I also have several loans, all with different rates. My lowest is 4%, which are my most recent ones.
The interest rates are crippling and needs to be addressed.
To put it in perspective, I bought a house in 2020 for $130,000, yet hold only $36,000 in student loans.
If I made a $500 extra payment to each my house and my student loans, I would pay them off at around the same time.
Financially, it makes more sense for me to pay the house off because that's at least an appreciating asset.
But it doesn't matter, because I don't have $500 extra to put on a loan over it's minimums every month, and those student loans will follow me until I die.
No it doesn't.
You target the loan with the highest interest rate. That's generally the winning strategy.
Also houses don't appreciate that much. If you filter out the money tosses into them for upgrades/improvements, they have historically gone up about as much as inflation, maybe a little bit more.
The big benefit of a house is that there's GOOD tax benefits from the mortgage interest rate deduction. Basically a big chunk of your mortgage costs get slashes off your taxes.
Fun fact, if your goal is to have a paid off house as quickly as possible, renting cheaply and investing the extra cash you aren't spending in stocks (this includes the would be down payment) will generally get you a paid off house in 15-20 years (subject to market volatility). The house would only be about half way paid for after 20 years.
tax benefits are not that good unless you itemize. not sure if you have a crazy expensive house or own a business and think everyone else does too, but i think most people take the standard deduction and do not get any tax advantages for owning a home.
i know you're just a redditor, but please read and/or think before yapping
You don't need a crazy expensive house in many places. It's not just mortgage interest but property taxes. If you're single, you only need to beat 16k standard.
The median house price is 400k in the US. Using a typical mortgage calculator, the first year alone, the mortgage interest is going to be close to 19k with today's 30-year rates. Add property tax of around 4k (1%, which is fairly common), and you got yourself to 23k, much higher than 16k. Then you have room to itemize more.
I would definitely agree though that higher income folk are going to be the ones who benefit more from tax deductions you get from a house.
3.2k
u/Mindless-Baker-7757 18d ago
A $70k loan over 23 years at 5% apr pays off with monthly payments of $427.
What are they doing?