paying off your mortgage early

Paul Wilson

BECOMING DEBT FREE IS AS MUCH A PART

OF THE AMERICAN DREAM as owning a home, but there certainly can be conflicting circumstances that make the decision to pay off your mortgage early unclear.

The advantages of paying off debt early is increased cash flow, less interest paid and a higher credit score. The disadvantages are lower cash flow available as discretionary funds for meals, entertainment and other things. Consider the immediate sacrifices to successfully reach your ultimate goal of financial security.

Paying off your mortgage early is a personal decision that may be right for one person and not for another. Reasons you should pay it off early include peace of mind knowing that you don’t have a mortgage, saving on interest regardless of how low your mortgage rate is, and lowering your housing costs before you retire.

Reasons you should not pay off your mortgage early include if you can invest at a higher rate than your mortgage, if you have other debt at a higher interest rate than your mortgage that needs to be paid off, or if you might need the money in the future and want it to remain liquid. Other reasons to hold off are if your employer has a matching retirement plan that would benefit you more, if you have more urgent financial needs like emergency fund, life, health and disability insurance, or if you expect high inflation and the value of your mortgage debt to decrease.