[USER]

My husband and I have our rainy day fund that earns us interest of about $1000 a year. We bought a home a year ago, and are making extra principal only mortgage payments to clear the loan faster.

I did the math, and if we make no changes and add in an extra 1000 to our principal every year (the money we’d get as interest from our HYSA), we’ll clear the loan a year and a half faster.

I want to do this but I’m having a tough time getting my husband on board. Are there tax implications for doing this?

Would love to finish the loan quicker so we can eventually rent it out and have extra income that way.

[Adam]

Not sure on your loan amounts but if you can put an extra 2 or 3 payments you can knock it down to maybe 12 years but can confirm if you play with a mortgage calculater and you will be saving 100k of thousands in interest.

[Benjamin]

No tax implications on paying off sooner BUT you should be reporting the 1000 as part of your income (bank should give you a form for it. Don’t remember which one it is).

[Andrew]

Always good to have an emergency fund that would cover 3 to 6 months expenses – after that the after tax return of paying off the bond is the superior next choice in my opinion.

[Mark]

Go for it you won’t regret paying it off especially if health issues happen down the road, nobody likes to talk about the risk factors in these equations.

[Author]

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