- quote -

You'll never earn safely what you pay in mortgage interest expense.
Liquidity issue aside, you should pay down your mortgage. What if the
rates are not attractive 2 years down the road? Your balance will be
much lower after 5 years when you don't have much to say whether you
like the market rates or not as your mortgage rate becomes adjustable
and can jump 2.0% in one year if the bank wants to and feels
comepelled to raise them. As long as you can't find a safe investment
that earns more, your choice is beneficial. You'll pay more in taxes,
but so you would if earning interest on your CD or money market,
unless you want to lock your funds until you are 60.

In article <b1729019.0310211104.1c29f7bd[at]posting.google.com> , Rtfgrtfg
<Rtfgrtfg77[at]yahoo.com> wrote:

- quote -

Did you make the 20% downpayment? If not, you are likely paying
private mortgage insurance, something that is expensive, but
has no value to you at all. If this is the case, your best bet
is to pay down the mortgage, and get a new appraisal to show any
increase in property value, and try to get to that 20% level.
Once you are there, you can eliminate the PMI payments, which
might be $50 to $100 a month. Having to not pay PMI will earn
you more money back than any interest that you might get from
investing these payments.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

All

I recently purchased a house at a 5-1 ARM and I plan to refiance once
my credit recovers (1-2 years). I have extra money to invest and not
sure wether to make extra payments on my 5-1 ARM or to put into a CD.

I wanted to know what the opportunity / break even cost are with
making extra mortage payments.

Lets say I fianance 200K at a rate of 10% to make the math easy.
Here are some factors.

-When you pay off debt you do pay taxes so your actual return is
higher.
-There are no commision or set fees with paying off debt.
-I will refiance at a lower rate once my credit so the time period is
a 2 year window.

When you make extra payments to you get a instant return because you
payments are always based off of principle of the loan?

Thanks in advance for you points of view.


Rtfgrtfg77