The advantages of paying off mortgages early include saving money in the long term and needing less money for retirement, according to AARP. A common drawback to paying off a mortgage early is the fact that the extra money spent on paying higher mortgage payments is unavailble for making other investments.
Borrowers who pay their mortgages off early are no longer obligated to make large payments each month, as AARP notes. Having this extra money each month as well as having a home that is completely paid off provides many people with a feeling of relief. While it’s true that paying off morgtages early reduces possible tax deductions, it helps reduce the length of time that individuals pay for the mortgage on their homes. It is also a good option for those who are nearing retirement because they can use the money they save on their mortgages for other living expenses.
It is also important to know when not to pay off a mortgage early, according to CNBC. One reason not to pay off a mortgage early is because the individual loses the potential to acquire more wealth. Instead of paying off the mortgage entirely, borrowers should use the extra money they have for other investments. Another reason not to pay it off early is because inflation might affect the mortgage payments and actually lower them in the future. Paying it off at a fixed rate might mean that homeowners ultimately pay more for their homes in the long run.