With bonds paying next to nothing, where can you turn for a respectable yield, guaranteed?
Well, how about your home?
Many homeowners look upon the homestead as a valuable asset they can tap for retirement through downsizing or a loan. They typically count on building equity the old-fashioned way, by gradually paying off the debt and enjoying some price appreciation.
There's another option: making extra principal payments on the mortgage to reduce the debt faster. Every dollar used to pay down the loan earns a "yield" equal to the loan rate, since it saves you from having to pay that amount of interest. If your loan charges 4 percent, prepayments earn 4 percent, a lot more than you'd get in bank savings or a 10-year Treasury note, now yielding a paltry 1.8 percent.
