Remember that prepaying a mortgage isn’t the best option for everyone. And in addition to making sure that your other higher-interest, non-deductible debts are paid first and your retirement and emergency savings accounts are in order, there are a few other reasons why you might not choose to prepare your mortgage:
- Your interest rate is extremely low. If you were lucky enough to refinance into a 30-year fixed-rate loan at 4 percent or below, that’s a historic interest rate. You might want to keep that rate and use your free cash for something else, like…
- You’ve found other investments with a higher rate of return. You might decide to invest your savings in the stock market or another investment that has a higher rate of return over time. Or, you might decide to buy investment property.
But if neither of these scenarios apply to you, go ahead and apply a few extra payments to your principal this year. The less time it takes you to pay off your loan, the more money you’ll save in the long run.