Released: September 17, 2007

Prepaying mortgage usually smart

Source: Carolyn Bigda, Chicago Tribune [Baltimore Sun] (Free Registration)

Much attention is being paid to homeowners who can’t afford their mortgage payment. But what if your bill is manageable? Or your interest rate hasn’t moved upward yet?

Should you prepay some of your mortgage?

The national median sale price for existing homes, about $230,000, is on the decline for the first time since 1968, according to the National Association of Realtors. So adding a few extra dollars to the mortgage payment might seem like the safest way to build equity: Any money you pay above the amount due is applied to the principal, not interest.

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