I think for 2009 I won’t be able to itemize… I was talking to a friend of mine, and she said my first mortgage payment won’t be until November with a close date of September 23rd… so I won’t have enough to itemize… But for 2010, I’ll be able to itemize, that’s for sure!
This is what I’m thinking about for the game plan. Pay my regular payment while I’m re-modeling (hopefully not to go past December 31st) and use the extra money to pay for my remodel stuff in cash (well points on my CC that in turn is paid with cash). Then come January, begin to pay off the mortgage in a frenzy.
Why dash to pay it off?
Answer: Even with the rate so small, the balance on the loan is also too small…after 3 or 4 years, I won’t really be able to itemize because I’ll be a married woman by then… the standard deduction doubles when we get hitched and we won’t exceed it to itemize. I’ll still be able to itemize while I’m single even if I throw an additional $500.00 towards the principle balance. Plus, you pay more interest on the loan in the beginning. So to save the most money in the long run, I have to put up more cash in the first place.
If I never pay anything over the normal mortgage, I’ll pay $133,997.40 in interest... and that’s a heck of a lot of money… (and makes me pay double the amount for the place in reality.)
If I pay an extra $500.00 in principle every month, I only pay 46,718.21 in interest. And that’s a really nice savings… plus the mortgage is paid off in 12 years… (but that’s assuming I live there for 12 years… so I’d be able to make the additional payment which won’t be the case… but who knows what our income will be when we are married… and how long will call our condo “casa.”)
Since most investments (safe and secure) can’t get that kind of return (even 5.5%), it might make sense for me to try and eliminate as much of it as I can in the next three years (the minimum time I’ll be living there.)
Lots to think about… At least for now the game plan is to keep saving for the remodel so I can pay for that in cash… and then get my fabulous government $8,000 check.
I’m going to use my rebate to pay myself back for all closing costs (minus my down payment— So that’s the start of my getting hitched account), and then use the remainder to help off set the costs of remodel so I’m not really “out” any money and it’s invested back into the property. That way when I eventually sell the place (after I attempt the whole land lord thing) I’ll be sitting pretty.