Wherever you are at on your mortgage journey, there may come a point where you consider trying to pay off your home loan as quickly as possible.
Maybe you are trying to decide on a loan term and are thinking about choosing a 15-year mortgage. Or perhaps you’ve been paying on your loan for some time now and can pay it off early.
In either case, you may be wondering what the advantages and disadvantages of paying off a home loan rapidly could be. Let’s go over some possible ramifications now.
Benefits of Paying Off a Mortgage Quickly
• It feels satisfying to have your mortgage paid off. Once you do, you can rest assured that you truly own your home.
• You no longer need to spend time and resources managing your mortgage and interest payments every month. You can stop focusing on paying off your home and spend that time and energy on other aspects of your life.
• You will longer need to worry about interest rates rising in the future, as you will no longer need to pay any more interest on your home loan.
• The total amount of interest which you will have paid would be significantly lower than it would’ve been if you took longer to pay off your mortgage. Depending on how quickly you manage to pay off your home loan, you could save thousands of dollars in interest.
• Paying off your mortgage early can be a significant stress reducer. It is a huge debt that you no longer must worry about.
Drawbacks of Paying Off a Mortgage Quickly
• If you put all your money into paying off your home loan as quickly as possible, you will have fewer funds available to invest. Investing early is important to grow your potential retirement funds as much as possible.
• Whether you are thinking about getting a mortgage with a short term which will require larger monthly payments or you’re thinking about rapidly paying off what is left on your existing home loan, either decision will remove liquidity from your budget, leaving you with less of a safety net to fall back on in case of emergencies.
• With less money remaining in your budget, it is also easier for your finances to be destabilized by small changes in bills, etc.
• If you have other debts to pay off, pouring all your money into your mortgage means fewer funds to pay toward those other debts.
• Paying off your mortgage early (especially while you’re young) may divert money from necessary savings toward other life goals.
Need Mortgage Advice? We Can Help
If you are having a difficult time figuring out whether to pay off your Phoenix mortgage quickly, our loan experts can help you analyze your financial situation and come to an informed decision. Please give us a call today at (480) 470-1080 to schedule a consultation.