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Single Mother on Disability Wants to Pay Off Loan Early. – Tonya

41 yr old Single mother, on disability. I live in Tennessee. The house I live in, My ex husband and I paid cash when we first moved in. Then we went and took out a 40,000.00 loan. The loan is a 5 yr refin. balloon payment.

My payments for the house is 326 a month, its time to refinance and I was wondering how much extra each month should I pay to pay the loan off in 5 yrs, before I will have to refinance again?

Tonya




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8 Comments

  • Without knowing the interest rate I’d guess that she would have to pay at least $750 to $800 per month at a 5% interest rate. I would suggest if you have the cash pay it off sooner, because if something changes with your income or credit you could lose the home if you can’t refinance.

    The payment is very manageable and you shouldn’t have a problem paying it off even sooner if you focus on it.

  • HeyTonya,

    I agree with Robert. Typically people opt for a balloon payment because they need to keep their monthly payments down for a short period of time or don’t plan on staying in the house longer than a few years. However, since you are asking how much extra you will need to pay per month to pay off the note before the balloon payment is due, I am confused as to why you don’t just get a 30 year fixed mortgage and then make the extra payments to pay off the loan. That will give you more flexibility and not put you up against a hard deadline to refinance in case you financial situation is not favorable at that time.

    Also, if you want to solve the problem of how large your monthly payment needs to be to pay off 40,000 over 60 months you will need to supply the current interest rate. Also if it is a variable rate then you won’t be able to get an exact figure and it could be quite a bit off depending on what rates do over the next few years.

  • HeyTonya,

    I agree with Robert. Typically people opt for a balloon payment because they need to keep their monthly payments down for a short period of time or don’t plan on staying in the house longer than a few years. However, since you are asking how much extra you will need to pay per month to pay off the note before the balloon payment is due, I am confused as to why you don’t just get a 30 year fixed mortgage and then make the extra payments to pay off the loan. That will give you more flexibility and not put you up against a hard deadline to refinance in case you financial situation is not favorable at that time.

    Also, if you want to solve the problem of how large your monthly payment needs to be to pay off 40,000 over 60 months you will need to supply the current interest rate. Also if it is a variable rate then you won’t be able to get an exact figure and it could be quite a bit off depending on what rates do over the next few years.

  • Have you considered a 30-year fixed-rate note? Rates are good right now.

    Why are you using a series of balloon notes? It is a very expensive and risky way to borrow money.

  • Have you considered a 30-year fixed-rate note? Rates are good right now.

    Why are you using a series of balloon notes? It is a very expensive and risky way to borrow money.

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