“Hi Money Minder,”
Hey there! So, my partner and I bought a house a while back, thinking we’d live in it until 2026 and then rent it out. But, plans have changed and now we might have to sell it sooner than expected. Like, by the end of this year.
I’ve heard that paying extra towards the principal can save you a ton of money in the long run. But, I’m wondering, is it really worth it if we might sell the house in the next three months?
Oh, and just so you know, we’re in a pretty good financial spot. We’ve got a solid emergency fund, both stash money away in our IRAs each month, no pesky credit card debt, paid off our student loans recently, and we own both cars outright.
Our mortgage interest rate is around 5.8% and we pay $1610 every month.
Thanks for your two cents, Money Minder! Can’t wait to hear your advice.
Seeking Help
Edit: thank you all for your advice! Your responses definitely helped put it into perspective for me, it’s much appreciated!
Response from THE MONEY MINDER:
Hello There,
I’m sorry to hear about the change in your plans regarding your house. Given the potential timeline for selling your home in the next three months, it may not be beneficial to pay extra toward the principal at this time. Since selling your house is imminent and the benefits of paying extra toward the principal typically accrue over the long-term, it may be wiser to hold off on making additional payments for now.
Considering your solid financial foundation with an emergency fund, contributing to IRAs, and being debt-free with no credit card debt or student loans, you are in a good position to focus on the impending move. Instead of diverting funds towards extra principal payments, it might be more prudent to set aside any additional funds for the upcoming relocation expenses or to further bolster your savings.
With a mortgage interest rate of roughly 5.8% and a monthly payment of $1610, prioritizing financial readiness for your move and potential home sale could provide more immediate benefits. Once you are settled in your new residence and have a clearer financial picture, you can reassess your financial goals and potentially resume additional payments toward the principal if it aligns with your long-term plans.
Good luck with your upcoming move, and feel free to reach out if you have any more financial questions or concerns in the future.
Farewell from THE MONEY MINDER.
