Anonymous Strikes Again!

We're back in the action with another question, this on also asked by the so called "anonymous". Whether or not it's the same one, we have not yet found out.

Dear Munnybagz,
I have a question I have been trying to get an answer to with no success. Does it make sense to pay down my mortgage by making extra payments if I plan to sell the house in 5 years or less? I hope you can help.

Dear Anonymous,
Short answer no with an if, long answer yes with a but. Short answer first. You seriously should not pay extra on your mortgage if you have other higher interest debts. That would cost you more money than paying off your other debts. The long answer is yes. As long as you have extra money to put into a debt, and you are on track with all other debts, always pay off as much as you can. Because if you pay off your mortgage payments, thus getting rid of the interest, whatever you put into your mortgage goes directly into the debt, not interest. That way, (if you've read my How to Pay a Mortgage post, you'll know*) if you can pay an entire years worth of mortgage payments when you don't have to, you just cut a year off your mortgage. Even if you have only 5 years or one year left in the house, you'll get more money once you sell it and finish the mortgage up. Hope this answers your question.

*Turn 8,000 Dollars into 20,000 Dollars!


Anonymous said...

Hey... I love your site! this isnt a question.. I just wanna tell u guys that your site rox... My mom listened to my plea and now i get my age in allowance! Thanks! im also gunna try your Fun ways for kids to get rich!

Munnybagz said...

That's great! I followed my own advise and i got my age in allowance too. That's two success stories so far!

Anonymous said...

Yea i wish it worked for evry1!

Ben Cruikshank said...

Actually, if you pay off an entire year of your mortgage early you would have cut well more than a year off the total payments.

Here's a cool tip for you: If you can manage to pay one extra payment a year on a 30-year mortgage you will end up paying it off in only 22 years and bypassing a lot of extra interest.


Anonymous said...

Goodness, who knew you were that smart! No offense, but you sure don't act like it!