In today’s uncertain economy, many homeowners who are currently financially stable are considering paying off their mortgage early. While paying off this large expense early definitely has its benefits, it is not always the right answer for all homeowners. If you are a homeowner who is considering taking this big financial step, it is always a good idea to take a realistic look at your finances in order to determine if an early payoff will be particularly beneficial to your specific financial needs.
Before you consider paying your mortgage in full, it is important that you take a look at any additional debt you may have. Whether it be credit card debt, medical bills, or additional loans, it is always a good idea to pay this debt in full before paying off your mortgage. The reason for this is that your mortgage interest rate is most likely lower than your credit card or car loan, and the interest on your mortgage is also tax-deductible.
Another important aspect to consider before paying off your mortgage in full is your emergency fund. If you were to pay off your mortgage, would you realistically have enough money in your emergency cash account to take care of any type of emergency expense that may come up? While you may have the peace of mind that your home is paid in full, you want to consider the fact that in life, unexpected expenses pop up when we least expect them, so it is always a good idea to make sure you have enough in your emergency account to ensure that there are no surprises later on down the line.
If you are at the point where you are maxing out both your 401k and IRA, taking steps to completely pay off your mortgage may prove to be beneficial to your overall financial picture. You may be able to build up your cash reserves, and once the large expense of your mortgage is out of the way, you will be able to focus on your retirement and spend your retirement funds as you choose.
Make a Plan for the Future
Since paying off your mortgage in full will definitely open up your overall cash flow, it is definitely wise to have some sort of plan in place detailing what you intend to do with your extra money. If you are married, you may wish to discuss your options with your partner, or you may wish to consult with a financial advisor to learn about potential investments that may be worthwhile. Whatever you decide, paying off your mortgage is no small feat, and you should definitely be proud of yourself for achieving a financial goal that is not that simple for a large percentage of today’s homeowners.
A Great Achievement
Paying off your mortgage in full is definitely something that can be achieved with the right planning, and by taking a realistic look at your overall financial picture. By paying off this large expense when you can truly afford to do so, you will have the peace of mind that your financial future will be secure and comfortable.