For many people, getting out of housing debt is a primary goal. You can make this happen in many ways, including refinancing at a lower rate, switching to a shorter-term mortgage or making mortgage payments more frequently. However, you should consider several factors before making the switch to paying your mortgage weekly.
While banks and mortgage brokers do not offer mortgages you pay weekly, you most likely can pay as much as you want as frequently as you want. In an interview on the Oprah Winfrey website, financial expert Suze Orman warns that you should check your home-loan terms to ensure that you have no prepayment penalty. If not, roll in extra payments by sending an extra check every week or by setting up an automatic transfer from your checking account.
A weekly mortgage payment does not offer much room for flexibility. If you lose your job or have emergency expenses, you may feel trapped by missing a payment. Instead, keep your standard monthly mortgage and dedicate yourself to paying one fourth of the total mortgage every week on the same day. This process results in your making extra payments, which go directly toward principle rather than interest, in every month that has five rather than four of the day you selected to pay mortgage.
Paying off your house loan is an admirable goal. However, you should have other financial aspects of your life in place before attempting to prepay your mortgage. If you have a significant amount of high-interest debt, such as credit-card debt, it makes more sense to pay it off first. In the article "Mortgage Prepayment Made Easy: Own Your Home in Half the Time" on the Get Rich Slowly website, J.D. Roth reports that you should also have a significant emergency fund, participate at the maximum level with your retirement plan and have savings dedicated toward other goals before prepaying your mortgage.
According to Anne Coleman's article, "Paying Off the Mortgage Early," on the Motley Fool website, market conditions partially dictate whether you should pay your mortgage weekly. If your mortgage rate is low and the interest tax-deductible, Coleman argues for using any extra weekly money for investments that may bring higher returns. However, her recommendation of investing in the stock market carries a risk of losing your principle as well as any interest.
- house image by Earl Robbins from Fotolia.com