Hellobee Boards

I think being able to pay extra on your mortgage is definitely a great thing. But meanwhile you will be living in there so if renovations will make that better, why not?
Also I assume the renovations will also increase the value of your home. So it's a win win. Personally I would renovate over paying off the mortgage. But I also plan to live in our new home forever. With our current (old) home we did renovations that we would only get the value back on during selling. If we couldn't we did not do it.

I try to follow Dave Ramseys way of paying off debt, i say try very loosely. I wish I followed it better! But basically I write down all debt/loans that I have. Car, student, mortgage and start paying them off one by one starting with the lowest balance. Then once you pay one off, allocate all of that payment to your next smallest debt. That way you can see progress being made, and you are allocating more of your funds to payments.

Plus most likely your mortgage interest rate is lower than your student loan interest rates. I would pay off student loans first, personally!

I second the thought that renovations do not always equal more money when you sell your home. We put $10,000 in renovations into our condo, and definitely lost ALL of that money when we sold it.

Keep in mind that the housing market at the time you decide to sell will also dictate the value of the home. That's very unpredictable, so you can't assume that you would even make money on your home even though you negotiated a good price when you bought it. The housing market could crash and you could end up taking a loss if for some reason you HAD to sell at a certain point.

I really like Mrs. Brewers' suggestion of listing your debts and paying them off starting with the smallest amount first, or actually, the one with the highest interest rate is probably the one you should tackle first.

I also agree that if you plan to stay in the home for 5 years or more, you should do the renovations that you want so that you can enjoy them.

How are your other savings (outside of the savings for house/renos)? Do you have a healthy emergency fund?

With an interest rate of 3.3%, honestly; I wouldn’t be in a huge rush to pay off the mortgage early. I would do the renos first so you guys can enjoy them; and continue to pay down your mortgage at a slightly less aggressive rate.

Do you have an emergency fund with 6-12 months of expenses? Are you saving for retirement?

I understand your student loan rates are low, but you are still paying interest on that debt, and unless you are making more interest in a checking account, I'd pay that off first.

Hrmm, paying off my condo's mortgage is not a priority because it's not our forever home. We only want to be here for another 1 - 2 years, max. I figure once we settle into our forever home, paying off the mortgage will become a priority!

@MamaMoose: This is exactly what we considered when deciding how much extra to pay toward our mortgage. I wanted to pay something more because I much prefer paying off debts early.

I would pay off student loans first absolutley.
My mortgage is 3.75% and I can't imagine paying two payments a month. Well, maybe if I made more money but for now we are fine paying it like we're supposed to. I don't know anyone who outright owns their home. I'm not going to be here for 30 years so I know we never will!

For us, we are trying to pay off our mortgage as quickly as possible, first so we can pay down the principal to 22% and avoid paying the PMI we pay each month ($200), and secondly, so we can then get another house and rent this house out. Then we will have more financial freedom and options.

I aggressively paid a bunch of $ to our 30 yr mortgage the first few years and it helped us to drop our FHA loan/mortgage insurance and move into a conventional 20 yr loan with cheaper PMI and a lower interest rate. This year, we did another refi in which all of those extra mortgage payments really 'paid off' because the appraisal came in nicely and thank God- we dropped PMI completely as we moved into a 15 year loan with a super low interest rate-2.6% after 4 years of home ownership. So although we have $5000 of things we still want to do on the house-floors, kitchen, yard, I opted to spend money to travel and pay a bunch off the mortgage the past few years. The next chunk of money (i.e. tax returns are right around the corner) will go to home improvements.

The answer is it really depends. Depends on your personalities and it depends on your interest rate. We pay more each month to at it off sooner only when the mortgage rate exceeds the rate of return on our most conservative investments (in this case our savings accounts). However, currently our mortgage is so low that it doesn't do that, so we'd rather keep that money in savings and earn interest on it above and beyond the three percent rate we're paying on our mortgage.

Side note-- student loans are my last priority for two reasons 1) my interest rate is even lower than my mortgage at 2.5% (consolidated at the perfect time) and I have aggressively pursued loan repayment grants. If I get this next loan repayment grant, I will have payed off my student loans mainly by hat mechanism--- outplaying minimal cash on my own. Depending on your joband location, this might be possible. I know they do it for teachers, doctors and nurses especially if you work in an undeserved area or on a reservation or you do research for a living (NIH).

The faster you can pay it off, the better. My DH and I made it a priority the first 3 years we owned our house, and it's still important to us although it's gone on the back burner a bit since we bought our commercial unit and did renovations on it (we now have made paying back the loan we took out for the reno a priority).

We're actually down to 90k left on our home. We plan on keeping this home as an investment property and moving to a more family friendly house in a couple of years. The first 3 years we paid off the max we were allowed to by the bank. By the time we move to a new house this one will be completely paid off and just generating income as a rental property.

With our income, we could be living in a much bigger and much nicer house now, but we're sacrificing now for a big pay off later.

I think paying off your mortgage early is important, but so is enjoying the home you own (and live in)! If your kitchen is driving you nuts (and remodeling would solve that), then remodel sooner rather than later.

A well thought out, organized, and well appointed kitchen saves so much time and generally makes me WANT to cook more (which is healthier and cheaper).

Paying down our mortgage is our #1 priority right now. I don't know how all of the calculations work but I know that if we make every just ONE extra mortgage payment a year, we can cut down our 30 year loan down to around 20! Even if the interest is low (3%), that's 3% on a HUGE loan amount. It's not like we're talking about 3% interest on a $20,000 loan. My husband is in finance and did all of the calculations and told me that the best use of our money right now would be pay down the mortgage and save a boatload off of the interest.