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Conflicting advice

I've heard that it's both a good idea and a bad idea to pay off the mortgage really. What's the truth? by saridder123 from Brice, Ohio. 19 days ago Reply


Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 1,904 contributions

It really depends on your circumstances and there is no 'One size fits all' answer. The things to consider include how much of your savings does it take to pay it off? All of it, or a small portion of it. What are your rates of return on your investments, vs the rate on your loan? If you have limited funds after you pay it off, and you have a financial crisis, it is neither quick nor cheap to extract money from the home. If you have $300,000 in a bank savings account paying you 0.25%, and you have a $75,000 balance on a loan that has a 4.25% rate, paying off he loan saves you 4.25% on $75,000 will save you $3,187.50 in the first year you pay it off, but you won't earn $187.50 in interest in your savings account. Sounds like a good plan to pay it off, because you are saving $3,000 in interest in the first year AND you still have $225,000 in the bank, so yu have plenty for a crisis. However, if your money is in investment accounts that are earning you 6.00% per year, then you make more money on your investment than you are paying the bank on the loan, so paying it off may not be a wise move. If you have a financial planner, they can help you determine what makes the most sense for your situation. ~ Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Licensed in Arizona, California, Georgia, Oregon, and Washington. Need help in other states? We got you covered. NEXA Mortgage is licensed in 46 states ~ www.ApplyYes.com 480-889-9000.

19 days ago
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,097 contributions

The answer is simple. Whatever works best for your personal situation.

18 days ago
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