double house payments or save the money for a land payment?

[beppington]

OK, so at least you have equity & therefore would be silly to walk away from the house simply because it seems to be losing value.

I don't think Zillow is all that accurate, but your house may be worth a lot more or less than they say. You would have a better idea on that of course

Maybe I'm old fashioned, but I still prefer no debt; i.e. to avoid the feeling of being enslaved. "Must go to work to pay bills"

It's good that you're getting other opinions, though, as the historically low current mortgage rates do seem to at least improve your borrowing situation. At least I guess. You still have to pay it back, though. Plus the interest. And you still have to deal with low-down, dirty lenders & all their tricks. And you can still be foreclosed on.

 

[gilbertmsg]

I would save the extra payment money until the right piece of land came along. As far as I know, there is no more land being made and a place you really like only comes every so often. It will be hard to finance acreage with a mortgage payment at another location. This is my reasoning for saving the second mortgage payment for a good down payment on your new property.

Good Luck!!

Eddie

 

[Tomtint]

This is JM. Right now and for the past 2 years has been a great time to buy property. If you wait to buy untill the overall economy rebounds, than real estate prices will also rise accordingly. You are always chasing the ball. If you have the stomach and wherewithal to acquire land now and hold your current home for a few more years than I believe you will be in better shape than selling your home short today to build another in the future.

 

[displacedPA]

wife and I just talked it over at dinner.

option#1
it seems that if we pay off our house in the five or six years then we could hopefully sell and get what we paid for it. it could be more who knows the market in a few years like others have said. I think it is the best way to get the cash for a new piece of property then we are debt free and have the $ to buy land.

option#2
We could also save that extra payment which most of you so far think is a good idea. I would save that for part of a property payment. then sell the house. Pay off the bank and what ever I have left after the sale goes towards the land as well. not sure where Id live in all this we don't have family nearby or anything. however I do have a lead on a nice 5th wheel we could live in for a while.

hmm still pondering

I do think it will be hard to get a loan on just poperty without having a house planned for it. Its just a matter of double payment or save it?

 

[sfloggie]

Evening, I agree with MoKelly plus I did what you want to do (twice). Once in OK and again in VA.

First. A dollar is not worth a dollar, so having cash (except emergency fund of 12 mos if one can ) is not prudant. And interest is none existent. So putting it in the bank is not helping it grow.

Second. Land will always be here, but not always where one can enjoy it or even buy it at an affordable price.

We got the house and looked for at least 20 acres land in a growth (progressing) area. We wanted at least twenty as most states give the tax benefits of a farmer if you have at least twenty.

Having the land without living on it allows one tax deductions for everything you do on it in the year you do it. Also, letting a good farmer farm some or most of it gives you the Land Use tax reduction and land management practices. Yes, it is a roll over deduction, but you should never have to pay it.

Finance the land with your local Farm Credit. They allow you flexible payments either monthly, quarterly semi-annual or annual. Plus they share the profit at the end of the year. We got back $2700 from them this year.

After you find the area, locate the local Farm Credit, find a good real estate attorney to everything at closing ( instead of a title company), find a good farmer who is leasing land and ask if they know of any land for sale (especially estate land). We did this twice.

We kept our OK land for a year and then sold it for about 100% higher. We sold early because of three troublesome neighbors.

Next we brought estate land in VA. We were looking for 20 acres and saw a farmed piece. We checked and found it was estate land of 113 acres with 1000 feet on a river. We brought it two years ago through Farm Credit as we did in OK. We at a home line of credit so we used it and cash for the down payment.

We love it and the deductions. I have had four heart attacks so this is great for my wife if I have a last one that is bad. She can sell the land, farm equipment as the land has increased the past two years. Our 401k was down 26% in 2011, flatlined in 2011, but is up 6% this year. The land is only going up as homes are being built around us.

Long winded with bottom line to put the money aside for a down payment on land, look for the land now, talk to Farm Credit now, find that farmer now (farm credit or the local farm agency can tell you) and find a real estate attorney. We looked for three years in VA before we found our land.

Best to you..write me private if I can help further.

