Five Reasons to NOT Pay Off Your Mortgage Early

The thought of owning your house outright might seem like an excellent idea. For some people, the peace of mind of no longer being responsible for making monthly mortgage payments is quite enticing. But does it make sense to pay off your mortgage early if you have enough cash on hand to do so? There are valid reasons for paying off your mortgage if you can afford it. On the other hand, however, there are logical incentives to keep your mortgage regardless of your ability to pay it in full.

Following are 5 reasons to NOT pay off your mortgage early:

1) You have a considerable amount of consumer/credit card debt — If you have a significant amount of credit card debt, it is highly likely that your credit card debt carries an interest rate that is higher than the interest rate on your mortgage. It usually makes absolutely no sense to pay off low interest rate debt when you have high interest rate debt.

2) If you use all of your extra cash-on-hand to pay off your mortgage, you might not have any extra cash to invest in other areas. Investing in the stock market or in areas other than your home can often yield higher results in the long term.

3) Paying off your mortgage early might result in your not having sufficient cash available  in case of emergencies. It also might result in your having less disposable income to spend on things you either want or need.

4) You will lose the tax benefits associated with the mortgage interest you pay each year if you pay your mortgage in full. This may or may not be a benefit to you. Please make sure to consult with a tax professional or certified public accountant to discuss the tax implications of paying off your mortgage.

5) If you are not adding the maximum amount possible to your retirement savings each year, it might not make sense for you to spend all of your extra money paying off your mortgage.

Paying off a mortgage makes sense for some people, but not for everyone. Therefore, before making the decision to pay your mortgage in full, make sure to consider all of your alternatives. Your decision should be based on you mortgage’s interest rate, the interest rate you are currently earning on your cash and other investments, your consumer debt level, and whether you may need access to the money that will be tied up in your house. For help making the best possible decision when it comes to paying off your home mortgage, give The Home Loan Arranger a call today at (303) 862-4742.

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