Should I pay off
my mortgage early

Paying Off Your Mortgage Early: Considerations You Need to Make

“Should I pay off my mortgage early?” is a question we are often asked. It depends. What are your motivators? Will paying off your mortgage truly get you closer to your goals? Seeking mortgage payment advice can be motivated by the objective of being debt-free. This idea is enticing enough to some to lead to people prepaying their mortgage without analyzing the financial impact of doing so. When to pay off a mortgage should be a decision that is made carefully, with a focus on your unique situation and desires. Seeking out the help of a Financial Planner can be beneficial when evaluating all of the factors involved in the decision of when to pay off a mortgage. Be weary of any “standard” mortgage-payment advice.

Prepayment can take various forms including making extra payments, making a larger than required down payment, or taking out a mortgage of less than 30 years. Oftentimes people prepay their mortgage because doing so, they believe, will decrease the amount of interest they pay over the life of the loan. This belief is frequently correct but constitutes an incomplete analysis of the subject of when to pay off your mortgage.

If You Itemize Your Mortgage, Interest Is Tax-Deductible

For those who itemize, interest is tax-deductible. By making extra principal payments on a loan, the interest deduction is being reduced and income taxes, everything else being equal, are being increased. Other factors to evaluate when considering when to pay off a mortgage include your marginal income tax rate and the alternative use of the funds being spent to eliminate the mortgage debt.

Keep in mind that the appreciation (or depreciation) of a residence has nothing to do with the underlying debt structure. Deciding whether to pay off a mortgage early is really an attempt to determine the cost of living in a home. Oftentimes people have a psychological desire to be debt-free. A mathematical analysis can provide people with the cost of fulfilling that urge.

We Can Help Calculate Your Potential Savings. Seek Mortgage Payment Advice From Us.

At Park Place Financial we understand that, when seeking mortgage payment advice, the numbers may not be the most important factor for you. Perhaps the sleep-well-at-night component will be your ultimate deciding factor. The Financial Planners at Park Place Financial will never dictate what you do with your money. We strive to educate our clients on the impact of their decisions and present them with alternative options so they can be confident that they are making the best decision available for themselves. If you are looking for mortgage payment advice, schedule a complimentary introductory call or appointment here.