Paying off a home mortgage provides peace of mind, offers a safe investment compared to other investment vehicles and allows the owner to provide his heirs with an assured inheritance, says Bankrate. Conversely, an individual loses the opportunity to build more wealth by leveraging his investments and is unable to take advantage of the inflation hedge that a long-term mortgage offers, notes CNBC.Continue Reading
Paying off a mortgage means an individual can provide his heirs with a better inheritance. Someone who would like to leave the home to his heirs has to pay off the mortgage, recommends Bankrate. In case he���s unable to settle the mortgage after deciding not to make an early payoff, his heirs may have to sell the house to clear the debt.
Owning the home after paying off the mortgage provides some form of protection from bankruptcy since the home is often exempt from judgment in case of a lawsuit, Bankrate explains. As compared to stocks, a paid-off house is a sure bet because the owner does not risk losing his investment. An early payoff provides intangible psychological benefits. For many people, living without debt is liberating.
An early payment means an individual cannot take advantage of a lengthy repayment period and low rates compared to the market and invest the difference, so he can build his wealth. The life of the mortgage also tends to provide a cushion against inflation and paying off early means losing that inflation hedge, states CNBC.Learn more about Credit & Lending