Should I pay off my mortgage?

April 18, 2019
Wambolt Team

Most homeowners at some point aspire to own their homes outright. But the math typically does not support paying off a mortgage early. Doing so can deplete your investment account and eliminates mortgage interest deductions.

Does that mean you should never pay off your mortgage early? Not necessarily. Whether to do so typically depends on the shape of your finances, financial goals and emotional attachment to owning a house outright.

Who owns now

Over 29% of American homeowners own their homes free and clear (Zillow) and are free of mortgage payments each month. Seniors have the highest level of homeownership.

The level of homeownership overall is declining, though. Gallup attributes these lower rates to a lack of means rather than a change in attitude about homeownership.

 

 

 

 

 

 

 

 

 

 

 

 

Weigh the pros and cons

The cost/benefit decision is an easy equation.  In its simplest form, and using the same pot of money, if homeowners can make a higher rate of return over several years than their mortgage interest rate, paying off a mortgage doesn’t make sense.

Putting basic pros and cons aside, whether you pay off your mortgage may ultimately come down to your gut or that of your spouse. Often, one spouse may want the security and flexibility of living a mortgage-free life while the other may be either indifferent or opposed to an early payoff.

When there is a stalemate like this, it may be time to pull out the third option – compromise. Strategies here tend to save you money and accelerate mortgage payments so your 30-year loan is satisfied in fewer years.

 

 

 

 

 

 

 

 

 

 

 

 

Paying off or down your mortgage is a financial decision that can trigger financial and deeply personal emotions for homeowners. Schedule time with your Wambolt advisor to assess your options and see what makes the most sense relative to your financial plan.

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