Do not pay off your mortgage early: Mortgage debt is your friend!
Many new homeowners will try to immediately pay off their mortgage as fast as possible. I’m going to share with you my top reasons why that is a bad idea. Essentially, mortgage debt will free up your money to work for you.
You can make higher returns elsewhere in the market. The current rate on treasury bills is almost 5%. Treasury bills are considered among the safest investments because they are backed by the US government. Extra money you have could go towards your retirement if you are not already maxing your retirement contributions.
You should build an emergency fund to sustain yourself during a financial emergency such as job loss or medical bills. Putting additional money towards your mortgage decreases your liquidity.
You should pay off high interest debt first like credit cards, personal loans, and even car loans.
The IRS allows you to deduct mortgage interest on your taxes which lowers your tax bill.
So before you are tempted to pay additional principal of your mortgage, remember, there are better places that money can be put to work for you and your family.
Works Cited:
https://www.experian.com/blogs/ask-experian/reasons-not-to-pay-off-your-mortgage-early/
https://www.forbes.com/sites/forbesrealestatecouncil/2021/05/25/why-you-should-not-pay-off-your-mortgage/?sh=37e866ad467e
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