ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Should you pay off your mortgage early?

Updated on May 12, 2012

A home mortgage will likely be the biggest debt in your life. Traditionally, a mortgage loan is paid off over the course of 30 years (although I have seen 40 year loans as well). To many people (including myself), 30 or 40 years is an interminable length of time to pay off a loan. So, should you pay off that mortgage early? Before I answer, lets look at some of the pros and cons of an early mortgage pay off.

Benefits of an early mortgage pay off

  • As with any debt, paying off your mortgage is a guaranteed return; no matter how the markets fluctuate, any additional payments made on the mortgage will lower your overall debt load.
  • If you are paying private mortgage insurance (PMI), the sooner you have more than 20% equity in your home, the sooner you can stop paying PMI. PMI is typically 0.5% of your yearly mortgage, and usually is not tax-deductible.
  • By paying off your mortgage early, you will reduce your cost of living. Sure, you may have to make some sacrifices early on, but the benefits of can’t be overlooked. Who couldn’t use an extra $1000 each month?
  • It is fairly easy to motivate yourself to pay off the mortgage early. While many people have trouble motivating themselves to save for retirement (after all, age 70 seems very distant when you are 26), paying off that mortgage early is a short-term savings goal (at least compared to saving for retirement). And research shows that short-term goals are the ones we are most likely to accomplish because we receive the benefits far sooner than long-term goals.
  • You will have the piece of mind that comes from truly owning your own home. To me, this is the biggest advantage of all.

Benefits to not paying off the mortgage early

  • Typically, the primary reason that homeowners don’t pay off their mortgages early is to enjoy tax advantages on the interest paid. However, this advantage is not as great as it may seem. Keep in mind that the tax benefit is limited to the extent that your itemized deductions exceed the standard deduction. Also, since mortgage payments progressively consist of more principal and less interest, the amount you can deduct declines each year. In short, don’t overestimate this advantage.
  • A mortgage is the cheapest debt you will ever have. Interest rates are low, and the interest you pay is tax-deductible. So, if you have other debts, it does not make economic sense to pay off the mortgage.
  • Don’t neglect other investments just to pay off the mortgage. If you don’t have rainy day savings and don’t have a retirement fund, focus on building those investments up before trying to pay off the mortgage.
  • You can earn a higher return on your investments than your mortgage rate. While rate of return on savings/money markets are not that great, investing in stocks, mutual funds, and ETF’s are a whole different matter. With the current low mortgage rates, it is not too difficult to find an investment vehicle that will yield more than your mortgage rate.

Should you pay off your mortgage early?

Let me start with the short answer….maybe. When considering paying off your mortgage sooner rather than later, you must examine your financial situation and both short and long-term goals. How long do you plan on living in your current house? What is your current rate and term on your loan? Do you carry several other debts like a car payment or student loans that you wish were off your plate? What is a more valuable goal to you, paying down high-interest rate debts like credit cards or paying toward owning your home free and clear?

While I realize that not everyone will agree with me, here is my personal view. Before paying off the mortgage, it is important to both have a rainy day fund and to contribute to a retirement fund. Second, all other debt should be paid off before the mortgage….after all, the mortgage is the cheapest debt you will ever have. After all of that is done, then I would focus my attention on paying off the mortgage. while I realize that I could come out ahead by keeping the mortgage and focusing on investing, owning a home outright is a huge goal for me.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)