Prairie Village residents seeking to pay down their mortgage faster should pause before adding extra principal each month, according to a sponsored column from local lender Fountain Mortgage. While the “secret extra mortgage payment” strategy—splitting a monthly payment into bi‑weekly installments—can reduce interest and shorten loan terms, the firm highlights several scenarios where holding back may be wiser.
Pay off higher‑interest debt first
Many Americans carry credit‑card balances that charge an average variable rate of about 18%, far higher than typical home‑loan rates. Fountain Mortgage recommends tackling those balances before allocating extra cash to a mortgage, as eliminating high‑cost debt can save more money in the long run.
Refinance instead of extra payments
Homeowners who lack cash for additional principal might explore refinancing to lower their current rate without resetting the loan term. The lender notes that a lower rate could produce a quicker breakeven point, potentially saving more than extra payments would.
Maintain an emergency fund
Financial experts stress the importance of setting aside three to six months of living expenses. Without this safety net, an unexpected job loss or expense could jeopardize a mortgage, especially if extra payments have depleted cash reserves.
Consider investing the extra money
If a homeowner plans to stay in the house for only a few years, the benefit of extra mortgage payments may not be realized before a sale. In such cases, directing the funds toward market investments could yield higher returns, depending on the individual’s risk tolerance and time horizon.
Assess your home‑ownership timeline
Evaluating how long you intend to remain in the property is crucial. If the projected savings from accelerated principal payments won’t materialize before a move, the opportunity cost of not investing elsewhere may outweigh the mortgage‑payoff advantage.
Fountain Mortgage encourages residents to discuss their unique financial situations with a loan officer before deciding on extra payments or refinancing. The company’s NMLS number is 1138268.
Original reporting: Johnson County Post (Overland Park) — read the source article.
