Why Aren't We Making an Extra Payment on Our Mortgage Every Year?

It’s like asking “why aren’t we exercising ?” Or “why haven’t you seen Ted Lasso?”

(You can binge Ted Lasso on a free trial of Apple TV if you think the subscription is too expensive.)

If your lender isn’t charging a prepayment penalty, you can make extra payments.

• Make sure it goes toward your principal and not future payments.

• Pay a lump sum when you get a bonus or a tax refund

• Pay a little more each month. Divide your monthly payment by 12 and add that amount to each payment. You can also do that with your home equity line of credit (HELOC).

“Why?” You Ask

• If you start early enough, you can shave years off your mortgage.

• You can pay down the principal faster, saving money on interest.

• It makes you feel financially responsible!

A Few Cautions

Make sure you know how you stand financially. Pay off high-interest debt first. Contribute the maximum to your 401K. Make sure you have a 3-6 months emergency fund.

Then consider paying down your mortgage principal even if it’s only one extra payment a year. It’s long-term thinking but, like getting in shape, it’s worth it.

(Thanks to Mitch Mitchell and the Movement Mortgage Blog)

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