Paying Debts Peer Pressure in the Investing World

Paying Off Mortgages

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Look into paying off your mortgage sooner rather than later. A mortgage with a long repayment term (30 or even 40 years) is very appealing because the monthly payments are relatively small, which can put a more expensive home within reach. However, the downside of this strategy is that you'll have a much smaller amount going to pay off your loan each month, and that can dramatically increase the total interest costs.
You can save tens of thousands of dollars in interest -- depending on the amount of your loan and the interest rate -- by choosing to reduce the length of your mortgage. Many people pay off their 15- or 30-year mortgage loan faster by sending in extra payments -- say, an additional $50 or $100 each month or one large payment once a year. If you can afford the extra payments and don't have other uses for the money, "this is an easy way to pay off the loan and save thousands of dollars in interest charges without incurring the cost of refinancing," said Marshall. There are pros and cons to the different strategies, so you may wish to consult with a financial or tax advisor about what is best for you.