If you finally get a little breathing room in your budget, you may find yourself with some extra money at the end of the month. Should you invest those extra funds or start to paying off your mortgage early? Many professional money managers have weighed in on this debate with mixed results and recommendations.
Here is a breakdown of the two options with some math to help:
If You Pay Off Your Mortgage Early
Most mortgages allow people to prepay the principle balance without any penalties. Paying just a few extra hundred dollars per year can shave years off of a traditional thirty year fixed rate mortgage.
For example, if you add one extra principle payment on your mortgage every year, or one twelfth of your payment each month, you can help you pay off a thirty year fixed rate mortgage in as little as twenty five years. That equals a savings of almost $50,000 in interest payments that you would have incurred otherwise. Adding as little as $100 extra to your monthly mortgage payment will save you an incredible amount of money over the course of your loan. [Check out the entire story]