| Doris Dobkins is the publisher of $mart Money New$. You can subscribe by
visiting her web site at
CreativeFinances.com |
Many people are refinancing their home
mortgages. When you refinance, it's important to make
decisions based on your personal and financial goals in life.
In this article, we are going to
discuss the topic of paying off your mortgage early and why you
might or might not want to.
So, what about you? Where do you
stand on this issue or are you as confused as many of us? The book
called Ordinary People Extraordinary
Wealth, A New York Times
best seller, by Ric Edelman states in his findings that most of the
5,000 people he surveyed with extraordinary wealth still carry a
mortgage.
While most of us have heard all our
lives that it is better to pay off our mortgage as quickly as
possible, both sides make some strong arguments for their case.
Here are a few reasons for Paying Off
Your Mortgage Early:
1. You want more than anything to be
100% debt free.
2. You want to have more choices and
options for your future and no debt gives you this option.
3. You want to retire early. With no
mortgage payment, you can save up for retirement faster and quit
sooner.
4. You want a guaranteed rate of
return. Paying off your mortgage guarantees you that savings rate.
Investing in the stock market can never guarantee you anything.
5. You don't itemize but take the
standard deduction.
6. You live in Canada or another
country where there is NO tax benefit to carrying a mortgage.
7. You are disciplined enough that
once you have paid off your mortgage, you will invest the same
payments into a retirement fund until you have enough to meet your
retirement needs. (Remember, with no mortgage, your required
retirement income will be greatly reduced.
Looking at the other side, here are a
few reasons for NOT Paying Off Your Mortgage Early:
1. Your primary financial goal is to
obtain great wealth.
2. You want to leverage your assets
to help you achieve your goals more quickly. Using someone else's
money is better than using your own.
3. You are in a high tax bracket, and
this additional deduction lowers your income tax bracket as well as
your taxes.
4. You think you can get a better
return in another investment (i.e. stock market, real estate, rental
property, etc.)
So the decision to Pay It Off or Keep
It As Long As Possible boils down to your personal goals. What do
you want to accomplish with your money and what do you want to
achieve financially?
Personal Peace of Mind and Financial
Freedom isn't for all. Some would rather take risks where the
rewards can be significantly greater than playing it safe. Bottom
line? We all need to decide for ourselves what will work best for
us.
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