{"id":4417,"date":"2020-04-15T11:24:48","date_gmt":"2020-04-15T11:24:48","guid":{"rendered":"https:\/\/dreamhomefinancing.com\/?p=4417"},"modified":"2022-05-30T09:19:26","modified_gmt":"2022-05-30T13:19:26","slug":"pay-off-mortgage-early","status":"publish","type":"post","link":"https:\/\/dreamhomefinancing.com\/pay-off-mortgage-early\/","title":{"rendered":"Should You Pay off Your Mortgage Early?"},"content":{"rendered":"

Should You Pay Off Your Mortgage Early?<\/strong><\/span><\/h2>\n

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Does it make sense to pay off your mortgage early when you can afford it? Or is it best to stick with your normal monthly repayments until the loan term is done?<\/span><\/p>\n

It is normal to have the desire to pay off your mortgage as soon as possible than wait for a decade or so to complete the repayments. However, before squandering a windfall or an inheritance towards your mortgage, the experts recommend taking a step back to review the possibilities.<\/span><\/p>\n

Benefits of Paying Off Your Mortgage Early<\/strong><\/h3>\n

Whether you want to pay off your mortgage early to save on interest, to gain the perfect credit score<\/a> or to simply have peace of mind, there are certain benefits to paying off your mortgage early. Here are some potential benefits:<\/span><\/p>\n

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  • Thousands of dollars worth of interest savings over time<\/span><\/li>\n
  • Lower monthly expenses\u00a0<\/span><\/li>\n
  • More cash available for retirement or other investments<\/span><\/li>\n
  • More cash available to save for college tuition<\/span><\/li>\n
  • Usable equity in case you need cash in the future<\/span><\/li>\n
  • Improved credit score (because of on-time and advanced mortgage payments)<\/span><\/li>\n
  • Priceless peace of mind knowing that you are debt-free<\/span><\/li>\n<\/ul>\n

    Disadvantages of Paying Off Your Mortgage Early<\/strong><\/h3>\n

    Paying off your mortgage can also come with several disadvantages including the following:<\/span><\/p>\n

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    • It can be challenging to access that equity again if you need cash<\/span><\/li>\n
    • You may miss out on better opportunities to earn through investments<\/span><\/li>\n
    • Real estate market changes may decrease the value of your home<\/span><\/li>\n<\/ul>\n

      The benefits truly outweigh the disadvantages of paying off your mortgage early but it is always smart to go through the checklist and weigh your options first.<\/span><\/p>\n

      The Basics of Paying Off Your Mortgage Early<\/strong><\/h3>\n

      Paying off your mortgage early is a good way to reduce the total interest you will need to pay over time, especially if you have a high interest or an adjustable-rate loan<\/span><\/strong><\/a>. For some, directing all of your funds to clear the mortgage might be well worth it if you are able to save a significant sum on the interest.<\/span><\/p>\n

      For homeowners who would like to pay their mortgage earlier, there are several ways to do this. Provided the lender doesn\u2019t charge extra for additional payments, you can increase the monthly payments or send 13 checks (or more) per year instead of the usual 12. By consistently increasing monthly mortgage payments, homeowners will eventually be able to fully pay their homes at an earlier timeline.<\/span><\/p>\n

      This is also done by sending payments every two weeks instead of just once per month. In the end, you will make extra payments over the course of a year.<\/span><\/p>\n

      Expert Views on Paying Off Your Loan Sooner<\/strong><\/span><\/h3>\n

      Experts have conflicting views when it comes to eliminating your mortgage debt. Popular money management expert Dave Ramsey<\/a> emphasizes the need to fully pay mortgages (in addition to all other debts) for better financial freedom and security in the future. <\/span><\/p>\n

      On the flip side, another personal finance expert, Ric Edelman, suggests that one should \u2018never\u2019 pay off their mortgage. According to Ric, a mortgage is one of the \u2018cheapest money\u2019 opportunities you will ever have.<\/span><\/p>\n

      While these two perspectives each have their own merit, the decision to overpay your mortgage (or not) ultimately depends on your personal circumstance. To some, paying their mortgages early makes sense, while for others, it may not, given their current financial situation.<\/span><\/p>\n

      This video will walk you through some viewpoints on paying down the mortgage early.<\/span><\/strong><\/p>\n