Home » Uncategorized

What is the best strategy to pay off my mortgage early?

8 May 2010 1,423 views 56 Comments

Yahoo Question

I have a standard 30 year fixed rate mortgage at around 5%. I am planning for an early mortgage payoff. I am wondering if I should pay the minimum mortgage payment and save my extra cash until I can pay the mortgage off in one lump sum 9-10 years from now or make smaller monthly payments.

CCWD reply

John, There are several factors that determine what you should do, but I will create a scenario for you, Assuming your not cash strapped and have a stable employment situation. You should take what you would want to apply to the payment and Open a troweprice account and send your money there. You will have a better chance of earning more money and here is why.

 Most American homeowners refinance every 7 years on average. American homeowners also stay in thier homes 10 years before selling or trading up. What if The housing market takes a dip and your home that you paid 150k for today is worth only 40k tomarrow.  Phoenix is expieriencing this  right now. Would you be okay with that?

Most people expierience a time in thier life when they feel they can accomplish anything financially, this ussually lasts about 2 years. some longer. I wouldn’t put more money into your mortgage. In the long run it makes them richer.

Many people are doing short sales and the banks are taking the hit. If you have to do a short sale You will be able to buy again.  Let the bank take the fall. and put your money into a 401k,trowe, or IRA, FYI most  401 k plans are protected from being lost in bankruptcy. so if you ever do have to file due to a short sale or forclosure your 401 k should be safe. check on your local law Site.

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading ... Loading ...

56 Comments »