Is It Best To Pay Off Your Mortgage?
We all want the peace of mind of know that we own our home, and not the financial institution. But, before you decide to apply extra income to your mortgage or refinance to a shorter term, here are a few things to think about:
1. Are you taking full advantage of your employers company match on your workplace retirement plan?
2. Do you have other debt that is accruing interest? Chances are that the interest rate you are paying on any revolving debt is going to be higher that what you are paying on your mortgage and this does not even take into consideration the possibility that your mortgage interest may be tax deductible.
3. How about your emergency fund? If you were to be out of work for an extended period of time or suffer a major financial expense, would you have the saving to get you through?
4. How much risk are you willing to take? With record low interest rates, it is possible that with the tax advantaged treatment of mortgage interest that you may decide that the effective interest rate of your mortgage is low enough that you can invest the money somewhere else to obtain a higher return. Before you make this decision you should speak to a financial advisor to make sure you are aware of all the risks and consequences. .
At the end of the day the correct answer really comes down to what is important to you and how much risk you are willing to take. These record low mortgage rates will not be around forever, so not would be a good time to speak with a financial advisor to make sure that you are on track to meet your financial goals.