If you are thinking about Paying Off Your Mortgage then you will be interested to see the following reasons behind if you should or not and what the possible ramifications might be. We will go over 7 reasons why Paying Off Your Mortgage may be a good or bad idea, depending on your situation and financial goals. Most people are under the assumption that Paying Off Your Mortgage is always the goal, but this may not be the case.
This is one of the first things a lot of money savvy individuals think about when debating about Paying Off Your Mortgage. If you pay off your mortgage, you will lose out on a sizeable tax deduction for mortgage interest paid. For example, on a $250,000 house at 4% interest rate, your amount of interest paid for a year could be as much as $10,000 or more per year. With such a large tax benefit, it sometimes isn’t wise to get your mortgage paid off as soon as possible.
If retirement is on the horizon for you then Paying Off Your Mortgage may be a great option for you. Knowing that you are debt-free when heading into retirement is a great feeling and can help once you are saddled with a fixed income for the rest of your life. However, if retirement is still years away, you may be better with investing your extra money than paying off your mortgage and getting a return on your money.
When tasked with paying off your mortgage or investing your excess funds, you are going to need to determine the return on investment you are anticipating on your money. If you have a 4% mortgage but can spend your excess cash investing in an item with 5% return, it is better to invest and get the return on your money rather than getting rid of your mortgage. If your investment were to only gain about 4% interest, then it is in your best interest to pay off your mortgage at 4%.
As you get older and older, the money needed for medical expenses rises as you get older. If you use all available funds to pay off your mortgage, what will happen if you are saddled with a large medical expense? You could find yourself taking out a home equity loan or line of credit which will probably cost more in interest than your mortgage would.
If there is a chance you may move then you may want to think twice about paying off your mortgage. If by chance the market should go south as it did during the Great Recession, it is easier to short sale a home with a mortgage on it versus a home that is owed free and clear. You may also want to just hold onto your cash if you plan on moving because as we know, new homes come with new expenses.
If you are not maximizing your retirement savings with 401k’s and IRAs, you might be doing yourself a disservice by paying off your mortgage. Yes, you can say you are investing in the equity in your home, but money put into retirement saving is just as valuable or more. It is wise to max your contributions if necessary before paying off your mortgage.
If there is one thing a lot of people can agree with is the relief knowing that a debt is paid off. If you by chance have the opportunity to one day pay off your mortgage, then you will have one of the biggest reliefs possible. Knowing you have a six-figure asset owned free and clear is a great thing to do.
As you can see there are 7 reasons in Paying Off Your Mortgage. Some are for the better and some are for the worse. Ultimately, you are going to need to determine your situation and figure out what is best for you. Doing so will put you in a great financial situation. If you want more info regarding Paying Off Your Mortgage you need to contact me right away at 888-900-1020, email at firstname.lastname@example.org, or visit my website for more info, www.loanconsultants.org.