Prepay mortgage or invest?
I’ve read across a few finance blogs that have been talking about prepaying mortgages or not - a lot of people seem against it, saying that the money would be better spent putting into various investment vehicles for “in theory” greater returns on the investment.
In researching this idea, I’ve gotten a good grasp on what seems to be the going concern - what debts are being paid off first?
In thinking about prepaying the mortgage, we’re laying out the debt that takes interest - i.e. credit card debt, which we will have paid off this month (as we do every month).
Our debt consists of:
- 0% credit cards (used for appliances, setup to be paid off one month before they expire)
- Student loans (for me, still in school).
- Mortgage
That’s the extent of the debt - Mortgage, Student Loans, and credit cards. What is charging the most? Our mortgage!
I’m contributing to my company’s 401k to the match, so I’m not losing any money, and with my wife working that gives us over a grand extra disposable income per month! The plan is to take this money and apply it towards our debts AND the mortgage principal - paying the principal (by sending a direct check notated that it’s for the principal) will cut down on insurance, as well! I do not look at it as “a return on investment” with our prepayments do to the recent volatility of the housing market. If we prepay the mortgage and sell the house in - say five years - we’ll have paid down $30,000 on the mortgage, plus the built up equity, meaning we could potentially have a huge down payment for the next home - all from the money gained from our home!
It’s still something I’m looking into, but I will be paying some extra down on our mortgage while paying down all other debt - while reaping the tax benefits of interest paid on student loans and our mortgage… 
posted in budget, debt, personal finance, real estate | 0 Comments
