Which to pay off -- Mortgage or Student Loan??

[Jeeebus]

Originally posted by: austin316
whichever one has a high interest rate.

seems like sound advice. guess the mortgage is getting attacked.

 

[ryan256]

Originally posted by: Jeeebus

Originally posted by: MercenaryForHire
Unless you really got boned on your mortgage, the student loan would have a higher interest rate. 😛

- M4H

it's an 80/20 mortgage, so the 80 is locked in for 5 years at a lower rate than the unconsolidated student loans, but the 20 is a floating rate, and is actually a step over the unconsolidated student loans.

To provide the added detail, if I were going to lump sum attack one or the other, it would be either the /20 mortgage (floating rate) or the unconsolidated loans (floating rate). No sense in paying off the consolidated loans which are at 2.6%.

I'd pay down that /20 quickly as possible. It most likely has the higher interest rate.

 

[JS80]

i locked in my student loans at 2.07% in 2004.

 

[FP]

Originally posted by: lytalbayre

Originally posted by: binister
My student loans are locked for life @ 2.2%

My mortgage is a 7 year ARM @ 6%

Personally I wouldn't pay either off. I would put the money in some investments.

Anything higher than 5-7% interest should be paid prior to considering investment. You'll save more money not paying high interest rates that you would earning interest. Plus, your original amount lowers the loan principle, which in return lowers the total interest you will have to pay.

To answer your question, pay off whichever loan has the higher interest rate currently.

Wrong. If you do it right you will end up saving money in the end.

Tell me, what does paying ANY principal on your mortgage get you in the first 5-7 years? Nothing except making the bank happy. The vast majority of your monthly payment is interest anyway. Why not put the money you would have paid toward principal into an investment and make it work for you during those first 5-7 years instead of just sitting in the bank's account?

My current SAVINGS account earns more than 5% interest and it isn't a special account. People tend to be afraid of large mortgages but they also fail to realize the value of leverage. Depending on your investments you could actually end up paying your mortgage off in a lump sum years earlier.