Pay Off Mortgage Or Invest: Factors To Consider Series 2 of 5

Factors To Consider Before Paying Off Your Mortgage Early

According to data from FiveThirtyEight, only 32 percent of Americans have 100 percent equity in their homes, meaning their mortgage is either entirely paid off or they never had one. Most homeowners aspire to join the ranks of this 32 percent; although, paying off your mortgage should not be your only financial goal as a homeowner. There is a multitude of ways to take care of your financial health while still paying for your mortgage. If you have extra cash each month and find yourself wondering “should I pay off my mortgage,” these are some factors you should consider:

• Your Savings: If paying off your mortgage early means depleting your life savings, think carefully about the decision before getting ahead of yourself. Remember that unexpected costs do come up, and make note of how much cash you can actually spare before making a decision.
• Taxes: Take a look at your tax strategy and whether or not you rely on deducting mortgage interest each year. Make note of whether or not paying off your mortgage will impact your deductions and in which ways.
• Financial Goals: Ask yourself what your financial goals are, both right now and for retirement. Does paying off your mortgage allow you to achieve those? Consider whether or not you have other important goals on the horizon, such as paying off student loan debt or credit cards.
• Timeline: Are you planning on staying in your home for the long haul? If you foresee yourself staying in your home, paying off your mortgage when you can make more sense. This factor may not weigh as heavily as the others, but you should consider how long you plan on living in your home.
• Stage In Life: Depending on where you are at with your career, certain financial decisions may be more or less risky. For example, if you are nearing retirement and are hoping to pay off your mortgage before then, using extra cash to do so can make the most sense.

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Pay Off Mortgage Or Invest Series 2 of 5

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