Profile picture for kevin 11 robinson

Should I make a principal only payment bi-weekly or save the cash?

I refinanced my house in June. 4.75% for 15 years. I currently make bi-weekly payments taken directly out of my paycheck. I am underwater a bit (Approx 10-20k). I'd like to buy a new  home in 3 years MAX however, the earlier the better. Not sure if reducing the principal or saving the cash is the better thing to do. Need a little guidance to make this happen. Thanks
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December 15 2013 - US
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Profile picture for kevin 11 robinson
Haha, no I am not a closer. Not in the real estate business at all. Homes similar to mine are selling for around 140,000. When payments are taken out of my pay (bi weekly) they are held until the payment is due the first of every month. I know that is not true biweekly but I do end up among an extra full payment every year.
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December 16 2013
Are you set up on a Bi-Weekly Plan or Bi-Monthly? I ask because Bi-Monthly looks and feels like a Bi-Weekly but only applies 2 half payments / month so no additional Principal reduction.The Bi-Weekly plan makes 26 payments/year ( 13 full payments ) which yields the 1 extra payment.
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December 16 2013
Thanks Kevin, are you my old Closer? Had to ask since you have the same name :).
Are homes in your area with the same footprint selling for more than 155K now? If so, over 165K?
What is the property zip code?
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December 16 2013
Profile picture for kevin 11 robinson
Thanks for the response. The current balance is $155.000. I will be selling this home before I close on my next. My budget for my next house is 300,000. The interest rate is 4.75%. Reason for this was my LTV ratio was 115% at the time of refi. I really had to plea and negotiate with my credit union to take the loan. It was still better for me to refi for it did not cost me anything at closing, I eliminated PMI,lowered my interst rate .5%, and cut the term in half. I originally purchased the house in March 2010.
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December 16 2013
You are probably earning more money paying the loan down for now. Will you be selling this home before buying the next home? What is the current balance on your home? Are you sure your rate is 4.75% and not 3.75%? If 4.75% I would refinance again with a Lender credit paying all closing costs unless the balance is small.
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December 16 2013
 
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