Paying off debt always seems like a good financial decision, but when it comes to your home, it’s hard to know if it’s best to pay off your mortgage early. You can use a mortgage early payoff calculator to help you get a better idea of your situation, or like with most decisions, looking at the pros and cons can also help. So here’s the early mortgage payoff list you’ve been looking for.
Pros of Early Mortgage Payoff
- Reduced debt – early mortgage payoff will reduce your debt load, reducing your stress and freeing up money for other expenses.
- Save on interest – early payoff results in fewer interest payments and money saved. The earlier the payoff, the more money you save by not paying interest.
- Owning your home – when you pay off your mortgage, you eliminate the lien from the lender, and you’ll own your home free and clear.
- Changes the resale dynamic – when you have a mortgage on your home and want to sell it, you must make enough to cover the loan balance. When you pay off the mortgage early, you can sell it with less worry about the state of the market.
Cons to Early Mortgage Payoff
- Potential reduction in your ROI – early mortgage payoff means putting more money than originally planned toward your monthly payments. Those extra payments can mean less money to spend on other things, including investments that might have a higher ROI potential than what you’ll save on mortgage interest payments.
- The mercy of the market – owning a home outright can be a risky investment. With an unstable real estate market, you could have all your eggs in one basket and may risk a financial loss if you can’t sell it if and when you need to.
- Loss of mortgage interest deduction – once you pay off your mortgage, you no longer have the advantage of deducting the interest on your income taxes, which means you carry the tax burden.
If you’re still deciding whether paying off your home loan early is for you, reach out to experienced mortgage professionals for guidance. Contact Midland Mortgage Corporation to determine if an early payoff is the right move for you.