While 30-year mortgage rates are not at the lows of 3% we saw in 2012, mid to low 4% rate are still really good. It is very tempting to make a small down payment and use the difference in an investment with a higher potential for return. If you only make a 5% down payment instead of a 20%, you will pay thousands in extra interest and PMI insurance. Plus, beating your 4% cost of funds is no slam dunk. Making a larger down payment will ensure that you your return on money is equal to your mortgage rate and will give you a small monthly mortgage payment, leaving you free to invest the extra cash or hang on to it for everyday expenses.
Making additional principal payments on your mortgage can save you thousands in interest and pay off that loan quicker. It’s hard to put a return on investment by becoming mortgage free, but taking the weight off your shoulders by not having to make a mortgage payment can lead to a happy lifestyle.
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