Is it a Smart Move to Pay Off Your Mortgage Early?

List: Posted: 09/14/11

We all want to make smart financial decisions, but it can be harder than you might think to do so.  For example, if you have extra money after budgeting bills and savings in your paycheck, what should you do with the money?  Is it smarter to pay off your mortgage early, or to invest the money so that you can make some decent returns?  

Paying your mortgage early certainly offers benefits.  When your mortgage loan is paid off, your home is entirely yours.  Paying the mortgage loan early also helps to save you considerable interest, as those excess payments go directly to the principle balance of the loan.

Of course, investing the money can be equally beneficial.  When you put that money into an interest bearing account or a low risk option at the bank, you can make pure interest on the investment that can add up significantly over time, putting money directly into your hands.  So which one is really the better option?

 

Ultimately, there are a few things to consider.  First of all, what is the interest rate on your mortgage loan?  If it is considerably lower than the interest you can make on investments, they may well be the best bet. If you pay high mortgage interest, however, you may well save more by paying off the loan early. 

 

For many borrowers, the solution lies somewhere in the middle and entails diverting money in both directions, but only you can know what is best for you.

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        The material in this article is for informational purposes only. The views expressed in this article are those of the author and do not necessarily reflect the views or opinions of Local.com. See Additional Information

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