I would suggest paying down the new mortgage to $750K, as that eliminates non-deductible interest. This gives you a risk-free 5.5% return, which is very good for a taxable account. In your 32% tax bracket, any further payments would give you only a 3.74% return (MA doesn't allow a state tax deduction), which isn't great; Vanguard MA Tax-Exempt has a higher yield.
Check that you will actually lower your monthly payments by making the paydown; you may have to ask whether the lender will "recast" your loan so that it is paid off on the original schedule. Otherwise, if you make prepayments on an ARM, the new payment is calculated at the next reset, which will be nine years from now.
Check that you will actually lower your monthly payments by making the paydown; you may have to ask whether the lender will "recast" your loan so that it is paid off on the original schedule. Otherwise, if you make prepayments on an ARM, the new payment is calculated at the next reset, which will be nine years from now.
Statistics: Posted by grabiner — Thu May 16, 2024 10:45 pm — Replies 1 — Views 232