Paying Off Mortgage
You finally took the plunge and bought a home. Then you realize that you are in it for the long haul when you get your first mortgage payment a month later. You may have taken out a loan for 15 years, or perhaps got a 30 year mortgage so you would have lower payments. In any event, you may decide that you want to pay off the mortgage much quicker than the agreed upon length. We will discuss how you can do that and if it is indeed a wise move for you to do so. There are a variety of factors to consider and we will go over them so you can decide which course of action is best for you when it comes to paying off your mortgage.
The sooner you pay off your mortgage, the more money you will save. If you are taking out a 30-year mortgage, by the time you finish paying off your home, you will have paid double the price for it. Paying the mortgage off as soon as possible can save you tens of thousands of dollars.
Another reason for paying off your mortgage as soon as possible is the peace of mind that you will have not owing on your home anymore. The only cost you will incur for your home will be maintenance and property taxes. You will truly be a homeowner and nobody will be able to take that away from you for a few missed payments, a scenario that can happen if you still owe on a mortgage.
Even with these benefits associated with paying off your mortgage early, there are some financial experts that would advise against making such a financial move. There argument centers on the thinking that you can get a better return on your money if you invest it instead of making additional mortgage payments. The problem with that line of thinking is there is no guarantee that your investments will make a steady return that will beat paying off your mortgage. Sure, a person may get lucky investing, but most people do not. The safe bet is paying off your mortgage by making additional mortgage payments, the gamblers bet is taking your ‘extra’ money and playing the market. Most conservative long term investors would advise a person to pay off their mortgage before taking the option to invest the money.
Another argument that you will hear against paying off your mortgage is that you will lose the tax breaks. It is true that mortgage interest provides a tax break, but it is a terrible investment. You will spend one dollar to get a thirty five cent tax break. Clearly not worth it if you have the option of paying off your mortgage.
So what is the best way to pay off your mortgage? Simple, send the mortgage holder more money. Budget your money more efficiently so that you can make extra mortgage payments. The more you can send them, the faster you will be able to pay off your mortgage and be debt free.