Not sure what to do....

sai361 · Joined: 12 Feb 2008 Posts: 2

I purchased my house in May of 2006 and am planning to sell it during the summer of 2009. I will have owned the house for 3 years before selling it. It is a fixed-rate FHA loan.

During the 1st year I paid extra into the principle (roughly 1 1/2 extra house payments that year).

Now, during the 2nd year money was tight so I started paying the minimum payment but I can afford to pay extra principal again.

So here is my question. If I'm planning on selling the house right after owning it for 3 years would it be better to pay extra into the principle for the next 1 1/2 years until I put it up for sale? That way I would get a little extra equity out of it.

Or would it be better to just pay the minimum payment from here on out?
I'm not sure which method would save/earn me more money.

Any advice would be much appreciated.

liverichly · Joined: 10 Feb 2005 Posts: 195 Location: Orange County, CA

Would depend on your interest rate on your mortgage and the rate of return on other investments you could put the "extra" into.

sai361 · Joined: 12 Feb 2008 Posts: 2

My loan ia 5.75 fixed. The reason why I thought about putting the extra into the principal instead of investing it is because we will be moving to another state and will need all our money to get set up. I know I will be able to get the extra back that I put into principal but I don't want to have money sitting in a retirement/investment account I can't touch for 10 years.

Hope that explains our situation a little better.

liverichly · Joined: 10 Feb 2005 Posts: 195 Location: Orange County, CA

There are investments you can put money into where you can get the money back at a drop of a hat... stocks, mutual funds, CD's, etc. You should seriously talk to your financial investment planner to determine your best course of action. I think paying down your principal could be your best option, but you need to analyze all investment options before determining that.