Should You Pay Off Your Mortgage Early?

Paying off a mortgage early can be a great thing for some people. And, it can be a great idea for some people NOT to pay off their mortgage early.

The Pros:

If you are living in the house that you plan to live in for the rest of your life, paying off your mortgage faster will give you more financial security when you retire. Pro-Tip: pay down the mortgage in the early years to reduce the principal now and the interest later.

Paying off your mortgage early allows you to live on a smaller income, because your largest expense is now eliminated. Pro-Tip: if you’ve got a high interest rate on your mortgage, consider refinancing the remainder of your mortgage for the lower rate and perhaps a shorter term.

The Cons:

Mortgage interest is tax deductible. So if you pay off your mortgage, you’ll no longer enjoy this tax break. Pro-Tip: you still need to plan for your property taxes, which in some places can be substantial.

This might not be the smartest use of your extra money. For instance, if your mortgage interest rate is low, it is smarter to invest extra money or pay down other debt first. Pro-Tip: Make sure you have paid off all other higher interest rate loans like credit cards, car loans and school loans before you tackle your mortgage.