Should You Prepay Your Mortgage?

Dated: 08/19/2019

Views: 335

Are You Making the Right Decision?

Deciding whether or not to prepay your mortgage is a big decision. If you’re not comfortable making it alone, watch my mortgage expert who’ll assist you in weighing all of the pros and cons.

Should You Prepay Your Mortgage?

Whether or not you should prepay your mortgage depends on a number of factors. You should consider the type of mortgage you have, how much your monthly mortgage payments are and what your interest rate looks like. You should also take a look at your overall finances and how well prepared you are for emergencies and retirement; it’s possible that your money would be better off going elsewhere at the moment.

Even if prepayments seem feasible and affordable, make sure that your lender accepts prepayments without penalty and that you know how they prefer to receive prepayments. Those extra payments won’t do much good if your lender simply applies them against interest or charges you a penalty fee because prepayments aren’t allowed by your loan.

Are There Any Downsides?

While there are definitely benefits to prepaying your mortgage, there are potential downsides as well. Some mortgages, especially those with adjustable rates, are designed to not allow prepayments; if you attempt to prepay on the mortgage, this can trigger a penalty fee. Additionally, some lenders only accept prepayments in certain forms and will apply any other money received as simply an early payment against the next month (which means that the money will go toward interest and principal and not just your principal loan balance.)

Attempting to prepay when you have significant debt elsewhere or don’t have a safety net built up for yourself isn’t a good idea, either; your mortgage likely has a lower interest rate than most if not all of your other debts, so you may be better off paying them off and building up savings and retirement funds first before you start worrying about prepaying a mortgage.

Blog author image

Kenneth Manesse

Helping you experience something new in Las Vegas that's guaranteed. Real Estate with less stress!....

Latest Blog Posts

Trusting Your Real Estate Agent?

Buying a home in Las Vegas can be a daunting task, but a good real estate agent can be incredibly valuable –especially as it relates to finding the right home and helping to negotiate price.

Read More

Shopping for a perfect night’s sleep in your new home?

You’ve got more options than ever when mattress shopping these days with no shortage of brick-and-mortar and online-only retailers to choose from. Here are the factors you should consider when

Read More

How to Plan for Organic Food on a Budget

Organic food usually tastes better, and is better for you, but it can also be very expensive compared to non-organic products. Organic food can cost nearly 50% more, thanks to the extra labor

Read More

Is Las Vegas in a Sellers Market for September 2020?

Home sales continue to outstrip supply and the Las Vegas Market has been moving higher for several weeks. This is a Seller’s market so watch for upward pricing pressure in the near future if

Read More