Congratulations! You saved your pennies and finally purchased your first home, shelling out a $63,000 down payment on your new digs that set you back $315,000 (the 2019 median home price in the US). You're all moved in and ready to start writing those monthly checks for the mortgage payments. With current interest rates hovering around 4%, those checks will be for $1203.00 per month, not including taxes or insurance. The first few checks are pretty painless as the excitement of actually owning your own home still has you smiling, but by month six it finally sets in that you are going to be writing these checks for the next 30 years. At that point, you vow to make your life's mission to get this debt burden off your back and pay that mortgage off early. You start paying every extra dollar that you have toward the mortgage in order to save some of the $180,803 in interest that you would pay if the loan goes the full 30 year term.
Is this a smart decision? Standard financial wisdom states that being out of debt is a great thing and avoiding paying all of that interest sure would be nice. In general, both of these statements are very true but there are a few caveats to consider before getting too crazy with those additional payments toward the mortgage.