House payments can take up a large portion of your paycheck, and paying even more toward your mortgage every month may seem like an overwhelming idea. What you may not realize, however, is that paying a little more can save you thousands of dollars over the life of the loan.
Before you put all of your extra money toward your house, consider the following to make sure it is best for your financial situation:
Benefits
Prepaying on your mortgage can save you tens of thousands of dollars. If you have a loan of $100,000 at 8% interest for 30 years, you will pay $264,240 in interest. That same mortgage held for 15 years produces only $172,080 in interest, saving you a whopping $92,160.
Drawbacks
It depletes the liquidity of your finances, and you wont have that money immediately available.
It is best to have a safety net with savings for at least 6 months before putting a lot of extra money into a mortgage.
Paying less interest on your mortgage can affect your tax picture (although paying higher interest is not a valid reason to keep a mortgage).
It does not make financial sense to pay extra on your mortgage if you are in...
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