Mortgage, Savings Linked

Financial advisers are split on the best way to allocate funds when a mortgage is involved. Some say that investing in a high yield savings account is best. Other point out that paying off a mortgage sooner will help more in the long run. So which option pays the most? That all depends on the money each month that can be used, as well as rates involved with both types of accounts.

If a homeowner can refinance into a lower fixed interest rate (for example, 6.00%), but they only have enough funds to qualify for a 3.00% rate on a savings account, the best idea is to put the money into the mortgage by paying more towards principle each month. However, if the homeowner has the same mortgage rate, but qualifies for a high yield savings account (such as 6.00%), the money will probably be better off in the savings. The trick it to make sure that the money is going into the highest interest account, be it a mortgage or savings account.\r\n