Pay off mortgage?

sherpa
Sat, 24 Jan 2009 00:43:07 +0000

One thing about a mortgage that you have had a while is that, through the magic of amortization, you have already prepaid most of the interest, and all you have left to pay is principal, so you might as well take advantage of the remainder of the term. If you pay it off after you are well into it, the effective interest rate over the life of the loan is much higher. The banks are counting on people to get tired of payments and pay off early, to stick it to the borrowers one last time.

The above is completely untrue.

More to the point, some schools, such as Princeton, do not consider home equity. I’d suggest going to the websites of the schools that interest your D to see their specific policies.

Good luck.