Pros and Cons of Paying off a Mortgage Early

There are both pros and cons to paying a mortgage off early. You will want to consider all of these factors to decide which is right for you.

Pros

You can usually save money on interest

You will often be able to save money on interest when you pay your mortgage off early. If you pay it off very early in the loan, this can be significant. It can essentially make what you pay in total for your home to be much less. Near the end of many loans, you will be paying a lot of principle, however, so at that point the savings may not be as much.

You do not have to worry about paying your mortgage every month

Many people worry that if they lose their job or have another problem that they will not be able to pay their mortgage. They may worry about getting foreclosed on and losing the very home in which they live. If you have the money to pay it off, then you can help to rid yourself of this worry. No matter what you will know that you own your home free and clear. You will also have one less monthly payment to give, and likely a significant one. You may feel like you have much more money from your income every month without this big cost coming out.

Cons

You may use up a great deal of your savings

Depending on how much mortgage you have left and how big it was to begin with, you may be paying a small fortune from your savings at one time. You may not need the money now, but what happens if something comes up and you need it? Emergencies happen and require the use of funds. You may use these up to pay for the mortgage.

You will not be able to use the money for other investments

With the amount of money you would use to pay off your mortgage you could be investing it. Of course you will need to decide if it is better to pay off the mortgage or invest the money based on the interest rate of your loan, how much interest remains and the returns you expect to receive from investments.

Paying off a mortgage early can be a very wise decision, but it not right for everyone. The above advantages and disadvantages are just a few that you may experience.