It is important to understand the process of making extra mortgage paymentsas well as how your specific needs fit into your search for a new home. Interest rates, points, processing costs, and adjustment features all affect how well a mortgage suits your needs. Homeownership has long been regarded as one of the basic elements of the American dream. Mortgage lending is mechanical, impersonal and competitive. Buying a home, however, is anything but basic. Finding the right mortgage involves some digging. Hunt for the best loan -- interest rate, points, processing costs and, on adjustable mortgages, the most favorable adjustment features. Don't pay much attention to who's originating the loan or where the lender is..

However, we recommend paying off your mortgage by the time you retire so you can get by on less money. Use your money instead to invest in liquid assets. After all, Uncle Sam refunds part of your interest payment if you itemize your deductions on your tax return. If you have less-than-steady income, such as from a commissioned sales position, or a job that has more exposure to economic fluctuations, consider setting aside six months' income.. In addition to putting money into a retirement account, you need cash that's readily available in an emergency so you don't have to rely on credit cards. Set aside enough money to tide you over for three months if your paycheck suddenly stopped. For the most part, it's usually not a good idea of making extra mortgage paymentsunless you have a lot of extra cash.