jonshin2003[at]yahoo.com wrote:
- quote -

And as a side note, you may want to look into moving your cash out of
your money market and into something that pays more than 2%. Emigrant
direct pays 4% on its plain savings account (no minimums or time
limits), and there are a number of banks that pay more on 6 month CDs,
not to mention 6 month T-bills are around 4.3% at the moment.

Andy

Very good points guys. Thank you very much for your posts.

Looks like the smart thing to do is pay off more each month, b/c I know
my MM is less than 5.875.

HI does sound nice. I think I'll do that too

jonshin2003[at]yahoo.com wrote:
- quote -

Your two choices are this:

1. Make extra principal payments, because you think that a guaranteed
5.8% return is pretty good.

2. Don't make extra principal payments, and invest the money in
something that will return higher than 5.8%.

It definitely doesn't make any sense to invest it in something that
earns LESS than your interest rate, then pay it off 6 months later. And
finally, money markets and CDs are earning about 4% these days (see
bankrate.com). So you definitely should not be putting it into a measly
2% money market regardless.

I agree with John.

I believe investment decisions are generally about alternatives.

For you specific question, paying down the principal is like earning
5.875% on your money for the remainder of the loan because you will
avoid paying the interest. So do it monthly rather than a balloon.

However you also need a plan for your retirement. Depending on your
circumstances, that might be a better use for your money than paying
down your mortgage.

If you are into wealth accumulation and are comfortable with the
mortgage debt and the risks of the market, then John's Mutual Fund idea
might be a better alternative.

Or you could blow it on a trip to Hawaii.

It is all about alternatives.

Frank

In article <1135047468.351130.194430[at]g47g2000cwa.googlegroups.com> ,
jonshin2003[at]yahoo.com wrote:

- quote -

It all depends. How do you feel about debt?

I hate debt. Debt makes me physically ill. I don't want any,
and I suggest doing everything you can to get out of debt.
Every extra principal payment you make up front on the loan
will wipe out one entire payment on the back end. Ignoring
time, a $200 payment now can wipe out a $1500 payment later
on. It is like magic (as long as you ignore time).

Folks who do the math will tell you that paying off the loan
early is not a wise choice. The reason is that over time,
the money you use for the extra payments can be put in the
stock market, where they will average an 11% return over
time. You might not get that 11% this year, but then again,
you might get 25% some other year. The 11% average beats
the 6% you are paying for the loan.

High rollers will suggest that you borrow everything you
can at these cheap rates, and invest it in a broad diversified
portfolio of mutual funds. The low interest might be a once
in a lifetime chance to get cheap money.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
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I just bought a house and I'm curious about something.

I have enough money to pay more than the monthly payment.

Is it better for me to save that money in a Money Market (about 2%
interest rate) and make a big payment in 6 months, or is it better for
me to just make double or triple payments every month?

I have a 30 yr fixed at 5.875.

Thanks,
Jon