Tips on Paying Off a Mortgage Early
Is Paying Off a Mortgage Early a Good Idea?
Many consumers are confused about whether or not paying off a mortgage early is a good idea. Below you’ll find some helpful information about paying off a mortgage early.
Don't Rob Peter to Pay Paul
It’s definitely not a good idea to make larger payments on your mortgage then necessary if doing so will cause you to fall behind in your other bills. Paying off a mortgage does have advantages for many consumers especially those who like the sense of security it provides, but you have to be realistic about how much extra money you can afford to pay on your mortgage.
Obviously if you pay extra on your mortgage each month you are paying down your principal sooner and will ultimately reduce the amount of interest you have to pay. If you have a good fixed interest rate, you might not want to leap into paying off your mortgage early. There are certainly worse types of debt to have, and you should always address your debt that has the highest interest rate first.
Don't Overlook The Tax Issue
It’s important to take into consideration the tax deduction you will receive for the mortgage interest you pay. You will be losing out on that benefit if you are paying off a mortgage early, so calculate this into the equation when you are determining just how much extra to pay on your mortgage every month.
Credit Cards First
If you have credit card debt, it isn’t really a good idea to focus on paying off your mortgage early. Basically, the interest rates on your credit cards are going to be much higher than the interest rate on your mortgage. Until you eliminate your credit card debt, you don’t even want to think about paying off a mortgage early.
Use The Tools Available To You
There are online calculators that can help you determine just how much extra you would have to pay each month if you wanted to pay off your mortgage by a specific date. The calculators can also help you determine when you mortgage would be paid off if you have an extra $50, $100, or $200 to pay each month. As you can see, there is no clear cut answer about whether or not paying off a mortgage early is the best option for everyone. Use you judgment and research your options before you make a decision about paying off a mortgage early.