Why keep my mortgage if I have the money to pay it off?
by Mortgage Rates on Saturday, October 9th, 2010 | 6 Comments
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If you pay off your mortgage early then they lose a lot of your interest money. Of course they are going to “advise” you not to pay it off. Most likely out of jealously because they are slaves to their mortgages interest. Think about it. If you paid it off and then deposited the mortgage into savings or investment all that interest would be yours.
If you can earn a rate of return on investing the money that you would use to pay off your mortgage that is greater than your mortgage interest rate then it would pay to invest and continue to pay your mortgage.
Also mortgage interest is considered a tax deduction on your federal tax return . That item along with property taxes and other deductions will qualify you to itemize your deductions rather than claim the standard deduction.
One thing you might consider to reduce your interest expense is making additional payments toward principal only.
Best wishes to you.
Depends on your overall financial situation, age, goals, income, etc.
This is an easy question to answer. Pay off your mortgage in total if you can. Like you already know, you will save thousands. There is no GOOD reason not too keep a mortgage. First, is you have an asset that can not be taken away, (unless you screw up). From the day you are paid off, you can concentrate on paying cash (no interest or credit cards) on other purchases. You can not get rich paying other people interest that belongs in your pocket. And your home will also increase in value as time goes by, too.
Next, you can save for retirement at an earlier age (all that time you would have paid into the mortgage you pay YOU). When invested correctly in a spread of mutual funds, your money will double every 8-9 years. And it redoubles as long as you leave it alone.
Finally, a large purchase, such as a car can be now paid for in cash (if you can wait and save for a couple years—saving you more money from not paying interest on that.
Don’t EVER listen to advice that tells you “you need the tax write off” either. The only way to get a “tax write off” is to spend more in interest.
I agree, the banker is interested in making money for themselves. Whether to pay off the mortgage is a cost-benefit analysis. If you have no other debts, keep an emergency fund in savings and put the rest toward the mortgage. An emergency fund is invaluable in case of job loss, medical emergency or car accident; how much is recommended depends on the financial situation (3-12 months expenses). If you have other debts, the cost-benefit analysis would include the tax benefit – meaning the cost of the mortgage would be reduced by the tax benefit to compare it to another debt. Regardless, if you’re paying a higher interest fee to other debts, it makes sense to pay them off.
Below is a link to a loan amortization table that allows for extra payments. You can use this (or loan calculators online) to run different scenarios.
this story convinced me to just pay the darn sucker off!
http://www.associatedcontent.com/article/5462178/pay_off_mortgage_early_or_die_broke.html?cat=3