Pay it down4/1/2023 ![]() ![]() By taking away one type of credit, your credit score will decrease. For example, maybe you have a credit card, car loan, and mortgage. Several factors make up your credit score, and one is your mix of credit types. You'll lose this perk by paying off your mortgage early. As a homeowner, you can claim the amount you pay in mortgage interest on your taxes to lower your taxable income. Lose the mortgage interest tax deduction.But you should always ask your lender first. Not all lenders charge this fee, and you probably don't need to worry about it if you're waiting more than five years to pay off your mortgage. A mortgage prepayment penalty is a fee you pay the lender if you sell, refinance, or pay off your mortgage within a certain amount of time of closing on your initial mortgage - usually three to five years. invest in the stock market for 10 years, you'll most likely come out on top by investing the money instead. ![]() So if you pay your mortgage off 10 years early vs. The average stock market return over 10 years is about 9%. The average mortgage interest rate right now is around 6%. The cons of paying off your mortgage early The freedom that no mortgage payments gives you is a powerful motivator. You may simply like the idea of not having a mortgage hanging over your head. When you completely own the home, there's no chance of losing the house. Your house could be foreclosed upon if you default on payments. If you hit a financial rough patch, there's the possibility that you won't be able to afford monthly mortgage payments. The average monthly mortgage payment is currently $2,064 on a 30-year fixed mortgage and $3,059 on a 15-year fixed mortgage-paying off your mortgage could free up a sizable chunk of cash for you to save or put toward other expenses. For example, you could invest the extra money or pay for your child's college tuition. By eliminating monthly mortgage payments, you free up that cashflow to put toward other things. (Just make sure to clarify with your lender that all extra payments will just be going toward your principal, not interest.) Paying off your mortgage early could save you tens of thousands of dollars. Each month that you make a mortgage payment, some money is going toward interest - so the fewer payments you have, the less you will pay in interest. The pros of paying off your mortgage early
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