Defeating the Interest
Posted By: Dr. Frugal in Loans on 09/02/2007 at 17:22:28
There are ways to work the interest system to your advantage if you are interested in paying down your mortgage more quickly. You can make additional payments--for example, make 13 payments per year instead of 12. Mark the additional payment to be applied to the principal and it will go to reducing your loan balance, not your lender's bottom line.
You can also add an amount every month to your mortgage payment for the same purpose. If you plan to stay in your house for a long time or want to retire there, paying down your mortgage early makes sense. However, unless you need to build equity for some reason, paying extra on a mortgage on a house you plan to sell in a few years might not be the best plan for you. Principal payments are not tax deductible, so you are not getting any immediate benefit.
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