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Eddy Fernandez president of All In One Mortgage Lenders give back to the community

Prepaying your mortgage: How reducing your loan principal can lead to big savings

What are the drawbacks of prepaying my mortgage?

There are potential downsides to prepaying. For starters, typing up your cash in your home means you have less liquidity and wiggle room in your budget. In other words, you’ll have less readily available cash to put toward increasing your 401(k) contributions or paying down high-interest debt. These financial goals could offer a higher return on your investment.

Another consideration is the opportunity cost of not having that extra money invested elsewhere. Over the past four decades the stock market has returned an average of 10 percent a year. For the broad bond markets, the average annual gain has been close to 8 percent.

When asking yourself, “Can I prepay my mortgage?” look at your entire financial picture. Here are some important questions to consider:

Is your monthly budget tight after meeting necessary expenses? Is your income variable and/or unpredictable? How long do I plan to stay in my home?

Mortgage rates pull back after last week's sharp increase

“Mortgage rates held mostly steady this week despite turbulence in the stock market, which saw its third largest weekly decline since the financial crisis,” said Aaron Terrazas, senior economist at Zillow . “For the most part, bond markets saw through this temporary volatility, which has yet to spill over to long-term lending rates. Rates remain at their highest levels since 2011 and are showing few signs of retreating. A steady stream of weak housing data, with more expected over the coming days, have thus far failed to put a dent in rates’ upward momentum.”

The Federal Reserve released the minutes from its September meeting this week. Although the central bank doesn’t set mortgage rates, its decisions influence them. In the minutes, the Fed reiterated its stance that the best way to keep the economy strong is to continue to gradually raise interest rates. The Fed, which raised rates for the third time this year in September, signaled that it would probably hike rates again in December and possibly three more times next year.

Will all mortgage lenders need 2 years of work history?

A lender who, at the beginning of the process, told us that our one year work history would be enough, is now telling us that he needs documentation for the last two years.

You do not need pay stubs, your income tax return that you submitted to the IRS will suffice.