newbees wrote:I and my husband (40 & 47 y.o) have around 200K cash in various saving accounts and CD's. So far they earn 0.3% interest annually max. We have maxed out our 401K, Sep IRA contribution. Our tax rate is 33 federal and 9% CA. For our primary home, we have a 500K mortgage with 3.99% 30 year fix. We have no credit cards or car debts. Should we use this cash to pay down our mortgage? We also own one rental property with 200K in mortgage (3.75% 15 year fix). We don't want to sell or buy more real estate. Do you have any recommendation for us on what to do with this money?
newbees wrote: We just refinance our mortgages,
newbees wrote:With our incomes, we don't qualify for Roth IRA. We just refinance our mortgages, so for our balances are 500k and 200k for the primary and rental homes.
sscritic wrote:newbees wrote: We just refinance our mortgages,
And the best you could get was 3.99% 30 year fixed? You are in CA, so $500k should not be jumbo in most counties. Are you in the sticks? If so, pay down to $417,000 and refi closer to 3%. I have seen no cost 3.25% 30 year fixed loans; you probably could do better.
celia wrote:When you refinanced, I hope you didn't start over with a 30-year loan. If you did, how old will you be when it is paid off? Will you still be working at that age or have enough income to pay the mortgages? Many people feel more secure going into retirement knowing that this big expense is paid off.
Whenever you refinance (or even take out the original loan), consider how old you will be when the loan ends, then consider a shorter term. By paying down part of it now, that will shorten the term, but the difference in remaining years wouldn't be as much as if you had a higher interest rate. Of course, you also need to hold onto liquid assets for emergencies.
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