If you have looked into wealth building strategies, you have undoubtedly stumbled upon the raging debate over prepaying ones mortgage. Here is the objective scoop.
Prepaying Your Mortgage The Pros and Cons
When paying a mortgage, one is in the unique and unfortunate position of having to pay a lot of interest over a long period of time. Depending on the value of your home, you can easily expect to pay hundreds of thousands of dollars over the life of a 30 year loan.
Advocates on one side of the isle suggest that paying even a few extra hundred dollars a month against your principal will save you tons of money over the life of the loan. Others feel this is lunacy as the money can be used for other purposes. As is often the case, both parties are partially right and partially wrong.
If you purchase a home with a 30 year loan and live in the home for 30 years, you will pay a draconian amount in interest. In such a situation, paying a few hundred dollars more in principle each month will save you tens or hundreds of thousands of dollars in interest over the 30 years. The question, however, is whether this makes sense for you in the real world....
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