Military Significant Others and Spouse Support - MilitarySOS.com
Page 1 of 3 123 LastLast
Results 1 to 10 of 30

Thread: WWYD?

  1. Senior Member
    BLBnJVB3's Avatar
    BLBnJVB3 is offline
    Senior Member
    Join Date
    Feb 2006
    Posts
    9,331
    Blog Entries
    1
    #1

    WWYD?

    Advertisements
    DH has a chance to take a loan with less than 1% interest. It needs to be paid back in 5 years. The amount is enough that we could pay off our house. But then we'll need to pay $500 more than we're paying now for the mortgage PLUS pay the insurance and taxes each year. Basically mortgage amount + $500 + insurance and taxes per year/12 = monthly amount we need to spend for 5 years. But in the eyes of the bank and I guess everyone else, the house will be paid off. And after those 5 years we'll just have the taxes and insurance. Also, he only has 1 year to take this loan. So if we don't take it in the next 12 months it is no longer an option.

    The other option is to pay $500 extra each month on our own. Since we'll still be paying the mortgage we won't pay extra for insurance and taxes. It'll more than likely take longer since the loan would take care of the interest in one swoop whereas this way would be spreading the interest out further. So I imagine it'll take 6-7 years to pay the house off as opposed to the 5 if we take the loan. But we will not be locked into that amount so if something comes up we have the option to not pay extra or at least not to that amount that month. We know we'll PCS during the 5 years of the loan as well.

    So which option would you choose?
  2. aka Milfon2Wheelz
    BraveLilToaster's Avatar
    BraveLilToaster is offline
    aka Milfon2Wheelz
    Join Date
    May 2009
    Location
    Kings Bay Ga
    Posts
    10,109


    #2
    I'm kind of confused. I'd take whatever is going to cost you the least in the long run as long as you can reasonably swing it. If like say the 5 yr loan was 20k (just picking arbitrary numbers here) and you end up paying 25k total with interest or the 6-7 year loan was 29k with interest I'd say go with the 5 year.
  3. Senior Member
    BLBnJVB3's Avatar
    BLBnJVB3 is offline
    Senior Member
    Join Date
    Feb 2006
    Posts
    9,331
    Blog Entries
    1
    #3
    The loan will be cheaper in the long run.

    My reservation is being locked into that payment for 5 years. Especially since we will need to also pay insurance and taxes. We'd be looking at adding about $700 to our outgoing bills each month. That $700 is on top of the amount we already pay each month for our mortgage. With the loan we would no longer have the mortgage but we'd still be paying out the mortgage amount plus $700 for 5 years.

    If we don't take the loan we could just keep paying the mortgage (which has the insurance and taxes already included) and add $500 to it each month. If we really want we could shoot for $700. It'll take us 6-7 years to pay off the house this way; whereas the loan would have to be paid off in 5. But if something happened that we needed extra money we wouldn't be locked into spending that extra amount.
  4. Senior Member
    Guynavywife's Avatar
    Guynavywife is offline
    Senior Member
    Join Date
    Aug 2007
    Location
    Maryland
    Posts
    19,311
    Blog Entries
    2
    #4
    Why do you think that insurance and taxes will be extra? Right now are you paying them into escrow each month with your mortgage payments?
    What happens if he does not pay it all back in five years?
    Can you afford to pay the extra money every month?

    How much is your current interest rate?

    Ok, just saw the post you posted at the same time.
    If you can pay it off in 7 years instead of 5, without the loan, I would do that.
    If you want my opinion on your relationship or life issues, just ask Villanelle!
    Quote Originally Posted by LittleMsSunshine View Post
    I think it's really funny when people come on here, and automatically assume that everyone here is a gung-ho, hoo-rah, i-bleed-red-white-and-blue, kiss-my-military-ass, people-in-uniform-can-do-no-wrong, and i'm-entitled-to-everything bitch.
    "RIP Blackie, and Whitey, New Whitey. Goodbye Poopers and Momma Beige and Lady Grey. New Blackie and the Whitey Sisters rule the roost now!"
  5. Quis custodiet ipsos custodes?
    Tojai's Avatar
    Tojai is offline
    Quis custodiet ipsos custodes?
    Join Date
    Sep 2009
    Location
    St. Pete FL
    Posts
    30,026


    #5
    I'm a little confused too ... you're already paying for home owner's insurance and taxes, aren't you? Or do you mean that the new payment will be $500 more than the loan payment only, and you won't have an escrow account for insurance and taxes?

