Should You Pay Off Your Mortgage Early?

Should You Pay Off Your Mortgage Early?

Even with today’s low interest rates, the total amount of interest you pay over the life of your mortgage will be a staggering amount. It's one of the reasons many people set a goal to pay down their mortgages early. Here are some reasons to consider it:

Paying your mortgage off will make you completely debt free.
You want to reduce expenses as much as possible so you can put more money into a retirement fund.
You plan to move in a few years and will need cash for your next home - for closing costs or for a down payment. Applying more money towards your mortgage balance will increase equity, which can be converted to cash if needed.
Currently, you do not receive a tax break on your mortgage interest. If your mortgage is small, your interest may not exceed the standard deduction the IRS gives non-itemizing taxpayers. Without that tax break, the actual cost of paying off your mortgage will save you money.
You pay private mortgage insurance (PMI). If you have less than 20 percent of equity in your home, making extra payments will build more equity sooner, allowing you to cancel your PMI. And eliminating PMI will reduce your monthly payments freeing funds for other purposes.

But pre-paying a mortgage may not be for everyone -- for some paying your mortgage off early can hurt you more than help you. Here are reasons to forego pre-paying your mortgage:

Your mortgage contract includes prepayment penalties.
You have other high-cost debts. Credit card interest rates are often more than twice that of most home mortgages. Any extra cash should go toward paying off the balance of those first.
You want more money in your pocket now which you can keep if you do not pay off the mortgage early.
You are in a high tax bracket and this additional deduction would lower your income tax bracket as well as your taxes.
You want to put money into another investment such as the stock market or real estate.

We are required by law to list the following licensing information. Flagship Financial Group, LLC is licensed as: Alaska Mortgagee Licensee #100278; Arizona Banker 0908193; Department of Corporations under the California Residential Mortgage Lending act Lender 4130854; Florida Correspondent Lender CL 0703188; Georgia Mortgage Broker Licensee 17297 – 3130 W Maple Loop Dr, #200, Lehi, UT 84043 (GA); Illinois Residential Mortgage Licensee MB6760204; Registered under the Kansas Mortgage Business Act License Number of 2002-4309, Maine Mortgage Lender License# SLM9424; Maryland Mortgage Lender 16461, Mississippi Supervised Mortgage Company 308/2006; Nevada Mortgage Broker 1385 – 1349 Galleria Dr., #110, Henderson, NV 89014; New Hampshire Banking Department Mortgage Broker 13439-MBR; North Dakota Money Broker MB101563; Licensed by the Pennsylvania Department of Banking (PA); Utah Mortgage Loan Company 5493106; Licensed by the Virginia State Corporation Commission, License MC-2980. In certain states in which we do conduct business, certain restrictions and limitation apply. Rates and terms subject to change. If you have any questions or comments regarding this offer please email to lharris@ffgcorporate.com.

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