**I’d favor extra mortgage principal payments once your cash reserve is sufficient.** At the rates you gave, paying down a 5.75% mortgage offers a stronger financial benefit than savings earning 1%–2%.

For each **$1,000**:

- Paying down principal avoids roughly **$57.50 in interest over the following year**, assuming the mortgage rate stays at 5.75%.
- Savings earns roughly **$10–$20 over a year**, before taxes.

Reducing principal lowers future mortgage interest and helps you finish paying the loan sooner. [CFPB explanation](https://www.consumerfinance.gov/ask-cfpb/how-does-paying-down-a-mortgage-work-en-1943/)

The key qualification is access to cash. “Some emergency money” may need topping up: **three to six months of essential expenses** is a common starting point, with more useful when income is uncertain. Also reserve money for foreseeable costs such as home repairs. Mortgage prepayments become home equity; accessing that money generally requires borrowing or selling. [Emergency savings guidance](https://myfloridacfo.com/ymm/LifeEvents/HandlingTheUnexpected)

If you’re in the U.S., taxes can narrow the gap. Savings interest is generally taxable, while qualifying mortgage interest may be deductible if you itemize. The relevant comparison is your **after-tax savings yield versus your effective mortgage cost**. [IRS savings-interest rules](https://www.irs.gov/taxtopics/tc403), [mortgage-interest rules](https://www.irs.gov/publications/p936)

Once those cash needs are covered, direct the surplus to principal. Confirm that your servicer applies it as an **additional principal payment**, and check your loan’s prepayment terms. Small extra principal payments typically avoid prepayment penalties. [CFPB guidance](https://www.consumerfinance.gov/ask-cfpb/can-i-be-charged-a-penalty-for-paying-off-my-mortgage-early-en-204/)