Bankruptcy Might Yield Better Savings Than Paying Down the Mortgage for Chicago Residents
A mortgage payment is the biggest bill most Chicago residents pay each month. So with mortgage rates at the lowest they may ever get - around 5 percent - now might seem like a good time to bullet and pay off your home loan early, if you can afford it.
But for most of us, just the opposite is true.
A low rate is actually a bad time to pay down a loan - especially if we're carrying debt or have neglected to start an emergency savings fund. We'd be better off paying down our credit card debt, and here's why.
With today's low mortgage rates, you'll probably never get a cheaper loan - especially if you can refinance. So you could pay down your mortgage and save 5 or 6 percent in the future (even less, if you're able to write off some of your mortgage payment on your income taxes), or you could pay down your credit card debt and save, on average, 20 percent or more. What sounds like a better deal to you?
Not that there isn't something to be said for freeing your life from debt, house included. Hey, I'd love to own my home free and clear. And if I had plenty of savings, a high income and zero debt, maybe I'd do it. But right now, I've got other things to worry about.
Often times, it's the other bills - not the mortgage itself - that can make your house payment difficult to afford. You'll save more money by eliminating those higher-interest debts - and then, by investing in anything that can yield a rate of return higher than your mortgage interest, such as a retirement account that you can write off on your taxes. Of course, if you don't have a stash of cash socked away in a bank account for emergencies, building up a savings should be your number one priority. That way if the worst happens, you'll be able to avoid racking up credit card debt, medical bills and other debts with sky-high interest rates.
Remember, for the highest savings you'll need to pay off debts with the highest interest rate. Paying more than the minimum each month is one way to get there. But if that's not possible for you, there are other methods. Bankruptcy is one of the most effective and logical. To find out if bankruptcy can help you affordably lower debt, protect your house, and put you back in control of your finances, give our free one-on-one debt analysis a try. A Chicago bankruptcy attorney with DebtStoppers will answer your questions and determine whether bankruptcy is right for you, all at no cost. Nothing can make your house payment easier to pay than an increase in income - and eliminating debt is one of the fastest ways to free up money.