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Build up your emergency fund. It is always a good idea to have cash on hand for little emergencies, but a nice cushion is even better. How long could you continue to make your mortgage payments if you lost your job? If your answer is six months or less, build up your cash reserves then consider paying down other long term debt like your home loan.
So why should you prepay on your mortgage? If your home loan is last hurdle in you goal to become debt free, pay as much as you can towards reducing loan. Even if you get maximum tax right offs nothing can compare to psychological effect of knowing that you own your small piece of America. Work out a budget with a financial planner or a tax advisor and setup a payment schedule.
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