How to Balance a Mortgage and Student Loans
When it comes to balancing your mortgage and student loans (or your child’s student loans), it may be seen as an art. It takes some planning, investment, and potentially cutting back on some of your discretionary spending. Here’s what you’ll want to look at when balancing the two.
When it comes to your monthly minimum payment, take a look at your finances and see if you have the wiggle room to allocate some extra money to one or even both loans, directly to the outstanding principal balance. Making additional payments can save you dollars in interest paid.
Compare Interest Rates
When it comes to paying off debt, it makes financial sense to try and pay down the loan that has the higher interest rate first. A higher interest rate means you’re paying less towards the principal.
Depending on your current situation, refinancing either your home mortgage or student loans may be beneficial if you can get a lower interest rate.
If your interest rates on your loans are low and refinancing or paying more towards the principal won’t make much of an impact, consider investing money monthly into a Roth IRA, if you are eligible. Depending on the amount invested and return you could save a considerable amount of money for your retirement. Please speak with a professional/certified financial advisor to determine your eligibility to contribute to an IRA.
It takes some skill and practice when it comes to balancing your mortgage and student loans. But remember, what worked for one person, may not work for another. It’s always wise to speak with a professional/certified financial advisor for help in determining the best path forward.
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