• There Are Many, Many Reasons You Should Consider Paying Your Mortgage Off Ahead Of Time. Read On To Learn Why It May Be a Smart Move

    There are many reasons that a homeowner might think about paying their mortgage off before it is actually due. In some cases, this is a smart move on their part. For other homeowners, it can be a disastrous move. Below are some of the reasons that it makes sense to pay off your mortgage before the loan term is due to end.e2b30e383db091135bbd0d96fc3ea67a

    Tax reasons. For many homeowners, having the ability to deduct mortgage interest is a big component to their tax strategy each April. Consider whether you will still be able to itemize deductions without mortgage interest. Check out: Should You Pay Off Your Mortgage Early? Maybe Not.

    Miscellaneous needs. Aside from the ability to invest excess cash, are there any other more pressing goals on the horizon? Look at your whole financial situation including student loans, credit card debt and whether you have adequate emergency reserves.

    For the intent to invest it. Realistically consider whether you’ll invest the cash that would have been directed towards paying down your mortgage or spend it. Consider direct deposits into yoself-invested-pensionur brokerage account or upping your monthly 401(k) contribution in an effort to “set it and forget it.”

    Playing with the opportunity cost. By paying off your mortgage early, you’ll save on the additional interest expense that would have been incurred in your regular payments. This savings can be significant, and will increase with the prepayment amount. However, by directing excess cash towards paying down a mortgage, those funds
    are no longer available for investment. The lower your interest rate, the less you stand to benefit through early retirement of debt.

    Current stage of their life. The decision to pay down a mortgage will vary depending on your life stage, risk tolerance and time horizon. If you’re nearing retirement you may have a more conservative asset allocation, and investing the excess cash in the market may mean taking on unnecessary risk. Being debt-free may also become more important later in life.

    Issues concerning their time-table. If you are planning to stay in your home for the long term, it makes more sense to consider overpaying your mortgage than if you don’t anticipate ever paying off the note.

    As you weigh the options, set realistic expectations and ensure the proper plan is in place to achieve your objectives. Discuss the decision with your financial adviser and tax professional before committing to a strategy. As with all financial goals, it pays to be flexible. If you’re still unsure which direction is best or whether you have adequate reserves, think about opening a dedicated savings account for your excess cash flows and revisit the decision in three to six months. By separating the funds, you will be less likely to spend it on daily expenses while you consider the options. For further reading, see: Pay Off Mortgage Early: 4 Ways to Do It, and, 8 Ways to Pay Off Your Mortgage Years Earlier.

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