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Home Equity loan which is a better option???

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Home Equity loan which is a better option???

The monthly payment
60K @ 5.99% for 10 years $670.00 per month.
Or
60k@5.49% for 5 years $1,150.00 per month.

There is no early payment penalty
I am leaning towards the 10 year and paying extra each month

Thoughts appreciated
Thanks
Message 1 of 5
4 REPLIES 4
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Regular Contributor

Re: Home Equity loan which is a better option???

Can you afford either or without any issues?
Message 2 of 5
Valued Contributor

Re: Home Equity loan which is a better option???

Fixed rate?

I would do 10.

.5% savings for almost double payment is not worth it to me.

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Message 3 of 5
Frequent Contributor

Re: Home Equity loan which is a better option???

At that small of an interest rate difference, I would do the 10 year, but pay as if it were 5. Five years is a long time to lock yourself into that much of a payment on paper (and affects your debt to income ratio). 

This will allow you to pay it off in the same amount of time, but give you a bit of cushion if something unexpected comes up.

 

I did this with my car. The 3 year loan was not saving me much more than the 6 year loan was interest wise. I purchased my car in 2017 and it will be paid off in 4.5 more payments.

 

K


You can't have your cake and eat it too. But you can dip your finger in the bowl and lick the icing!
Message 4 of 5
Valued Contributor

Re: Home Equity loan which is a better option???


@Cooki844 wrote:
The monthly payment
60K @ 5.99% for 10 years $670.00 per month.
Or
60k@5.49% for 5 years $1,150.00 per month.

There is no early payment penalty
I am leaning towards the 10 year and paying extra each month

Thoughts appreciated
Thanks

60K @ 5.99% for 10 years $670.00 per month = $80,400.00
Or
60k@5.49% for 5 years $1,150.00 per month = $69,000.00

 

I always tell people to think about taking the longer term & making extra payments for one simple reason. If money get's tight for some reason, you can drop down to the lower payment until things get back on track & it won't have a negative impact on your credit or finances.

If you take out the short term option, you're committed to that payment.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 5 of 5
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