![]() While the value of the dollar depreciates, your payments are fixed and your house presumably continues to appreciate in value. Inflation: If inflation rates are higher than your mortgage interest rate, then you are actually coming out on top by having an active mortgage.Cash and savings situation: Make sure you have enough money available for emergency spending, as well as sufficient contributions to your retirement plan before you make the decision to spend that money elsewhere.It could be helpful to solidify your overall financial picture before choosing to pay down your mortgage early. Consider paying off any higher-interest loans or credit card balances you have first. Paying off other loans: Mortgages typically offer lower interest rates than most loans, so while they’re a long-term commitment, they’re also a useful tool for allowing you to do more with your money.What you save on interest payments by paying off the mortgage early may not outweigh what you could earn if you invested that money elsewhere. Tradeoff of other investments: Paying off your mortgage early requires putting more of your money toward your mortgage payments rather than other investments, yet those other investments might produce a better overall return.Regardless, it’s worth checking with your lender or reviewing your monthly billing statement first. Not all lenders will penalize you, and few mortgages carry these penalties outside the first five years. These penalties typically go into effect if you pay off your mortgage in the first three to five years. ![]() ![]() ![]() These are sometimes put in place by your lender to discourage you from selling, refinancing or paying off your mortgage too quickly after entering into the loan. Prepayment penalty: One thing to look out for before paying off your mortgage early is a mortgage prepayment penalty.What to consider before paying off your mortgage earlyīefore paying off your mortgage ahead of time, check the status of your finances, the terms of your loan and the state of the market. ![]()
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