Roger Young

Mortgage Lender Peyton Mortgage

  • Home
  • About
  • Blog
  • Resources
    • Mortgage Calculator
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Free Loan Quote Request
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Loan Programs
    • Mortgage Glossary
    • Mortgage FAQ
  • Reviews
    • Reviews
    • Zillow Reviews
  • Contact
  • Apply
    • Apply with Roger
    • Download Application Form

Overpay On Your Mortgage Or Add To Your Savings, This Is The Question

February 5, 2014 by Roger Young 1 Comment

Overpay On Your Mortgage Or Add To Your Savings, This Is The QuestionSo you find yourself with a little bit of extra money – perhaps due to a raise, an inheritance or an unexpected windfall?

Should you put all of your money toward paying down the mortgage on your home? Or would you be better off placing your extra cash into a savings account?

Deciding whether to pay down your mortgage or add to your savings is a complex choice and it depends on a number of factors in your personal financial situation.

Here are some of the things that you will need to consider when making the decision:

How Much Are Your Savings Earning?

Take a look at the savings accounts where you are keeping your money and assess the interest that your savings are earning. Is your money earning more in savings than you would save by paying down your mortgage earlier?

Does Your Mortgage Have Overpayment Penalties?

Some mortgage lenders will charge you a fee if you try to repay your mortgage earlier than the agreed upon term. Check with your lender to find out and calculate whether the extra costs will outweigh the benefits you get from overpaying your mortgage. If they do, put your windfall in savings instead.

What are Your Other Debts?

It doesn’t make sense to be overpaying on your mortgage if you have a lot of credit card debt that is charging you an enormous amount in interest. Prioritize your high-interest debt first before you think about overpaying on your mortgage.

Do You Have An Emergency Fund?

You should always have an emergency fund in cash that will protect you from having to use expensive credit card debt if an unexpected payment comes up such as a burst pipe or a flat tire on your car or if you lose your job.

A good rule is to have the equivalent of three to six months of savings in a bank account just in case you need it. This is a first priority and only when you have this emergency fund established should you consider overpaying on your mortgage.

These are just a few of the important factors that you should consider when deciding whether to overpay the mortgage on your home or place the money in savings. For more information, contact your trusted mortgage professional.

Mortgage Tips Tagged: Mortgage Tips,Homebuyer Tips,Overpaying For Mortgages

Comments

  1. Brandy says

    September 13, 2014 at 3:02 am

    Overpaying mortgage or add the excess money in your savings is a big decision and both has their own advantages and disadvantages. Thank you for sharing these things that needs to be considered before making a decision.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Roger Young

Contact Roger


Mortgage Broker
Peyton Mortgage
Mobile: (281) 772-6249
Office: (832) 767-2530

roger@peytonmortgage.com
APPLY NOW →
FREE RATE QUOTE →

Connect With Me!

  • Facebook
  • LinkedIn
  • Twitter

Sign Up For My FREE Newsletter!

Repair your credit today with Lexington Law
Roger Young reviews

Quick Links

  • Calculator
  • Accessibility Statement
  • About Us
  • Contact Us
Equal Housing Lender

Archives

Categories


Located in Houston, TX
Company Address:
11111 Katy Freeway Suite 910
Houston, TX 77079

Copyright © 2022 Roger Young  ·  All rights reserved   ·   Log In