    I just didn't get why that is considered an additional expense when it's something you're already paying (unless someone else is paying that for you?)
  6. MilitarySOS Jewel
    Jazmine's Avatar
    Jazmine is offline
    MilitarySOS Jewel
    Join Date
    Jun 2011
    Posts
    9,757

    #6
    I would make sure that the amount could be paid without causing stress on a monthly basis and make sure that there was enough in emergency savings to cover that much for a few months if someone lost a job, there was a big expense (furnace problem, surgery, pet problem) etc.
  7. Senior Member
    BLBnJVB3's Avatar
    BLBnJVB3 is offline
    Senior Member
    Join Date
    Feb 2006
    Posts
    9,331
    Blog Entries
    1
    #7
    Why do you think that insurance and taxes will be extra?
    With the loan they will no longer be paid with the mortgage. To pay the loan back in 5 years our payment would be our mortgage amount plus $500. My rough guess on insurance and taxes per month is $200. So $700 on top of our normal mortgage amount will need to be paid for 5 years.

    Right now are you paying them into escrow each month with your mortgage payments? Yes, we are. They maintain enough in escrow to pay 1 year. We actually just got a check 2 months ago cause we switched insurance companies and it created a surplus in the escrow.

    What happens if he does not pay it all back in five years? It is something that is being offered because of his promotion. Therefore I'm guessing they'd garnish his wages til it is paid back.

    Can you afford to pay the extra money every month? We have the extra money right now. It would be tighter than I'd like. We took these orders so we could travel on the west side of the country. Taking this loan would make having extra money for traveling a bit difficult. And if something would happen (a tenant messed up our house, needing a new car which would add a car payment, etc.) I can't say we'd have enough money to make all those payments or we'd have enough in savings. And the fact this stretches over 5 years and a PCS, maybe 2, makes me nervous.

    How much is your current interest rate? The current rate is 5.75%. We bought the house 8 1/2 years ago.
  8. Quis custodiet ipsos custodes?
    Tojai's Avatar
    Tojai is offline
    Quis custodiet ipsos custodes?
    Join Date
    Sep 2009
    Location
    St. Pete FL
    Posts
    30,026


    #8
    Sorry, I posted after I saw your explanation too. If having the loan would make things tighter and only shave a couple of years off paying off the house, personally I wouldn't do it. Kind of sounds like it doesn't really fit your current budget if run of the mill emergencies could make it untenable to make the payments. If you don't have enough savings to support the payments I wouldn't get the loan, but then again I'm pretty conservative with my finances.

    5.75% seems a bit high, you could also look into refinancing as an option to lower payments/pay off the house more quickly.
  9. Senior Member
    BLBnJVB3's Avatar
    BLBnJVB3 is offline
    Senior Member
    Join Date
    Feb 2006
    Posts
    9,331
    Blog Entries
    1
    #9
    Quote Originally Posted by Tojai View Post
    I'm a little confused too ... you're already paying for home owner's insurance and taxes, aren't you? Or do you mean that the new payment will be $500 more than the loan payment only, and you won't have an escrow account for insurance and taxes?

    I just didn't get why that is considered an additional expense when it's something you're already paying (unless someone else is paying that for you?)
    They are included in our mortgage. But the loan would pay off the house so we would have the loan to pay back plus insurance and taxes each month (well I would at least have it budgeted in to put the amount needed back each month and then either twice a year or once a year...however it is billed when you own a house but don't have a mortgage...pay the insurance and taxes). Like when a car is purchased with a loan and the insurance is separate.
  10. Senior Member
    BLBnJVB3's Avatar
    BLBnJVB3 is offline
    Senior Member
    Join Date
    Feb 2006
    Posts
    9,331
    Blog Entries
    1
    #10
    Quote Originally Posted by Tojai View Post
    Sorry, I posted after I saw your explanation too. If having the loan would make things tighter and only shave a couple of years off paying off the house, personally I wouldn't do it. Kind of sounds like it doesn't really fit your current budget if run of the mill emergencies could make it untenable to make the payments. If you don't have enough savings to support the payments I wouldn't get the loan, but then again I'm pretty conservative with my finances.

    5.75% seems a bit high, you could also look into refinancing as an option to lower payments/pay off the house more quickly.
    We've looked into refinancing but were told the amount we owe on the house and what they would charge us to do the refinancing aren't worth it. Well, they would fill out the paperwork and get it going for us but they said personally they wouldn't do it.
Page 1 of 3 123 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •