Gzz..
If you made a year’s worth of payments now and didn’t have to make a payment for 12 months, you would still be paying the same amount of interest and not saving anything; you would just be paying it in advance.
Several options possible.
By paying $50K now, you will save about $1800 in interest over the next 12 months but still be obligated to make your same monthly payment which will pay down principal faster.
Are you comfortable with that ?
You could also pay down $25K now and save the $25K as a cushion.
If you are willing to risk that you *probably*
will not need the $50K in the next year, pay down your mortgage:
1) Call your servicer and ask them if you want to pay down a chunk of principal if they will recast your loan payment adjusted to the lower amount with the same payoff date. Sometimes possible.
Understand that they likely do not own your loan, they just collect payments. A mortgage backed security is expecting the monthly payment based on your original amount
2) If you have at least 25%+ equity, apply for a HELOC (Home Equity Line Of Credit) if you can qualify. There’s no cost and you get a checkbook with a line of credit that should be no more than Prime (now 3.50%) and you should only be charged daily interest if you need any money in a pinch.
3) Get a credit card OR check the ones that you have for access to cash at 0% for up to 21 months, with a 1%-3% upfront cost.
**This is cheap money. I have clients that have been creative in paying down mortgage balances this way, you need a good credit score**
There are ways to juggle debt with very limited risk. As long as you have access to cash somewhere
it’s not a bad idea.
Never wait until you really need the money to set these strategies in place.
You can often get access to money when you don’t need it but if one waits until they lose their job and then applies, it’s much less likely that you can get approved when you really need the money.
