My mortgage rate is many times higher than the interest rate on any of my savings accounts. I can try to get better accounts like an Money Market or a Certificate but I'd have to drop like 100k, which I don't have, just to get a rate comparable to my mortgage.
My mortgage is young so its currently over twice higher than my other assets. $1k in a certificate gets me $50 in a year. $1k lump to my mortgage saves me $2k in future payments. $1k extra annually saves me $15k. If I kept reinvesting that certificate I'd earn about $4K over the same timespan.
As I see it, I should be dumping much money into my mortgage as I can afford right now. Maybe when the account gets smaller than my other assets that'll change. But for now the only thing stopping me is having some actual liquid savings.
If you are unwilling to invest in
, then it absolutely makes sense to pay off your mortgage as quickly as is viable for your other savings needs. If your rate is appreciably higher than the interest on any savings vehicle available to you, the effective value of the money is better as you explain in your math; basically whatever money you put into your mortgage is a garunteed return of whatever your mortgage rate is. IF that's like some 7% bullshit then you're balling and no savings account will ever give you that much. Although I think the math changes if you assume you will refinance at some point.
I don't have a 7% interest rate, thank god. But its like %5.75 and the default for my savings and IRA is 0.25%. Best is the 401k which is like %4. I probably should move my IRA over from my bank to whoever does my 401k because it looks like a joke.
How is your 401k so low? The one my work automatically puts it into is like 15% this year?
Maybe I'm reading the stats wrong. There's no equivalent fixed APY because its tied to
. it says %10 somewhere bit I read that as total overall not year total.