Is Paying Off Your Mortgage Early Something You Should Do?
Even if you can easily afford your mortgage every month, the idea of living debt free after paying off your home loan early can be pretty tempting. If you do decide to pay off your home loan early, you’ll save money from skipping out on the interest tacked on your mortgage payments. While saving money on interest rates is great, there are many benefits to steadily paying off your mortgage as well. Consider the following before deciding to pay off your home loan early– you just may save more money in the long run.
Many homeowners get a decent tax break based on the interest they’re paying on their home loan. During the years you pay off your mortgage, you get a federal and state tax deduction on mortgage and home equity loan interest for loans that are up to 1 million dollars. Before deciding to pay off your mortgage, consider your future tax strategy to assess whether or not it’s in your best interest to do so.
Retirement and savings.
If you’re planning to develop a retirement fund or other savings accounts over the upcoming years, perhaps putting so much of your money into paying off your mortgage early isn’t the best idea. Down the road when you begin to rely more on your 401(K), you’ll be happy you didn’t spend too much of it on a mortgage. It’s also hard to know of any future expenses that may fall into your lap (like medical bills, natural disasters, school, etc.), and it would be nice to have a little money set aside for you to use when you have nowhere else to turn.
Other financial responsibilities.
Borrowing money for a house isn’t as expensive as some other loans like high interest credit card debt, or student loan debt. Because paying off a mortgage can be easily managed, it may be wise to use any of your extra income on more pressing payments. If you use more of your money to pay off a home loan early, you’ll end up paying more money in interest rates on more expensive debt in the long run.
Whether or not you decide to pay off your mortgage early, be sure to take the time to go through your current and potential future finances to ensure it’s in your best interest to do so. If you’d like an extra opinion on the matter, consult with a financial specialist to help you come up with the most beneficial options for you.
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