Whether or not to pay off your mortgage early is a highly debated subject, some mortgage professionals say “no” while others in the industry say “why not?”.
The correct answer really depends upon a number of different factors. You need to evaluate what is most important to you before making a decision. Ensure that you consider the following first:
Factors to Consider When Deciding to Pay off Your Mortgage Early
- You Have Other Debt – Your mortgage is one of the lowest interest debts that you can possibly have. If you have other debts or loans outstanding then the logical thing to do is pay off those first.
- You Could Increase Your Retirement Contributions – Ideally, you want to get to a place where you are contributing the maximum amount possible to your retirement savings plan. If paying off your mortgage would allow you to do that, then it is something to consider.
- You Lack Liquid Assets – In today’s economy, having at least 24 months worth of living expenses saved is recommended. It is much easier to reach that goal when your home is fully paid for. However, you do not want to put all of your cash into your home to pay it off if you don’t have other assets available.
- The Debt Bothers You – Some people are okay with having the debt of a mortgage for the rest of their lives. They are happy to continue to upgrade to larger homes, even if it means never making significant strides with paying off the mortgage.
At the end of the day, paying off the mortgage on your home could be a smart choice, but you have to decide whether it’s the right choice for you as there truly is no right or wrong answer. We can help you look at your own financial goals and consider the above to make your decision.