Pay off as much of your principle as early as you can to reduce your interest outlays.
Old news to some — new to others:
Russ touches on an important point. Not only for the reason he cites, but incrementally prepaying one's home mortgage can be an important — and relatively painless — retirement-planning strategy. For most, a mortgage payment represents the single largest monthly expense. It follows that eliminating this expense
before retirement is a good thing (unless you're one of those who believes that
leveraging is a good thing
).
Hypothetical: $150K mortgage; 30-year term; 6.5% interest rate; P&I payment $948. Paying the equivalent of one extra payment a year by increasing the monthly payment $79 ($948 ÷ 12), the mortgage pays in-full in ~24 years ... ~6 years early ... and eliminating $~66.5K in payments. Increasing the monthly prepay to $150 pays off the mortgage 9 years early.
Use one of the on-line financial calculators to play with "what ifs."
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