Need the hive wisdom.
Recently purchased a new home, new mortgage is $1.25M (5/1 ARM, 3.625%). Closing on former home next week, proceeds after paying off its associated loan, closing costs, etc... will be $625k.
What should I do with the $625K?
Thanks!
Recently purchased a new home, new mortgage is $1.25M (5/1 ARM, 3.625%). Closing on former home next week, proceeds after paying off its associated loan, closing costs, etc... will be $625k.
What should I do with the $625K?
- Immediately put towards above new loan until I can save up enough to refinance into a 15yr conforming loan. Should take me about 4-6 months. I'm not sure, but I believe the payment will all go towards principal, and resulting interest will be that much reduced. I will still have to make my current mortgage payment (~$5800/mo, which is not a cash flow problem for now), but about $3700 per month will go towards principal vs right now about $2000/mo (I think that's how it will work, are mortgage payments calculated using simple interest?
- Put the cash in an online savings account earning ~1% interest until I save up enough to refinance into that above 15yr conforming loan.
- Just go ahead and refinance now into a 15yr jumbo loan. The rates right now are about 3.5% for the jumbo 15yr vs. 3.0% for the conforming 15yr. Those rates may change over the next roughly 4-6 months it will take to save up the cash to get my loan balance to $417k.
Thanks!
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