can i pay 50k to my mortgage loan and ask bank to reduce monthly premium?

[JavaBava]

1 hour ago, HtmlBro said:

Invest. 50k vunade neku mortgage vachi 4٪ interest anu kundamu, yee 50k nee S&P lo invest cheste average 8% returns. Think about it.

Market teda kodite 50k 20k avutadi .. loan ante untadi

[pittagoda]

10 hours ago, Konebhar6 said:

If you put this 350k in a Fixed deposit @ 5 or 5.5% interest, you are getting $17,500 per year in interest. That's $1450 per month. 

So in theory your monthly payments are only $5250-$1450 = $3800 with $350k still in your pocket. 

What am I missing here? Its not like these are risky or complex investments.

You qre missing the Tax  on 1450

[Konebhar6]

8 hours ago, pittagoda said:

You qre missing the Tax  on 1450

True. 

[Pirate_of_hearts]

On 8/10/2023 at 5:27 PM, Konebhar6 said:

If housing market crashes. All your investment is under water. Even if the interest rates drop, you cannot refinance as you will be asked to put more money. For e.g.

You bought a home for $1M. Lets say you paid 20% so $200k down. So 800K is your mortgage. If market crashes and your home is now only valued at $700k, and the rates drop to 3%. For you to refinance, bank will only refinance 80% of money which will be $560. So you will be required to pay an additional $800k-$560k=$240K. In essential you paid $440k overall and only own 20% of your equity in your home.

Lets say the market goes up. You only lost 1% interest on the money on your house which is negligible.

So cash is hand is always more useful. 

If you want no hassel -> Go with your gut. Keep things simple and payoff as much as you can and reduce monthly payments. You cannot put a monetary value on stress free mind

 

In the example that you mentioned where the market price dropped to $700k, how different would the impact be if the downpayment is just 5-10%

[Konebhar6]

2 hours ago, Pirate_of_hearts said:

In the example that you mentioned where the market price dropped to $700k, how different would the impact be if the downpayment is just 5-10%

Same impact except it’s easy to cut your losses and foreclose your home. Ppl usually stop mortgage payments and it will take > 1 year for them to evacuate the occupants. So you will get 12 month free rent which partially covers your 5% or 10% of your investment. However the record stays on your credit history for 7 yrs I think and impacts getting loans for those yrs.

[bschi]

On 7/5/2023 at 6:37 PM, raccharambola said:

I am on mortgage loan since 2.5 years, can i now pay 50k to my mortgage loan and ask bank to reduce monthly premium? 

 

please throw some light.

Yes, you can do it. Call your lender and talk to them. Set the expectations clear when you speak with them.

[changure1]

My two cents bro:

If you put 50k in fixed account, you are obligated to pay taxes on interest. keep that in  mind.

Recasting will help you reduce your monthly payments, but they will readjust for 30 yrs (though you have paid some amount till now).

I would pay towards principal, which will reduce your interest by huge margin does not matter how low your current interest rate is unless you are a skillful investor to make more money.