“I’m a 53-year-old single man with very little savings”: I want to take out a 30-year mortgage but pay it off in 7 years. Is that possible?

I am a 53 year old single male with very little savings. I paid off all my credit card debt a few years ago. I have now decided to buy a house. My rent has gone up to the point where it’s almost as high as a mortgage, so I’m buying a house. I’m trying to pay off the mortgage as soon as possible.

With my Credit Union credit card, I can make a balance transfer once a year for 0% financing free of charge. It’s a very high credit limit, and I’ve considered putting it on the mortgage to pay off the mortgage earlier, rather than making additional payments to the mortgage company each month.

By doing this, I can pay off the card over the course of the year and save a lot on mortgage interest. My calculations for paying a weekly principal mean that the house could be paid off in less than seven years. I think it would be a little better to make a big payment in advance. Just wanted to know your opinion on this topic.

Here are my numbers: a $260,000 30-year mortgage with monthly payments of $1,390 per month. If I pay an extra $2,500 a month, I can pay it off in about seven years. But if you’re paying $25,000 once a year, that might go a little faster.

wannabe homebuyer

Dear prospective buyer,

By taking out a 0% loan on your credit union card, you rob Peter to pay Paul. But in this case you are both Peter and Paul.

I’m sorry about Get all Dostoyevsky on you, but you must be careful how you pay off this loan as you risk committing to both a mortgage and a loan. If you default on the latter, you’re likely to face hefty repayments when that 0% interest expires. Also, your bank does not accept credit card payment as a deposit. When you apply for a loan, it also performs a forensic review of your finances before approving a mortgage.

I’m not the only one with alarm bells ringing. “Dangerous curves ahead!” says david waltz, a New York-based bankruptcy attorney. “What happens if you default on just one payment and that zero interest rate jumps to 18%? What if you are having a hard time again and cannot cash out the card on time? Even if you make all payments on time, these credit card companies regularly check your credit score.”

Credit card companies have a lot of fine print. “You intend to transfer low balance debt to another low balance card. But what if that new low-interest offer never arrives? Now you can’t make credit card payments — and you’re going to struggle with the mortgage, too,” adds Waltzer. “I have filed tens of thousands of bankruptcies in New York and New Jersey. A lot of them were for people trying to do what you describe.”

“You rob Peter to pay Paul. But in this case, you are both Peter and Paul. I’m sorry to burden you with Dostoyevsky, but you must be careful.”

Your monthly base repayments look slightly optimistic. Talk to a financial advisor about your goals and why you want to own a home. The big missing piece here is your salary and, to a lesser extent, the prospect of an inheritance. Please seek advice from an advisor before boarding. Disclose your finances, your hopes and your dreams, in particular where you would like to be when you retire and whether you envisage working beyond the classic retirement age.

I fully support your desire to buy a home. Let’s say you work another 15 to 20 years: Not only have you acquired this equity in your home with your monthly mortgage payments, but your home has probably – or very likely – appreciated in value over that time, giving you more options if you want to cash out and move to a smaller home. With inflation and hopefully a higher salary, you may also find that your mortgage payments become manageable.

You’re 53. You’re not to have to repay that loan in seven years and you don’t have to incur any additional debt. If your mortgage officer allows it, paying off a regular amount on your mortgage—provided you’re paying off interest at the same time—can be more effective than an annual lump sum. For those who can afford to pay extra, both are a good idea as long as you make sure you have basic necessities like an emergency fund.

Waltzer is more cautious than I am when it comes to home ownership. He warns that if you have poor credit, your mortgage interest rate could also exceed 5%. “The cost of owning a home is always higher than expected,” he adds. “If you buy a $260,000 house, you’re probably going to pay 10% ($26,000). But the closing cost will be a bit more. So you’re probably looking for more like $40,000. Will that be wrapped up in your mortgage?”

Lay out all your options: 15 years vs. 30 years; the pros and cons of paying the extra versus saving that money; insurance and wealth taxes; home repairs; closing costs; and possible bidding wars. The shorter the term – 15 years mortgage instead of 30 years – the lower the interest payment. Nevertheless, interest rates are rising: Monthly mortgage payments with 30-year mortgage interest and a 20% down payment are around 50% more expensive than a year ago.

And finally, the moneyist is (mostly) an optimist: you might not be single forever.

Cash the monetary private Facebook Group in which we are looking for answers to life’s most difficult money questions. Readers write to me with all sorts of dilemmas. Ask your questions, tell me what you want to know more about, or subscribe to the latest Moneyist columns.

The Moneyist regrets that it cannot answer questions individually.

By submitting your questions via email, you agree that they may be published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story or versions of it in any media and platform, including through third parties.

Also read:

“All sorts of stories and explanations come up”: My brother moved in with our mother after our father’s death in 2015, transferring family property into his name

‘It’s a real source of stress’: My boyfriend, 67, asked a trusted nephew to be his executor but he hasn’t made time for him in 2 years – not even to sign papers

‘How are the chances? I retire and the stock market crashes. All my plans are upside down.” I want to use my 401(k) to renovate my new home. What options do I have? “I’m a 53-year-old single man with very little savings”: I want to take out a 30-year mortgage but pay it off in 7 years. Is that possible?

Brian Lowry

InternetCloning is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button