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Money Guy Show

Should You Pay Extra on Your Mortgage Now?

Money Guy Show

Brian Preston, CPA, CFP®, PFS and Bo Hanson, CFA, CFP® | Fee-Only Fiduciary Advisors

Investing, Education, Business

4.73.1K Ratings

🗓️ 5 June 2023

⏱️ 24 minutes

🧾️ Download transcript

Summary

With interest rates for mortgages increasing recently, does that qualify as "high-interest debt," and does that mean you should pay it down faster? We'll walk you through that question and more in today's Q&A episode! Jump start your journey with our FREE financial resources Reach your goals faster with our products Take the relationship to the next level: become a client Subscribe on YouTube for early access and go beyond the podcast Connect with us on social media for more content Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0

All right, next up we've got a question from Tyler.

0:10.1

He says, with a mortgage interest rate of 6% these days, should I consider it as high

0:16.7

interest debt and pay on it more aggressively?

0:20.7

Or not?

0:21.7

What do you think?

0:22.7

So Tyler, this is a really hard question and one we're getting a lot.

0:26.2

If you follow the financial order of operations, review and hold the thing right, set up for

0:29.7

me.

0:31.4

If you follow the financial order of operation, there you go.

0:33.8

You did.

0:34.8

You'll notice that step number three is pay off your high interest debt.

0:39.0

In order to pay off high interest debt, you have to define what in fact is high interest

0:44.9

debt.

0:45.9

And we've come through a period where mortgages were nowhere near high interest debt,

0:51.2

right?

0:52.2

Two and a half, three, three and a half percent mortgages.

0:56.0

People was very, very, very, very, very hard to justify prepaying those, right?

1:00.7

Because it just did not make sense.

1:03.0

And so now we're in a place where mortgage rates have come up.

1:06.2

Mortgage rates have now crept up to where they're 6%, 7%.

1:10.4

And so this is the question that I would ask Tyler, is where are you in your financial

1:15.2

life cycle?

...

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