Jim

 

[LD1]

I say pay the mortgage off ASAP:thumbsup:

Because regardless of weather you pay it down quick, or drag it the full term, when you find that "right" piece of land you want to buy, and are ready to sell your house, it is going to be worth the same weather it is paid off....or if you still owe 50k on it.

BUT.....IF you still owe 50k on it, it "may" have only cost you an extra 30k to of had it paid off. (just hypothetical examples).

I personally dont like saving money as long as I have debt. Because letting money sit and earning 0.00000000001% interest just does interest me when I have loans costing me money daily.

I think what you really need to do is set a realistic timeline, and then spend some time on a spreadsheet and do some #'s. For example.....Let's say in 5 years you want to buy land and sell the house. Run some #'s. See how much you would still owe on the house and how much you would have in a savings account IF you DONT make double payments. And then do the same for IF you do make double payments. And see which one will put you farther ahead in that amount of time. Not sure what your interest rate is, But I'd venture a guess that your mortgage payment is a tad over $1000/month. So make double payments of ~2k or so, then once paid off, wait a year and bank that 2k. You will have 24k+ to put down on a nice peice of land. Then sell your house and take that money and pay off the new land purchase:thumbsup:

 

[strum456]

I say pay the mortgage off ASAP:thumbsup:

Because regardless of weather you pay it down quick, or drag it the full term, when you find that "right" piece of land you want to buy, and are ready to sell your house, it is going to be worth the same weather it is paid off....or if you still owe 50k on it.

BUT.....IF you still owe 50k on it, it "may" have only cost you an extra 30k to of had it paid off. (just hypothetical examples).

I personally dont like saving money as long as I have debt. Because letting money sit and earning 0.00000000001% interest just does interest me when I have loans costing me money daily.

I think what you really need to do is set a realistic timeline, and then spend some time on a spreadsheet and do some #'s. For example.....Let's say in 5 years you want to buy land and sell the house. Run some #'s. See how much you would still owe on the house and how much you would have in a savings account IF you DONT make double payments. And then do the same for IF you do make double payments. And see which one will put you farther ahead in that amount of time. Not sure what your interest rate is, But I'd venture a guess that your mortgage payment is a tad over $1000/month. So make double payments of ~2k or so, then once paid off, wait a year and bank that 2k. You will have 24k+ to put down on a nice peice of land. Then sell your house and take that money and pay off the new land purchase:thumbsup:

I am in the same basic sutuation as the OP. My land is alread bought and paid for, but I am paying on a mortgage for my house 15 miles away. I am plannning to pay off this mortgage as fast as possible, so I can bank money for a year and then build. Hopeuflly I could sell the house I am living in now and have no mortgage at all.

 

[strum456]

The way I look at it, my mortgage is guranteed to cost me 4.8 apr, no matter what. I havent been able to find any investments that good. Of course, this comes second after the emergancy fund.

 

[Wnc3]

Two thoughts:
get the house paid off by paying additional principle (maybe less than double payments)

Find a piece of property with at least some improvements (power,road,fence,water well,shed,etc.) and get the owner to owner finance it.
They will make more interest off you than they can at the bank.

 

[displacedPA]

I say pay the mortgage off ASAP:thumbsup:


I think what you really need to do is set a realistic timeline, and then spend some time on a spreadsheet and do some #'s. For example.....Let's say in 5 years you want to buy land and sell the house. Run some #'s. See how much you would still owe on the house and how much you would have in a savings account IF you DONT make double payments. And then do the same for IF you do make double payments. And see which one will put you farther ahead in that amount of time. Not sure what your interest rate is, But I'd venture a guess that your mortgage payment is a tad over $1000/month. So make double payments of ~2k or so, then once paid off, wait a year and bank that 2k. You will have 24k+ to put down on a nice peice of land. Then sell your house and take that money and pay off the new land purchase:thumbsup:

well I ran a five year plan just for numbers sake.

These numbers are based off of the fact We can sell our house for what we bought it for.

by making the extra 600.00 a month payment to principle I will be further ahead by 3,273.19 at the end of five years.
and at the end of the five years what I owe on the house will be 75K

i suppose its something right...