Should I Pay Off My Mortgage Early?

Should I Pay Off My Mortgage Early?

I’ve had my mortgage for just over ten years now. I remember when I got my house. It was such a happy day! That down payment was the biggest check I ever wrote, and I was sure that I’d be eating Ramen noodles for years to afford my mortgage. My real estate agent assured me that wouldn’t happen, and thankfully he was right. I managed just fine and have even been able to contribute additional principal payments each month. I eagerly await my statement every month to watch the balance go down. I also run an online mortgage amortization calculator to see exactly when I would be sending in my last payment.

We typically recommend our clients pay off their mortgage before retiring. This way, they have a smaller amount of living expenses during a time when there’s no employment income. Reducing debt is also a way to get closer to financial independence.

However, sometimes additional principal payments might not make sense. Before paying off your mortgage early, there are a few things to think about:


  1. Is your emergency fund fully funded? 

The point of an emergency fund is to have cash available immediately for something unexpected. If your emergency fund isn’t enough to cover a crisis, pause additional principal payments.


  1. Is there something better you could do with the funds??

If there are other outstanding debts with a higher interest rate, it’s better to tackle those first to save on the total amount of interest paid. You could also decide to put funds toward your retirement or invest in the market if you could earn more with the funds invested than the mortgage interest rate you pay. Keep in mind, getting that higher return by investing is not a sure thing.


  1. Do you need the extra liquidity?

While you may be able to get equity out of your home if you needed it through a HELOC or reverse mortgage, you lose the liquidity debt gives you by paying off a mortgage early. The added leverage of debt allows you to do other things with the money such as investing in the market or another piece of real estate.


  1. Is paying off your mortgage early a goal?

Some people hate the idea of having any kind of debt, but not everybody desires to pay off their mortgage as quickly as possible. Perhaps there’s isn’t enough cash flow to make the extra payments or you don’t mind having debt. The point is, if it isn’t your top goal to pay off the mortgage early, focus on the goal that is your priority.


My goal is to pay off my mortgage early. I’ve been targeting the year my 7-year Adjustable Rate Mortgage (ARM) adjusts as the year I’m mortgage-free. Recently, my dad told me that the happiest day in his father’s life was when he paid off his mortgage. My day will come soon!

Cynthia Flannigan
Cynthia Flannigan

Cynthia made the shift to financial planning to guide clients through making good financial decisions through both grim and exciting changes in life. More than anything, she thrives on helping people. She obtained her CFP designation in 2008 and completed a masters in financial planning and taxation at Golden Gate University.

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