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Is Paying Off Your Mortgage the Best Option?
By JLP | May 2, 2006
Su Bacon (cool name) at the Kansas City Star has written a really good, well-balanced article titled Mortgage-free: The way to be? (might require free registration) on the topic of paying off a home mortgage.
A topic like this is where financial planning gets all touchy-feely. In purely number-terms it most likely makes more sense to carry a mortgage (assuming interest rates are low) and invest the extra money elsewhere. Of course, the other side to that argument is the safety and satisfaction of not having a mortgage payment. I can see both sides of the story.
Personally, I see nothing wrong with having a mortgage payment as long as it isn’t hurting my monthly cash flow. I’m perfectly comfortable investing my money elsewhere. Apparantly, I’m not alone as you will see when you get down to the bottom of the article.
Topics: Basics, Financial Planning, Mortgages | 8 Comments »
May 2nd, 2006 at 10:16 am
Very interesting article. It’s a topic I struggle with all the time — my emotions say pay it off, my head and the numbers say let it be. With the rising interest rates (and 3 separate ARMS on investment properties, as well as my own home), I’m starting to listen to my emotions a little more. At least to the point where these things start cash flowing better.
May 2nd, 2006 at 10:29 am
At my low fixed rate–let’s just say I’d be marginally better of putting my money in my savings account, rather then paying off the mortgage–it’s a no brainer. Furthermore, having a mortgage assures that I will be able to itemize my deductions, which is no small feat.
May 2nd, 2006 at 2:56 pm
This may not be your decision, my wife insisted we pay off the mortgage when some extra cash became available. She also wouldn’t let me refinance and pull any cash out when rates were VERY low.
May 2nd, 2006 at 5:44 pm
Gee, Gary, it’s fun to blame your wife. Ever thought that maybe you could explain the benefits to her and have a discussion about it? Saying “it’s not my decision” is such a cop-out.
June 9th, 2006 at 3:53 am
I have spend a great deal of time doing the math and the reality is that for myself, paying my mortgage off is going to save me roughly $120,000 in interest. Why wasn’t this mentioned first in the article? I feel that people in general think that they must grow old with their mortgage not realizing that long term they will save money if they pay it off. This is that same type of trap that people fall into with credit cards.
June 12th, 2006 at 8:05 am
Ok it isn’t the early morning and I am fully awake. I know that in a perfect world if you do the math it works. I am not in the financial profession. I don’t have the time to follow the market anymore, and for the last month started to spend more time reading more about financial matters. My question to those who are more knowledgeable than I is where does inflation set in. I know that 10 dollars today is not going to hold the same value in 15 years. We don’t live in a perfect world. I have a family member that put college money away for his son in Mutual funds and didn’t make all that much money in 12 years.
July 3rd, 2006 at 8:35 pm
The math will almost always tell you to not pay off the mortgage but it is not always about math. A home that is paid off gives security that investments will not always give. Accounts tell you that you will loose a great tax write off. Since when is paying $1.00 to save $0.30 good advice. There is coming a day when many will wish that their loans were paid off, it is hard to loose your home when you owe nothing on it.
October 26th, 2006 at 3:02 am
Su – Very interesting article. It definately invloves a Yes from the 2 masterminds (Brain and the Heart) !! My feelings say pay it off but my head and the numbers change my decision.
The Million $ question out here is How to find a great mortgage?