![]() It’s pretty simple… if your mortgage rate is low compared to current interest rates, then (all else equal) keeping the mortgage is favored. And the #1 way to reduce risk? Aggressively pay down debt. It could give you space to pursue other financial goals such as saving for retirement.įor the folks who are retired or will be soon, then reducing risk can offer fantastic rewards. The younger you are, the more sense it makes to maintain a mortgage. Younger people have a longer investment time horizon, more career capital, and more time to bounce back from any hiccups along the way. ![]() ![]() Your age can have a tremendous effect on your overall risk profile. So paying off your mortgage can help you feel better AND avoid the stress and hassle of dealing with the bureaucracy of your mortgage servicer. The fix required about 3 hours of my time and a good deal of frustration. My mortgage servicer “forgot” to pay my property taxes one time (even after I reminded them). Mortgage servicers do not have the best reputation for customer service. Paying off your mortgage also relieves you of a major hassle… the burden of dealing with mortgage servicers. Just ask anyone who has successfully gone through Dave Ramsey’s program. And doing so will almost certainly make you feel better. However, a mortgage is still debt and paying it down can help reduce your financial risk. Unlike credit card debt, mortgage debt often has a lowish, fixed interest rate and supports the purchase of a valuable asset. Here are the major factors to consider when thinking about paying off your mortgage: #1 – Your personal psychologyĪre you risk averse or a high roller? Mortgage debt is often touted as the “good” kind of debt. Everyone has different needs and constraints, so almost everyone will ultimately arrive at an answer tailored to their personal circumstances. ![]() Like almost everything in personal finance, there is no cookie cutter answer. Pay down all debt as soon as possible and as fast as possible (aka the “Dave Ramsey special”).Compare your mortgage rate and the returns on your investment portfolio… if you can borrow cheaply from the bank and earn a premium in the stock market, then keep the mortgage (aka the “mortgage arbitrage approach”).Generally, you’ll get one of two answers to this question: When it comes to personal finance, there are few questions more common than, “should I pay off my mortgage?” ![]()
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