Paying Down Your Columbia SC Home Mortgage

If paying off your Columbia SC home mortgage is a goal of yours, consider whether your individual circumstances make doing so a smart move or not.

The rules have changed with the advent of historically low interest rates and the urgency to pay off your mortgage has somewhat diminished as interest rates have plummeted to historical lows. It is not the black-and-white decision it once was when interest rates hovered between 6 percent and 9 percent, and even the 11 percent to 13 percent we saw a couple of decades ago.

Things to Consider Before Paying Down Your Columbia SC Home Mortgage

Rather than just paying off your Columbia SC home mortgage, here are some places you might want to consider putting your extra money first.

Take your cards off the table: Pay off credit cards with any high interest rates — especially today, as there is now a huge discrepancy between credit cards interest rates of 13 percent to 24 percent and a 3 or 4 percent mortgage interest rate.

In case of emergency: You should first build up an emergency fund. Most financial planners recommend nine months to one year of living expenses. Yes, today's job market is improving; however, if you suddenly find yourself facing a layoff, you need to be prepared to sustain one year of living expenses.

Build up for retirement: Are you able to make the maximum yearly contributions to your retirement accounts? 401(k), IRA or an equivalent? Ask you accountant what the maximum allowable is for you and go for it.

Get the kids to school: Think about the kids, their schools and their college funds. Depending on how many children you have, how old they are and what type of college enrollment expectations they have, you need to be making adequate contributions to those 529 plans or other college savings accounts.

You may live a long time: Your money could run out before your health runs down. Another priority investment you should consider making each year is toward long-term health-care insurance. It is not as costly when you start it in your 30s or 40s. But if you didn't get around to it till your 50s it will take a hit out of you budget each month.

Best Method to Pay Down Your Columbia SC Home Mortgage

Pay an extra bump: On Jan. 1 or Dec. 31, write an extra mortgage payment check to the bank. Send it in as additional principal, and the bank will credit your account. After a few of these payments, you will really begin to see the portion of your monthly mortgage payment that is interest begin to shrink and the portion of your payment that goes to principle begin to grow.

Stash the cash: Before you go out and treat yourself to that new suit or to the spa retreat weekend, deliver your tax refund or your annual bonus directly to your mortgage principal.

Go monthly: Add an extra one-twelfth of your Columbia SC home mortgage payment to each monthly payment. Or if you can afford it, add even more extra every month.

Don't pay the bank even more: Banks love to send out notices telling you how much money you will save by allowing them to make twice monthly payments for half your mortgage amount rather than the one monthly payment. They will graciously offer to do this for you with a one time set up fee and then a small monthly processing fee. Do you think the banks offer this because they love you? Of course not, it's because they make money on this. Pay extra on your own, via any of the methods described above. The bank is getting enough of your money already.

For more Columbia SC mortgage tips, visit our Columbia SC Mortgage Info link under our Columbia SC Real Estate Categories to the right.