Should I Pay Off My Mortgage Early?

Should I Pay Off My Mortgage Early?

Sending in extra cash with your monthly mortgage payment can speed up the day to fully own your home clean if monthly payment, but it's not always a good idea.

Before paying off a mortgage, consider these four factors:

Factor #1: Your Mortgage Rate

If you have a 30-year mortgage with a low fixed rate, financial advisers usually say it's best to stretch out your payments for as long as possible. With this kind of mortgage, you don't need to prepay unless you no longer have any debts, and you have enough money to put in other investments as well.

Factor #2: Credit Card Debt

If you have any credit card debt, the thought of prepaying your mortgage shouldn't even cross your mind. Because credit card debt typically takes a high-interest rate, pay it off before anything else.

Factor #3: Investments

When your employer matches your 401(k) retirement contributions, that's like getting a 100 percent return (doubling) your money right now. Plus, that doubled cash continues to grow (you hope) until you retire. Compare that to what you'll save with your early payments on your mortgage.

Factor #4: Savings

Having enough savings to pay your household bills for six months or more makes it easier for you to survive a financial crisis. It's better to save your extra cash on savings instead of prepaying your mortgage until you have that financial cushion built.

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