Author Topic: Should I stop my biweekly mortgage payment?  (Read 2339 times)

pipercat

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Should I stop my biweekly mortgage payment?
« on: November 01, 2014, 07:25:53 AM »
Original loan amount: $120,156

Original loan date:       7/29/2011 (first payment due 09/01/2011)

Loan length:                15 years

Balance remaining:       $96, 042.15

Interest rate:                3.75%

We've been paying on this loan every two weeks, but it just occurred to me that maybe that isn't the best plan.  We are in debt payoff mode, paying off some debts with interest rates as high as 8.25%.  Maybe I'm answering my own question, but wouldn't it be better to take the money away from paying off the mortgage early, and put it toward the higher interest loan?

Anything I'm missing about this?


Two9A

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Re: Should I stop my biweekly mortgage payment?
« Reply #1 on: November 01, 2014, 07:48:44 AM »
In certain circumstances, it can make sense to pay down the mortgage at a faster rate than debts of higher interest. I don't know what those circumstances are though...

I'd at least cut down the biweekly payment, definitely, if you don't want to remove it altogether. I have a weekly overpayment going towards each of my mortgages, but that only went into place after I'd cleared the last high-interest CC.

nereo

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Re: Should I stop my biweekly mortgage payment?
« Reply #2 on: November 01, 2014, 08:05:01 AM »
Yes, unless you have some very unusual circumstances you should pay the minimum on your 3.75% mortgage right now while you put all available resources towards paying off that 8.25% debt. 

I'd only consider accelerating the mortgage payment before paying off other debt IF you home is underwater AND you know you need to move soon. Or if your mortgage was about to re-set to a much higher level (but in your case it would need to jump to >>6%) That doesn't appear to be the case here.   

Grateful Stache

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Re: Should I stop my biweekly mortgage payment?
« Reply #3 on: November 01, 2014, 08:05:20 AM »
8.75% > 3.75%

Go for the high-interest stuff first. After that, there is plenty of discussion on whether paying off a sub 4% loan early makes any sense whatsoever. There was a great thread about it in the investing section, I believe.

Cheers.

MDM

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Re: Should I stop my biweekly mortgage payment?
« Reply #4 on: November 01, 2014, 09:17:12 AM »
Anything I'm missing about this?
No.  You have indeed answered your own question correctly.

arebelspy

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Re: Should I stop my biweekly mortgage payment?
« Reply #5 on: November 01, 2014, 09:23:50 AM »
Pay the mortgage minimum, pay the other debt first.

Paying every two weeks doesn't necessarily mean you're paying a lot extra to principal though, so IDK how much this will save you (unless you're doing a full payment every two weeks, then that'll obviously cut it in half), but either way, shave it to whatever the minimum is and pay the other high interest debts first.
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Goldielocks

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Re: Should I stop my biweekly mortgage payment?
« Reply #6 on: November 01, 2014, 10:20:54 AM »
Paying biweekly makes it automatic that you save the extra paycheque(s) each year, instead of accidentally spending part of  it.  Depends on your discipline.

I would take a look at extending from 15 to 25 yrs and putting the savings difference on higher debt or investing.