If you find yourself in a position where paying off your mortgage is both feasible and reasonable for you and your family then congratulations are in order.  If you've reached the point of paying off your mortgage, then you've made the most of your finances along the journey thus far and are looking to make the most of them moving forward.  

Our REALTORS® know what it's like to buy a home as well as own a home outright and have helped countless homeowners just like you make crucial decisions for their home purchases. But is paying off your mortgage early always the right way to go?

The Power of Compounding Interest

Most people are familiar with interest simply in the form of a debt instrument. Your mortgage, car payment, or even student loans all have that dreaded word "interest" tied to them, which makes paying off a major debt even more rewarding. While interest is your enemy in loan situations, it can actually be your best ally on the investment end.

In all likelihood, if you're looking at paying off your mortgage, then you have a reasonably low interest rate in the grand scheme of things. What this means is that your low-interest rate on your mortgage may end up being more of a benefit compared to using your extra cash to make an investment yielding a much higher interest rate.  

All of that to say, the extra cash you've got burning a hole in your pocket may be better used and more profitable when directed toward a healthy investment with a reasonably high yield.

Financial Freedom

If financial freedom is what you're after and getting out of debt is your top priority, then paying off your mortgage may very well pay off indeed. No matter your mortgage payment, wouldn't it be nice to be able to funnel some or all of those funds toward things that matter and have the freedom to do so?

Paying off your mortgage can free up a significant amount of cash flow, giving you options for what to tackle next. Consider putting some of that money toward a high-yielding investment or knock down another debt obligation. Bear in mind, however, that if you have multiple debts with significantly different interest rates, then it may behoove you to pay down your highest-interest loan first.

Financial Planning Is Key

Paying off your mortgage is great, but where does it fall into your bigger financial picture? Paying off your mortgage just for the sake of doing so without a firm plan for the funds you'll be freeing up or a plan for the future may end up being a very costly venture. This is where a certified financial planner or money manager can make a big difference.

Getting a mortgage or other major debt obligation off the books may or may not make the most sense for your overall personal finance goals, which should bear some weight in your decision. Remember compounding interest? Perhaps making investments for your future or your retirement would or should be a higher priority than paying off your mortgage.

In the end, only you, your family, and your financial advisor can make that decision, but it's better to consider all of the alternatives now than have some remorse about your finances down the road.

Buy in Beavercreek

If buying a home is your goal, then there are plenty of Beavercreek homes for sale in the area. Contact Wright-Patt Realty to learn more about our current inventory of Beavercreek homes and help our agents find one that's perfect for you!