Paying Off Your Mortgage Early – Do or Don’t? | Mint Personal Finance Tips Video


This question comes from Alfredo
off of Mint’s Facebook page. And Alfredo asks this. If I have the cash to pay
off my house, should I do it? First off, Alfredo,
congratulations for having that kind
of cash laying around. There are different
opinions with respect to accelerating the
payoff of a home mortgage. And here are some
schools of thought. There are some advisors that
will tell you to not accelerate the payoff for a
couple of reasons. A, it’s generally
fairly inexpensive money when you’re financing a home. 5 1/2%, even to 7 1/2%, which is
a fairly high mortgage interest rate, is still not a terribly
high interest rate for mortgage money. Accelerating the payoff
gets rid of the debt, yes. And you’re not writing a
check every single month. However, you also just lost
a fairly significant tax deduction by doing, though. Also, you’ve lost a
great deal of liquidity. That’s money, now, that you
cannot get back unless you take out a loan against your home. So, I would not go cash poor
just to become house rich. If you have the
money and it’s not going to strap you
financially to pay off, fine, go right ahead. But remember, you’re losing
a pretty significant tax deduction.

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