Paying Your Mortgage off Early

Most people do not have the financial resources to pay their mortgage off early but for those who can payoff their mortage does it make financial sense?

That depends on your investments, age and interest rate you are paying on your mortgage. Surprisingly there are pros and cons to paying off your mortgage early.

Let’s start with the Pros:

• The biggest pro to paying off a mortgage early is the interest rate savings. Have you ever used a mortgage calculator and compared the amount of interest you would pay on a 30-year mortgage to a 15-year mortgage? The savings run up into the tens of thousands or even hundreds of thousands depending on the loan amount.
• Another pro is being freed from what is probably the largest loan most people will ever have. Imagine the relief of not having to worry about a monthly mortgage payment?
• Now that you don’t have the monthly mortgage payment you can invest that money in your future or your retirement.

Now for the cons of paying off your mortgage early:

• Have you enjoyed that fat tax return every year? The reason why most people get a big refund year in and year out is you’re able to deduct all the mortgage interest you pay. Without the mortgage interest tax deduction you will pay more income taxes.
• All the money you’re pouring into your house could be earning you money in other investments. This is especially painful when you are watching your home decline in value every day like we all have been doing the past couple of years.

As you can see, there are good reasons to pay off your mortgage early but there are cons one needs to take info consideration. The best course of action to figure out if paying off your mortgage early is right for you is to sit down and crunch numbers or talk to your financial advisor.