Get The Lowest
Rates Today!
Complete Our No Obligation Information Application
and get Mortgage Lender's information
When To Make Extra Mortgage Payments
Many people
routinely add $100 or $200 to their mortgage payment each month. It's
a good feeling to know they are closer to paying off their home or apartment.
For some of them, however, it may not be the best move, financially speaking.
Those whose mortgage interest is tax-deductible, should make another choice.
Their interest payments are actually reduced by the income tax deduction. For
them, funding retirement accounts is a better idea, especially if the funding
is tax-free. Financial planners say safe municipal bonds offer yields that are
greater than extra mortgage payments would offer.
Paying down a mortgage loan IS a good idea if your mortgage interest is not tax
deductible.
In 2004, if you are married filing jointly, and your total itemized deductions
including mortgage interest come to $9,700 or less, you will end up taking the
standard deduction instead. You receive no tax break for your mortgage interest.
You might also want to make extra principal payments if you have an adjustable-rate
mortgage. If the interest rate rises by two points or more, your monthly payments
will be much higher. To offset that, you may want to reduce the balance with
higher payments.
If you lack the self-discipline required to invest elsewhere, you would also
benefit from extra principal payments. It's easy to procrastinate when you should
be investing. But you have to write that mortgage check every month anyway, so
you might as well make it a little bigger.
All brand names and product names used on these web pages
are trademarks, or trade names of their respective holders. May or may not be affiliated with Mortgage Lender.
NEWSLETTER 
