At times, you might be tempted to make extra payments on your mortgage. But is that a good idea?
While it might indeed be satisfying to shorten your payoff period, your mortgage does offer some benefits. After all, it provides you with a tangible asset – your home. Plus, you may be able to deduct the interest payments on your taxes. And your interest rate is probably quite low, by historical standards.
Furthermore, you could find better uses for your money than making extra mortgage payments. For example, you could put the money into an emergency fund. If you faced an unexpected cost, such as the need for a new car, or you were temporarily unemployed, your home probably wouldn’t help you, but your emergency fund could.
You might also help yourself by contributing any extra money to your 401(k), IRA or other retirement account. After all, you could spend two or three decades as a retiree.
Think carefully about making extra mortgage payments versus using the money for other needs. There’s no right or wrong answer, but your decision can have a big impact on your financial future.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor, Casey Caliva, at Historical 30th & Fern.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.
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