Pay Off Mortgage Early – Yes/No?

Should You Pay Off Your Mortgage Early?

Should you pay off your mortgage early?The questions is, “should I pay off my mortgage early?”  To answer that question you have to ask yourself a number of questions:

  1. Will there be lost opportunities if you pay off your mortgage early?  You see it is impossible to pay off a mortgage early without paying additional principal.  Should that additional principal go toward investments instead?
  2. What is your current age?  If you are young and have many years ahead of you to invest toward retirement, maybe investing now instead of paying off your mortgage is more beneficial.
  3. Did you know it would take $336,000 invested at 5% to produce a $1,400 per month house payment at retirement?  If you are close to retirement it would be best to retire your debt so you can retire.  With no debt payments your retirement money will last longer.
  4. Often when looking at investing families are also dealing with high interest rate loans in addition to their mortgage.  The higher interest rate loans need to be paid of first before investing.
  5. If your mortgage is at 4.5% and you have no other high interest debt and you can get 10% to 12% on your investments, then based upon time horizons investing may be the best pathway.


Pay Off Mortgage Now or Invest?

The only way you are going to find out the answer is to do a complete analysis.  A simple calculator illustrating investing versus paying off the mortgage is not going to give a real world answer.  Avoid such a simple analysis.

After working with clients all over the US we have found from experience that the actual answer to invest now or pay off mortgage is different for everyone.  There is no single correct answer.  You have to include all of the variables, income, expense, debt and investment opportunity.

That is what we do with the Lifestyle Equity Builder.

We want to look at your income and how it is earned, how you spend your expenses, including timing of when you make your expense payments.

  • We need to see all of your outstanding loans, terms and conditions.
  • Then what are your investment capabilities?
  • We have to know your current age and how many years you have before retirement.

Often we find that it is better to pay off debt now and invest 80% of your excess income once all debt has been paid.

We can look at doing both, debt reduction and investing at the same time.  Is your investment growing taxed, taxed deferred or tax free.  Once we have all of your numbers we can do a full analysis, then you decide.  The answer to pay off your mortgage early or to invest will be clear.

Peace of Mind – Sleep Like a Baby

Being 100% debt free gives you peace of mind.  I sleep better being 100% debt free.  The answer to paying off the mortgage early should also include what gives you the most peace of mind.  Owing debt and investing or being 100% debt free first, then dedicating the rest of your earning years to investing.  Use the FREE LEB financial analysis to help give you peace of mind in making the right decision.

Answer Your Question with a FREE Financial Analysis!

Because you are unique there is no one specific answer that is right for everyone.  Take action – click on the “Call or E-mail” button at the top.

Let’s get you started in discovering the correct answer for you.

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About Richard Harter

Richard L. Harter, CPM, CSM, CRES, President/CEO and founder of MDRP Marketing Services, Inc., has an extensive background in the production of financial analysis for major corporations, start-up companies, and all size real estate projects in the area of development and management. Connect with him on Google+
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