... I'm paying $250 per month in mortgage insurance. I need to reduce my principal by another $36K to get the insurance removed. I currently have $25K in emergency funds and was wondering if I should consider saving the additional $11K and paying the principal down to remove the insurance... any thoughts on using the $25K to pay towards the mortgage vs. keep it liquid and investing it?
My answer is DO NEITHER. Here is what I mean.
Emergency reserves need to be kept
liquid. So, no, I would not invest those reserves; I would keep them in a liquid savings account.
Emergency reserves are there to cover financial
emergencies. What happens if you take all your emergency reserve cash and throw it at your mortgage
and then you get hit with an emergency (which, by definition, cannot be foreseen)? Not a good position to put yourself in.
So, IMHO, in your shoes I would (1) calculate how much of an emergency reserve I really needed (6 months of living expenses?), (2) I would set that money aside in a dedicated savings account, and (3) then I would start saving money
separately to whack down that mortgage principal bad boy.
Good luck.