Financial Organization, Planning, Budgeting
Should You Pay Off Your Mortgage?
Paying off a mortgage sounds like a great idea, but that might not be the case. Here’s why:
- Paying off your home could put you at risk during an emergency. Try to keep at least six months income in an emergency savings fund; if paying off your mortgage early puts your finances at risk, don’t do it.
- Other investments may earn more. If your mortgage interest rate is less than 5%, you can probably get a better return on your money through other investments.
- You lose the opportunity to benefit from inflation. While inflation does mean prices are going up, inflation also means you pay off old loans using less valuable dollars.
So should you pay off your mortgage early? While there are financial reasons not to, if being mortgage-free will give you peace of mind and a tremendous presence of mind, by all means retire your mortgage!