September. 4k total. 2.5 of which was buying a 1/2 point on the final interest rate.

[mosesbotbol]

Originally Posted by kydsid

8k for a refi. Damn I don't think I would have done that either. We did a refi in September. 4k total. 2.5 of which was buying a 1/2 point on the final interest rate.

I thought 8K was excessive as well. This was through the same bank I currently have a mortgage with. They also wanted a new appraisal when I had an appraisal with them 6 years ago when I refinanced. All property has gone up since then...

I ran some calculators and it looks by paying ~$500 extra towards principal will get the loan paid off in around 15 years and save almost 60K in interest. I am going to just stay on that path. 3.8% interest I am fine with for now.

[G G]

I am currently in a similar situation. Several years ago my wife and I were able to be debt free. Flash forward some years and our autos were getting older and we had to buy newer vehicles. I also went into a part time business doing lawncare and have made pretty good money doing it. I paid off the wife's new car we bought in 2016 in about two years. Now I have a truck financed and an almost 10K lawnmower I bought last spring. I did retire from my full-time job in November 2020. Drawing my state retirement and doing lawncare exclusively now. I have paid extra on the truck and the mower and right now I owe about 7K on the mower, and I recently refinanced the truck with my credit union from the dealer financing expressly for the reason Moses had with the principal payments no going to principal with a transfer or online payment at the other bank. The refinance of the truck extended the original term a few months but made the payment almost 50 bucks a month less but I am still at the least paying the same payment as before. As soon as the lawncare gets going full force (prolly next month) I will then be able to throw about 1500 or 2000 a month at one or both loans. I have waffled back and forth on which one to pay. The regular payment on the mower is $208 a month and the truck is now $458 a month. On the one hand the mower is a no interest for 48 months so there is no savings to be had for paying early. The truck interest is 3 point something so there is savings to be had there. But I also in the past have attacked the lower balance stuff first and had good results. so I think I will hit the mower first since in maybe three to four months it will be paid off. Now that I am semi retired the wife and I would like to buy a travel trailer so we can explore the mountains of North Carolina and Tennessee and be more mobile than renting the same cabin like we have for the last few years. But I have made my mind up that we will wait until the truck and mower are paid off before buying.

[kydsid]

Originally Posted by mosesbotbol

I thought 8K was excessive as well. This was through the same bank I currently have a mortgage with. They also wanted a new appraisal when I had an appraisal with them 6 years ago when I refinanced. All property has gone up since then...

I ran some calculators and it looks by paying ~$500 extra towards principal will get the loan paid off in around 15 years and save almost 60K in interest. I am going to just stay on that path. 3.8% interest I am fine with for now.

I think an appraisal is just always gonna happen. We were with Wells Fargo, they refused to do a refi saying they wouldn't do an appraisal which required the appraiser to enter the home, due to COVID. I asked if that would change soon. Nope. Even told them the only thing keeping me at WF was my mortgage and combinations with all the other products. So we called a Mortgage Broker who lives in our neighborhood. Great process and talk about working for the money. They worked their but off. We closed by having the Attorney come over and signed paperwork in our backyard.

For the appraisal we had to open all the windows and turn fans on, everyone wear masks. Still not a bad deal IMO.

Honestly I don't know where rates are for mortgages are right now but 3.8 is high, or was in September. That was our rate. We are down to 2.2. Shaved a little over $200 off the payment with the interest rate alone. We extended the mortgage by 3 years by refinancing. Cost of the refi and to catch up to where we were will take 3 years but be nearly cost neutral in that time due to the change in interest rate. After that 3 years we can start saving keeping that extra or pay to the mortgage.

I'd look around if you could. Wells is losing a customer they had for 23 years, 3 mortgages (all paid off), a bank box, 2 checking, 2 savings, money market, IRA. Only thing I'm keeping with Wells is my CC that unfortunately has the highest limit of all my cards. Getting rid of it would hurt my credit score too much. That is to say I've done most of my banking my entire life with only Wells Fargo. I was hesitant to switch but they forced my hand.
Your bank shouldn't be in the way of refinancing at 3.8 rate.

[mosesbotbol]

Whatever the interest rate was when I last checked + plus expenses for the new loan wasn't any different than me just paying the nearly the same amount if I went with a 15 year. The closing cost and amortization schedule off set any reduced interest on the 15.

@kydsid - I have closed cards and took a hit on my credit. Wasn't much and bounced back quick enough. Didn't lower it enough to negatively impact anything I needed new credit for.