Should I Pay off my Loan Early?
Why pay early?
Making your monthly payments early can have a few benefits to your overall life such as: saving money, peace of mind, and improving financial strength. You can eliminate your payments quicker, use equity later, and save thousands of dollars in interest as well. Although it's important to take into consideration what early payments can affect.
- Will other investments beat paying off my mortgage early?
- Will cash be tied up in my mortgage?
- How will I use that money if I don't pay it off early?
- How much do I value my peace of mind?
When should I not pay early?
Early payments can be beneficial, but sometimes they can hurt more than they help as well. Paying it off early can:
- tie up a chunk of your liquidity/net worth making it harder to access later.
- cause you to miss out on potential higher return investments.
- stop you from getting the full home equity value from your home.
So how do I pay it off early?
There are a few ways to get ahead of your mortgage payments.
- Make bi-weekly payments
- Make extra payments each year
- Refinance with a shorter term
The bottom line is that it's up you, your family, and your loan officer to figure out what is the right option for you, fits your home value, and how you would like to continue in the future.