Mortgages are guaranteed monthly expenses for most of us, but we don’t have to wait 30 years – or even 15 years for that matter – to enjoy financial freedom without a mortgage to weighing us down!
If you’re willing to put every effort into paying off your mortgage early, you can be mortgage-free in less than 10 years.
The following sections discuss the benefits and disadvantages of paying off your mortgage early.
Paying Early Has Its Benefits
For most American families, the monthly mortgage payment is their biggest expense. Think about what you’d do with that money if you didn’t have a mortgage payment each month? How many doors would suddenly be open for you?
Living without a mortgage provides financial freedom and opportunity. Your yearly household income would benefit greatly from an extra $10,000 to $25,000 in mortgage payments you wouldn’t have to make any more.
Here are some of the financial benefits you’ll be enjoying by negotiating an early mortgage payoff:
- Freedom to pay off even more debt to truly live debt-free
- Buy a brand new car with cash
- Invest in the real estate rental market to earn passive income
- Buy a vacation home for your family
- Go on exotic vacations
- Buy a boat for leisure activities
- Invest more money in your 401k
- Save cash for your children’s college tuition
- Renovate your house without increasing your debt
- Create an emergency fund for unforeseen expenses
This is just the beginning of a number of different opportunities you can create by arranging an early mortgage payoff for more financial freedom.
Let’s say you have a $1,800 mortgage payment, which adds up to $21,000 per year that you can save or spend however you please. By saving just 5 mortgage payments, you can pay for a $9,000 car in cash. Or you can use the money as a startup fund for a small, part-time business you’ve been wanting to invest in.
Arguments Against Early Mortgage Payoffs
Not everyone is convinced that paying off your mortgage early is a smart idea. If your mortgage has an unusually low-interest rate or you’re already on a tight budget, paying off a mortgage probably isn’t the best option.
Here are some arguments for keeping your mortgage payment instead of paying it off early:
1. Tax credits
Mortgage payments provide an annual tax deduction for the amount you pay in interest. However, deducting $15,000 would save a mere $3,750 in taxes.
- Would you rather have $15,000 in the bank (plus the payment that is applied to your principal) or save $3,750 in taxes? $15,000 could buy you a new car, while $3,750 might only pay for a small family vacation.
Some people suggest that diversifying your investments is a sure route to the highest returns. If you’re spending all your extra money to pay off your mortgage early, you’ll have fewer funds to choose other investments or build a nest egg for a rainy day. Diversification minimizes risk and is a good general rule of successful investment strategies.
The most important reason for paying your mortgage early is that you’ll have the security of knowing you’ll always have a place to stay in the event you lose your main source of income. Plus, you can build personal wealth by investing in opportunities you wouldn’t have been able to with a mortgage payment.
Making early mortgage payoffs possible requires diligence and dedication. You’ll be pouring a good portion of your available cash into larger payments for several years. However, the sooner you pay off your mortgage, the sooner you can have the financial freedom you’ve always dreamed of.
Did you find that helpful?
Let me know what you think in the comments below. And, feel free to share this with your teammates.
Did This Help You? If so, I would greatly appreciate it if you commented below and shared on Facebook