Save future down payments for other properties
Depending on the value of your home, your mortgage payment can range from $800 to $3,000 (or more) per month. Regardless of the specific amount, your mortgage payment is likely to be a large part of your monthly budget. If you pay off your mortgage early, that money is now available for other purposes. If you are smart, you will not spend it on material things.
Set aside that money (or at least some of it) to acquire new assets. You can make regular contributions to a Roth IRA, invest in mutual funds, or even make payments on a second property that you rent. Just make sure you use some of the financial freedom of being mortgage free to build up more wealth.
interest rates are rising
This point is typical for periods where the federal interest rate has been rising. However, in the wake of the pandemic and rampant inflation, interest rates are currently higher than they have been in at least 15 years. Many analysts also expect them to keep climbing in the near future.
If you have a variable rate mortgage, your payments could soon skyrocket. You can see your interest rate increase from 1.9% to 4.9%. Or more, depending on when your mortgage is up for renewal. No matter what your specific circumstances, higher mortgage interest rates will inevitably cost you more money. You can save on those extra expenses by paying off your mortgage faster.
Shutterstockoutright home ownership
Buying your own home outright has a certain level of comfort. There is zero chance of any such unlikely event that will result in complete destruction of your home. The bank cannot foreclose on it, as it has been paid in full. You won’t be out on the streets due to a sudden job loss or medical emergency, because you won’t have to pay a mortgage anymore. (Yes, property taxes, utilities and general maintenance are still an expense.)
Another advantage of being the outright owner of your home is that you have access to all the equity. Historically, home values have continued to rise (despite small downturns in the real estate market). Being completely mortgage free lets you access 100% of your home’s equity when you need it. This can also be done through a home equity line of credit or reverse mortgage. Or you can let your property increase in value as long as you continue to live in it, until you downsize in retirement or leave it (and its increased value) to your heirs.
Shutterstock
