Should You Pay Off Your Mortgage Early?
Bob just found his dream home after a month long search. But when his agent told him the price of the home, his excitement turned into a heart break. Have you ever been in such a situation? Of course, there are home loans to help you out, but they are a tricky business and you can end up paying almost double the amount of loan you took during the term period. Many people consider paying off the loan earlier than the decided term period. But is this the right strategy for you?
Prepayment Penalties – Before you decide to pay an early mortgage, learn about pre-payment penalties. Research the rules and regulations prevalent in Ventura County regarding these penalties before making a decision. Paying a penalty is nothing but a waste of money.
Retirement Savings – Using your savings for the retirement in order to reduce the loan does sound like a good idea, but trust us, it isn’t. You can put this money to a better use than paying off the mortgage principal. You can’t risk your savings like that, no matter how confident you are about your future.
Do You Have Other Debts As Well? – If you are carrying consumer debts such as a credit card debt, we would suggest paying it off first instead of paying off the mortgage loan. Such debts have really high interest rates as compared to the mortgage rates.
Inflation – Are you happy with your monthly income? Even if you are, there’s a strong possibility that in another 20 years you won’t be. Rising inflation can make high salaries look small in a few years. Your fixed rate mortgage loan can actually act as a fence against inflation in the years to come.
Psychological Freedom – That’s one of the main reasons why people opt to pay off their loans earlier. The feeling that you now own a debt-free property is extremely satisfying and relaxing.