In the realm of personal finance advice, there are conflicting views about what you should do with the extra cash in your budget. Some advocate for putting extra funds toward principle on your home while others feel that investing your financial surplus is a better option. While there are plenty of articles advocating for either side of this debate, the choice to pay off mortgage or invest is ultimately a decision best made through careful analysis.
No matter which way you choose to use your extra cash – the decision is going to come down to a number of extremely personal factors including the size of your mortgage, the amount of extra money you have in your monthly budget, the size of your rainy day fund, etc. To make the best decision possible, you need to weigh all of the pros and cons that come with choosing to pay off your mortgage or invest. Below are some reasons to pay off your mortgage early.
Get Your Mortgage Over With
Your mortgage payments are most likely a large sum of money compared to most other expenses that you may be taking care of every month. By paying off your mortgage early, you are giving yourself room to breathe in your budget, freeing up more money to invest and put towards other things.
That debt can cause major emotional stress, tension in relationships and other non-financially based consequences. Putting your extra cash towards your mortgage payments is going to help you pay off your mortgage entirely much faster.
Protect Yourself
Your home is probably one of your biggest assets therefore making your mortgage also extremely important. When you have that substantial amount of debt in your name, it is very possible that if you fail to make payments and fall extremely behind, you could lose your house.
The risk of losing your home is unsettling so therefore, it is best for you to pay off your mortgage early and eliminate that risk.
Payment Options
To pay off your mortgage faster when you know you have a steady income of some extra cash, there are a couple options that you can consider. One option is choosing to pay off your mortgage faster by refinancing. When you refinance for a short repayment term, you will be able to spend less time in the repayment period. A great option that will raise your payments but you will be in repayment for a shorter amount of time.
Another payment option is to pay extra principal payments every month. When you are paying extra principal, you will additionally cut down on the amount of time that you are in repayment.
Of course there are pros and cons for the reasons to pay off your mortgage and you have to consider all options so that you are using your money wisely at all times. For example, there may be other things with higher interest rates that you need to invest extra cash into to pay off faster than your mortgage. Whatever you choose, pay off your mortgage or invest, do your research and make a decision that is best for your current financial state.
