Owning a home free-and-clear is a dream for a large number of owners but financial experts advise borrowers to consider their options before throwing extra cash at a mortgage.
Although tempting, one of the first considerations to make before paying off a home is to consider how this could impact other debt or investments. If you have credit card debt, vehicle loans or simply not a large enough emergency fund, these should take priority over extra mortgage payments. While the savings of retiring a mortgage are significant, borrowers should consider that this will tie up cash that could otherwise be invested in a broad portfolio.
Experts also suggest considering the tax implications – without mortgage interest, tax payers will no longer be eligible for a key deduction. Additionally, if a move is probable in the coming years, paying off a mortgage only to need another one later on may not be the best choice. Living debt free in retirement however can have a much greater impact.
Meanwhile, conforming no-point 30-year fixed rates averaging 3.375 percent while the 15-year rate is near 2.75 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.