Should I pay off my mortgage? Many homeowners ask themselves this question, but few know the actual benefits of doing it. The answer is different for everyone, but I feel that if people knew how much they could save, people would be more diligent about paying it off. Homes in Order the eBook will show you in detail how compound interest works and how you can save money by putting your money to work for you. As you learn in the book, it’s not a big secret. As Benjamin Franklin says, “Small strokes fell great oaks.” So, start with an extra $5 per month, then increase it. Look how the family below benefits by making payments.
There are countless ways to invest your money. I’m very partial to making your most important investment your mortgage, and paying it off. Here is a list of 10 reasons to pay off your mortgage early. But this isn’t just another fluff list. This is mathematically backed by the Homes in Order How To Pay Off Mortgage Early Calculator.
Saving money is good. But saving money and investing it is great. And it’s a lot of fun. With no further ado, here is the list.
1. You will save a lot of interest. If the typical homeowner at today’s mortgage rates were to add just $100 extra to their mortgage payment every month, they would save over $30,000 in interest. Wow.
2. You will save years of payments. If the typical homeowner were to add just $100 extra to their mortgage payment every month, they would save over 4 years of mortgage payments.
3. You will save a lot of money – Interest + Principal. Not only do you save interest (#1) and payments (#2), every time you pay an extra $100 to your mortgage payment, that is $100 of equity. It is just like putting money in the bank. That adds up! So, if the typical homeowner at today’s rates were to add just $100 extra to their mortgage payment every month, they would save a lot of money.
4. It’s easy. You just add $100 (or whatever you can afford) to your monthly payment. What if you can only spare $5? Easy. Add $5 to your monthly payment! You pick your pace.
5. It’s secure. You’ve already invested in your home. Now you’re just reducing the loan liability. You don’t have to worry about giving your money to someone, or what the market is going to do. Your rate is already committed.
6. It’s investing. Are you investing your money anywhere else? Homes in Order will show you how just a dollar here and two dollars there will really add up. Paying off your mortgage is a fantastic investment. There are a lot of investment opportunities out there, but I challenge you to find something better.
7. Power equity deposits. Every month you make mortgage payments, but perhaps only 10% or 20% of the payment goes to principal. Whatever you add over and beyond your required payment goes 100% to principal. Whether you pay $5 extra or $500 extra, that portion is 100% principal. That is your money. That is your equity.
8. It’s cheap. You don’t have to pay a financial advisor. You don’t have to pay your accountant, your real estate agent, your insurance guy, or anyone else. Just add the payment. This is easy investing. Safe investing. It’s your house.
9. The HELOC. Let’s say you paid your house off. Now what? Well, you own a house! Get a HELOC and you can borrow from your house. WARNING! This is getting into debt — but by the time you pay your house off, you’ll know that you don’t want to be in debt. But when you have access to your equity, get ready to really start investing in real estate.
10. Peace of mind. Just knowing that you have a roof over your head and nobody coming to kick you out of your house is reason enough.