There is no one-for-all answer when it comes to paying off your mortgage, as there are positives and benefits or both sides. Yes, there are positives of not paying off your house as soon as possible, and many choose to do this as well.
There are a lot of ways to make extra money during your retirement. One of the easiest ways is to take out a reverse mortgage, which gives you some of your home’s equity in the form of spendable money. But there are many different reverse-mortgage pros and cons you must consider. You will have cash for paying medical bills and other expenses, but your reverse loan will also have a high interest rate, and refinancing will not be an option. Since the balance will not come fully due unless you move out of the home or die, you may not think that is much of a concern, but your heirs will have to pay the balance or allow your home to be sold to make up the difference.
Many people choose to pay off their home because it can really help lower a person’s budget. It can make life seem much easier knowing that you have one less bill to pay. Maybe this one less bill will enable you do something with your life that you been wanting to do, but you’ve never felt secure enough.
Here are different things that you should think about before you make a decision.
Do you have other debt besides your mortgage?
If you have a car loan, credit card debt, etc., then you may want to research further about whether or not you should be working on paying off your home first (and early).
If you have debt that is at a higher interest rate than your mortgage, then you should be thinking about paying that off first, then working on paying off your home early.
Do you have an emergency fund?
If you do not have an emergency fund, then you may want to think about beefing up your emergency fund first, before you decide to use all of your available cash on paying off your home early.
You never know if something may happen, and it’s best to have a cash reserve available if something arises. This is because if something does come up, you wouldn’t be able to take cash out of your home since it is not a liquid investment.
What’s the interest rate on your mortgage?
If the interest rate on your mortgage is low (such as below 4%), then you may not be interested in paying off your home early because of the very low rates.
You may be able to invest your cash into something that would give you more than 4%. However, if your interest rate is high on your mortgage, then it may give you a reason to pay it off quickly because of how much is going towards interest each month.
Do you have other investments?
If you work on paying off your home early, do you have other investments as well? Or will your only investment be your home? You will want to have worked on saving other money as well, such as for retirement so that all of your money isn’t tied up to one thing.
Are you working on paying off your home early? Why or why not?