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Should I Pay off my Mortgage or Invest?

Updated on December 5, 2011

Should you pay off the mortgage or invest?

In the world where finances and money dominate, certain choices must be made. One of those crucial choices is whether or not to pay off the mortgage early or to invest any spare cash. The following article will look at the pros and cons of paying the mortgage early or not paying the mortgage early.

Reasons to Pay the Mortgage Early

There are certainly legit reasons to pay off the mortgage early. The most important of them all is the peace of mind factor. Most people fail financially because they are completely stressed out with too many bills and make the wrong choices on which ones to pay first. Not having the mortgage to worry about relieves so much stress and potential debt. With foreclosures on the rise in certain areas, peace of mind of knowing you own the house will feel better than anything. Another reason to pay off the mortgage early is the interest money you save. Most mortgages double and triple in prices because of failure to pay just the interest on the loan. By paying off the entire mortgage, the interest saved could range from a few thousand to hundreds of thousands of dollars. The last reason to pay the mortgage off early is because it is a complete requirement to pay it, while investing isn't required. You may or may not choose to follow through with paying the minimum for the mortgage and investing the rest. In fact, there is a good chance you will find more bills to use the investing money for.

Reasons to Invest

While the reasons for paying off the mortgage are many, the reasons to not pay off the mortgage early are powerful indeed. The biggest downfall to paying off the mortgage later is all the interest you will end up paying. Even though interest rates in the real estate market are much lower, a fifty year mortgage can add up to six figures in interest rates alone. A good reason to wait to pay off the mortgage is all the opportunities to to make more money investing than if you were to pay off the mortgage right away. The key is to earn more money investing than the minimum monthly mortgage payment and interest rate combined. If you earn 10% investing and the mortgage is 5%, you are making double the profit and easily paying off the mortgage simultaneously.

Whether or not you decide to pay off the mortgage or invest, be sure to always ask a professional on the matter to help you.


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