Decisions, Decisions: Making Good Financial Choices

Should you pay extra on your mortgage or pay only what's due each month?

If you have the cash, it's tempting to make an extra payment to shorten the life of your mortgage. But before you write that check, ask yourself this question: Is this really the best way to invest the money?

In most cases, the answer is no, says Haubrich. Paying off a mortgage faster will save you some interest, but probably not as much as you might think. When you factor in the state and federal tax benefits, a 6 percent mortgage really only costs you about 4 percent. And if you invest the money in mutual funds instead, you can expect to earn about 10 percent annually over the long haul (based on historical averages).

Bottom line: Paying down a mortgage feels good, but making your money work for you feels even better.

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