1. Do I maximize contributions to my retirement plan at work?
2. Do I carry balances on high interest non-tax-deductible consumer debt?
3. Do I have a sufficient liquid rainy day fund established?

Remember: Your mortgage is just one element of your financial plan. And while securing a low rate or owing little on your mortgage are great achievements, neither will make you financially secure if you don't also have a plan in place for retirement or have liquid cash on hand to cover an emergency. And, if you're making large credit card payments every month–paying more in the long-term in interest on these payments than if you were able to use some of your equity to pay off your debt–than your mortgage is standing on its own, instead of helping you increase your overall worth.

Question 4: Should I pre-pay my mortgage?

Would you rather be house rich and cash poor? Or house poor and cash rich in this current economic environment? Here's some information to consider.

Home equity accumulates in four ways: the money committed in the original down-payment; any appreciation in the local housing market over time; physical improvements or renovations; and, of course, principal payments on the mortgage itself. While seemingly desirable on its face, this accumulation of wealth in the home has three consequences that you should keep in mind.

First, the cash in your home is "buried." Not only is it unavailable in the event of a family emergency, it is vulnerable to loss due to periodic downturns in housing values, fire, or natural disasters such as hurricanes (insurance, where available, may not cover the full market value of your home). Perhaps more critical, cash trapped in property is earning zero interest, year after year. No prudent consumer would put money into a savings account or investment plan that yields no rate of return, but many homeowners do exactly that without a second thought when it comes to their mortgage.

The Bottom Line

Everyone's situation is different and the only right answer is the one that is right for your situation. If you'd like to see how you can make your mortgage work better for you, contact the professional who supplied you with this month's issue of YOU Magazine. And have a safe and happy summer!