|
Mortgage VS Auto Loan Payment
It seems like a lot of people pay more attention to their auto loan instead of their mortgage. They negotiate the price of the car to the last penny and also negotiate and shop interest rates. The thought process needs to be 10 times stronger for finding and negotiating mortgage options. Just because you're buying a home for $100,000 doesn't mean you have an flat payment choice. You could get a fixed rate loan, adjustable rate mortgage, interest only, 80/20 mortgage etc. Each of those loans will result in different mortgage payments, different down payments and different interest rates. If you don't put a down payment of at least 20% then you'll also need to pay PMI which is principal mortgage interest. You don't have to pay PMI for the entire mortgage, only until 20% is paid off.
Once you get your mortgage I recommend using a mortgage calculator and printing out an amortization schedule of every payment you need to make. It will haunt you, yes, but it will also push you to make extra principal payments to off set the interest. You can also make sure that when you get to the 20% paid down that the bank stops charging you PMI. PMI is usually about $55.00 for every $100,000 of your mortgage.
It seems like it's become standard for people to live in debt and it's "alright" to have a certain amount of debt. Imagine is you didn't have any loans with the bank? That's probably not going to happen so we need to figure out what we can afford and not over reach our boundries. Living comfortably with a mortgage payment and auto loan that we can afford is the ideal situation. Everyone should keep a close eye on their debt to income ratio to be fully aware of their buying power with the banks.
Your auto loan is definitely still important to pay attention to because you obviously want to save money whenever and wherever you can. So try to find the best interest rate and shop the best auto loan so that you have the lowest monthly payment to keep your borrowing power available. You never know when you'll need it and it you have it available you'll be happy you made the right choices in the first place. When it comes to saving money after you have acquired the loan then you should be looking more toward your mortgage because there's a lot more savings available. | 
