A single loan is hard enough to pay back, what more if you have two? Do you know which one you should pay for first? In such a case you should consider factors such as amount of debts and the payment terms. You should pay for the larger debts first. You should take everything in consideration and figure out what’s best for your credit’s health.
What Should Be Paid First? Second Mortgage Or Student Loan A single loan is hard enough to pay back, what more if you have two? Do you know which one you should pay for first? The truth is, there is no right answer to that question but there are factors that you have to consider when it comes to repaying your student loan and repaying your mortgage, such as the amount of debts and the payment terms. Keep in mind that it is best to pay for the larger debts first. Paying for the bigger loan will help you save more in the long run and you’ll finish off that debt faster and it will soon be out of your hands. If you are thinking about paying for your mortgage later for the interest deduction, then you might want to think about it again because you will only be getting a small portion with the deduction. While student loans are surely tax deductible, so no matter what you do the tax will really be reduced. Student loans are also very flexible in payment terms and you are usually allowed to change the terms and it can also be based on a scale, your income and it can even be deferred if you are experiencing financial difficulties. Paying down your mortgage first will make most sense in mathematic terms due to the interest rate. Also, if you do not want to leave a huge loan with your family if you pass on, then it’s best to pay for the mortgage first because student loans die with you while mortgages do not. Paying regular payments and keeping track of your free credit score report is definitely an option to maintain your credit’s health no matter which one you are paying off first. You can also try to finish off paying the one with the biggest interest. The more you skip out on the one with the higher interest. The more you’ll have to pay in the future and the bigger you’ll debts will become. The student loan is less to worry about because if you lose your job, it will be put to deferral or forbearance. But if you lost your home to foreclosure, you will be sued for the balance of the home equity loan. Take everything in consideration and figure out what’s best for you, your family and even your credit’s health. If you are a college student, then as much as you want to screw up your FAFSA, you sure want to improve your free credit score. For managing finances affectively always keep a check on your credit history and credit score from the start.
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