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Homeowner math on two mortgages....


I recently bought my first house! Hooray for a steady paycheck...

And I have a quandary. I had to split the mortgage loan into two loans since I couldn't put 20% down, so I have one loan for $377,500 and a second loan for $27,500.

Now the first loan is a normal 30 year mortgage loan at 3.75% ($1770/mo) while the second is HELOC which will become a variable rate after a few years but currently is at 3.25% (making it roughly $75/mo).

Now I have a bit of extra cash that I would like to put toward paying down faster (while I have this income stream)...but which do I put it towards: the smaller loan which is a smaller % rate (but will go up in a few years to whatever APR happens to be, but which will erase that loan more quickly cause it is less $ per month?) or the larger loan since the interest on a larger loan is so much greater.

Amortization schedules can be kind of confusing to me, and I wasn't sure how to try to determine where my extra $500 a month would be more powerful, since I want desperately to make smart financially savvy choices, but it isn't a clear answer to me.

Thanks in advance for your help (and for letting me know why -- since that is part of what confuses me...)

Confused but trying
Happy Homeowner - it is like I am finally an adult!
Is the 3.75% guaranteed for the full 30 years?
When does the 3.25% become variable?
YES, it is a 30 year fixed mortage so it will always remain the same payment with no pre-payment penalty.

The HELOC at 3.25 becomes variable in 2 years, but it is hard to know what the APR will be at that time.

Thanks for the information Denis! -- And thanks JeffM for your opinion.