Many clients ask if it’s worth it to make extra mortgage payments to pay off their home loan ahead of schedule. Here are two questions you may want to ask yourself before you make extra mortgage payments:
1 – Will I have any large upcoming expenses in the next 5-7 years?
If the answer is yes, you may want to put some money aside to cover those expenses instead of making extra payments. According to recent statistics, nearly 80% of Americans are living paycheck to paycheck. That’s a staggering number! If you have some left-over cash at the end of the month, it may be a good idea to put that money into a savings account for a rainy day. Here are some examples of large expenses you may encounter:
New roof, new appliances or other large home maintenance expenses
Caring for elderly parents or helping other family members
New car, new house, or new business opportunity
2 – Can I earn a higher rate of return by investing my extra money?
If you can invest your funds at a higher rate of return than your mortgage rate, you may want to consider doing that instead of using the funds to make extra mortgage payments. Check with your financial advisor for more detail on investment opportunities that may be worth your consideration, including retirement accounts and college savings plans.
Let me know if you have any questions, or if you’d like for me to run some mortgage numbers for your situation!
Source: CMPS Institute
Kevin Brierton
Sr Loan Consultant NMLS 599873
NMLS: 599873
Caliber Home Loans
(480) 553-8770
16430 N Scottsdale Rd Ste 170,
Scottsdale, Arizona 85260
Corporate NMLS: 15622
All loans are subject to credit approval. All rates and programs subject to change without notice. Other restrictions may apply. This advertisement is not a loan disclosure or commitment to provide a loan approval or a specific interest rate. This information is not intended to be an indication of loan qualification, loan approval or a commitment to lend. Other limitations may apply. Caliber Home Loans CHL NMLS #15622 EQUAL HOUSING LENDER
