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Module 5
Life as a Homeowner
Benefits of Home Ownership
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Prepaying Your Home Loan

A Great Investment for SomeBy paying extra principal on your home loan each month, you can repay your loan sooner and ultimately lower the amount of mortgage interest you pay over the life of the loan. But while prepayment of a home loan can be a great investment for some, it isn't for everyone.

Consult Your Tax or Financial AdvisorWhen the real estate market is strong, home prices are increasing, or the stock market is down, homeowners who prepay their home loans generally reap solid returns and build equity. But when the stock market is strong, homeowners might want to reconsider whether prepaying a home loan is still a better deal than investing the cash in stocks or bonds. A basic question to ask is: Where will my money work hardest for me? Consult with your tax professional or financial advisor to decide if prepaying your home loan is a good decision for you.

Be Sure There Are No PenaltiesIf you want to prepay your home loan, consider increasing your regular monthly payment or making additional payments each year. But before you start, be sure your lender doesn't charge any prepayment penalties on additional payments, and be sure to inform the lender that the additional monthly cash is to be applied to your principal.

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