Sasha Pachev sasha at
Mon Sep 19 14:59:28 MDT 2005

 > I am not a big fan of paying extra on my house every month.  Lets say
 > a house payment was 1000.00 a month but you had 1500.00 a month you
 > can spend on a house.  Wouldn't it be better to pay the 1000.00 and
 > put the other 500.00 in a savings account?  At the end of three years
 > you would have made your house payments and 18000k in a savings
 > account.  Then, when you lose you job, you can make your house payment
 > for 18 months (while looking for work) as opposed to owing a little
 > less but not having the money to make payments with the possibility of
 > losing your home.  When you have enough in your savings account to pay
 > off your home, do it then.


I understand your reasoning. The solution for the problem is refinancing your 
regular mortgage to a home equity loan, which is what we did. With UCCU, your 
monthly payment becomes 1.2% of the principal you currently owe or $150, 
whichever is greater. If you keep the line of credit open for at least two 
years, there are absolutely no closing costs. If you close the line of credit 
earlier, they charge you $250. You can pay it off in less than 2 years, and just 
keep the line of credit open with zero balance and no interest the rest of the 
time to avoid the fee.

You can make a payment anytime, and you can take the money back out anytime. 
This allows you to get very aggressive in paying off the mortgage - lets say you 
have been paying off extra $500/month for a year, and at the end lost your 
sources of income. You can take the extra $6000 out to live off (including 
making the mandatory payments), and actually be better off than you would have 
been had you not paid the extra - all this time you have been paying less 
interest because your principal was smaller than it would have been for the 
entire year.

Sasha Pachev
AskSasha Linux Consulting

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