The thought of paying down your mortgage early is appealing to a lot of people…think of how much money you’ll save in interest in the long run! One extra principal payment each year on a $200,000 loan could mean paying thousands less in interest and shaving four full years off the usual 30-year repayment term. That is a very tempting idea!
The problem comes when you ignore other more important financial obligations in your efforts to pay off your house. Before making extra payments, financial planners say you should make sure:
- You’re contributing enough to your 401(k) to get the full company match
- You’ve paid off all your other, higher-rate debt
- You’re adequately insured
- You have an emergency fund
If you can do all that and still have extra money to pay down your mortgage, go for it! If you don’t, though, don’t feel bad that it may take you the full 30 years to pay off your house. With today’s rock-bottom interest rates, it’s pretty cheap debt to have.
