Are You Ready to Pay Off Your Mortgage Early?
You’ve followed your life plan; checking off the boxes on your list, including buying the home you’ve always wanted. Now, you daydream about how great it would be to never have a house payment again.
Making additional payments on your mortgage is a smart choice, especially in the long run. Just $100 extra each month could save years of payments and lots of interest.
With other financial responsibilities on your plate, how do you decide if paying extra on your mortgage is the best allocation of your budget?
Your financial priorities should line up like this:
1. Pay off high interest credit cards first. Credit card rates tend to be significantly higher than mortgage rates. As a rule of thumb, the best financial decision is to pay off high interest balances first. You may also consider transferring the balance of your card to a card with lower interest.
2. Savings, savings, savings. You don’t want to be caught in a financial crisis because you don’t have an emergency fund to pay your bills when you need it. You certainly don’t want to fail to pay for the house you worked so hard to get. Set a goal to save at least six months of living expenses first before you start making additional payments on your mortgage.
3. Actively contribute to your retirement fund. Work towards contributing the maximum amount allowed annually towards your retirement account. If your employer will match contributions, take advantage of the full amount. Treat your retirement account like a fixed investment that must always be paid.
If your high interest credit card is paid off, you have ample savings in reserve, and you are contributing a sufficient amount of money to your retirement account, you can confidently set up an extra payment towards your mortgage each month. Being proactive in a plan for your future is always a smart decision.
Explore First Florida Credit Union’s low rate credit card and retirement options today to help you achieve your goals!