Paying off a mortgage early. Should we or shouldn’t we?May 25, 2023
Have you ever thought about paying off your mortgage early? Well, it has been on our radar since my husband and I started getting serious. But, we have met a lot of resistance from friends and family as there are many opinions about whether paying off your mortgage early is advantageous.
There is an age-old debate in the financial community as to whether paying off your house early is worth it. I’ve heard, “your money could do better in the market”; “there are tax benefits to having a mortgage”; “you can’t borrow money this cheaply”. Although valid points, there are counter points to be considered such as, you can reduce your overall debt, build equity in your home, and potentially save money on interest payments over the life of your mortgage.
One’s decision should not be based on points of views from one side or another. Rather, I believe that paying off your house or even considering paying off your house is a personal decision. And it starts with considering your broader financial goals and priorities. For example, if you have other high-interest debts or if you're not contributing enough to your retirement savings, it may be worth reassessing your strategy for paying off your house. Additionally, it's important to maintain a healthy balance between saving and spending, so that you can enjoy your life now while also preparing for the future.
Less spoken about is how paying off your house may affect you emotionally. There are emotional benefits to paying off a house and those emotional benefits will be particular to your money history, your money beliefs, and the relationship that you have with money. I am sharing the emotional benefits that we have experienced as we are about 2 years away from paying off our house. It has been a roller coaster and we have constantly re-assessed if this is the correct decision for our family.
In 2015, my now husband and I started getting serious about our relationship. For some time, we had conversations about the role of money in our lives. Those initial money conversations were often not easy but they were foundational in how we approached getting married and the goals we set for ourselves. If you haven’t seen the video of one of our initial dates where money was brought up, you can watch that here. One of our goals as we entered into matrimony was to pay off our house early. There are both emotional and financial benefits to paying off your house early. It is a personal decision that should be considered as part of your financial journey. Here are a few of our reasons.
Creating a new money narrative
Both of us grew up in single parent homes where money was scarce as well as a source of stress. The financial stability and security that paying off our mortgage early will give us is essentially indescribable. It will change the financial trajectory of our present and future, making any sacrifice or discipline well worth it.
Paying off our mortgage early gives us more flexibility to design our life and makes us more agile to respond to illness of ourselves or family members, and/or pivot in our careers. My husband also indicated early on in our relationship that he would like to retire early. Not having a mortgage payment makes that goal much more achievable. It will allow us to focus on what is most important to us and support how we want to live our lives including, travel, living abroad, spending quality time with family and friends, as well as pursue entrepreneurship.
Money can be a source of tension in relationships and paying off the mortgage will help alleviate this stress. Personally, I want to think less about money commitments and focus more on using money as a tool to live out my dreams and desires. The financial security of having a paid off mortgage also allows us to focus on our caregiving relationships to our child and our aging parents. It also brings joy to be generous with time or money within our families, our community, and our areas of interest.
Build Generational Wealth
Having no mortgage payment frees up money to invest as we want whether that be through investments, philanthropy, or entrepreneurship. We are also using the journey as an example to our son of prioritizing values, making sacrifices, and practicing discipline. We make him a part of the conversation when we decide not to buy a new car, or have or do all the things. We have even initiated simple gamification techniques for illustration.
(This is a house pay off tracker found on Etsy and colored by in my son. With each mortgage and additional payments, we color in the amounts paid down. There is another sheet we have to go:).
Overall, paying off your mortgage can have a range of emotional and financial benefits. Ultimately, it is a personal decision but one that should be considered on your financial journey.
If you are interested in learning more about the benefits of paying off your house or financial independence, considering my financial wellbeing services which you can find here.
Photo by Jeffrey Czum
Questions: email [email protected]
Mariah Hudler, MSW, MBA, CFT-I™ is a therapeutically informed financial wealth & wellbeing coach. She works with individuals, couples, families, entrepreneurs, groups, and organizations to make Wealth & Wellbeing a joyful part of life.
Disclaimer: This blog is for education only. Please consult with a qualified professional when you have any questions about your personal financial, tax, or legal situation. Information contained in this post is for informational purposes only and not intended to replace professional advice.
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