Pay Off Mortgage Early
Is It Good to Pay Down Mortgage?
Pay off mortgage early – is it always the best use of your money to make extra mortgage payments?
Financial experts have long debated the merits of paying off a mortgage early. Some reduce the argument to a simple matter of numbers. They compare the choice to use money to pay off the mortgage to the choice of investing the money.
If you invest the money that you would have used to pay off the mortgage, will you be able to consistently get a higher rate of return than the interest rate of the mortgage? For instance, if the interest rate of the mortgage is 5% and you could get a return on investment of 6%, then some experts suggest you should invest the money rather than paying down a mortgage. This argument is even more convincing when you take into account that the interest on the mortgage can be tax deductible.
Pay off mortgage early – the right choice for you?
In reality, the decision about whether or not to pay off the mortgage early is more complicated than just comparing a couple of numbers. Even though the comparison of rates seems simple and conclusive, there are several other factors to take into consideration.
For instance, how can you be sure what rate you will be able to get on your investments over the next several years? In retrospect, it has been challenging for most investors to receive a consistent return on their investments over the past several years, regardless of what type of investments they had.
Secondly, you don’t know what the future holds. You may run into financial difficulties because of the loss of a job, medical problems, or some unexpected expenses. Even if you face hard times, you can sleep well at night know that you have already paid off your mortgage.
Ready to start paying off mortgage?
Before you start to make extra mortgage payments, make sure you:
- pay off all your other debts.
- make regular payments to your retirement plan.
- save an emergency fund of six to twelve months of living expenses.
If you decide to pay off your mortgage early, you will find this mortgage payoff calculator to be a great tool to help you reach your goal.
Return from Pay Off Mortgage Early to Financial Freedom Advantage