Question by AN: Should I pay off my mortgage sooner or later?
I just refinanced my home with $ 59,000 balance left for 15 years with an interest rate of 3.24%.
My monthly payments come out to be about $ 420 roughly including principal and interest but I have been making $ 1200 payments to pay off my mortgage sooner.(the additional money is reducing principal). Is this a recommended strategy? Will I save much money over the long haul in terms of less interest paid?
Answer by bdancer222
Yes, it is always a good idea to pay off loans faster and you will save a ton on interest over the long haul.
I hope that you already have an emergency fund of at least 6 months worth of expenses already set aside. You should also be taking advantage of retirement savings, especially if your employer offers a 401k.
I am also assuming that you do not have other debt — no credit card balances, no car loans etc. If so, pay those off first. The interest rate is likely much higher than your mortgage.
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The savings are huge if you pay off the loan in 5 years instead of 15 years. Your strategy seems fine. The only problem is if you end up selling the house, you didn’t need to hurry to pay off the loan….. it will be paid when you sell.