Pros and Cons of Paying Off Your Mortgage Loan Early

You should think about the term on your mortgage loan and whether it would be beneficial to pay it off early.

Pros of Early Payoff

  • Nearing Retirement: If you are nearing retirement, paying off your mortgage can bring peace of mind and extra cash flow during your retirement years.
  • Increased Disposal Income: If you want more money to use for other purposes, you can free up a big chunk by paying off your mortgage faster.
  • Access to 100% of the Equity in the Home: You can tap into the equity for home improvements and renovations. It is also easier to sell the home or convert it into a profit-making rental property.

Cons of Early Payoff

  • No Interest Tax Deduction: You will lose the interest tax deduction you can claim on your federal tax return.
  • Savings Shortages: You could be forced to cut how much you save or invest for retirement to pay off the loan faster.
  • Less Access to Cash: While you can get a loan against the equity in the home, it is not as fast or convenient as tapping into an emergency savings funds.

Most people tend to strike a balance between paying off their mortgages sooner and their other financial and cash needs. One way to do this is by refinancing your current loan for a shorter term or lower interest rate. To learn more about different options for paying off your mortgage faster, please feel free to contact Elite Financial at (800) 908-LEND or (805) 494-9930 today!