With so many people walking away from their mortgage, it may seem odd to discuss paying it off earlier than required. However, there are great reasons to stay on the side of responsibility, repay your debt, and even pay your mortgage off early.
Many financial advisors have unique positions on why a mortgage should be the last debt repaid within the life of the family. Some will recommend that all debts with higher interest rates should be repaid first although few will encourage the mortgagee to delay saving for retirement prior to repaying the house because of the need for a place of residence in the event of a loss of income. Family needs must be met while making additional mortgage payments each year, but steady progress can be made by simply paying one extra payment on the mortgage every year. As more money can be paid against the principal, faster progress is made. Many factors play into the decision to repay a mortgage early, but when the decision is made and a strategy is developed the homeowner will have reached a major milestone in life.
5 Reasons To Accelerate Your Mortgage Repayment
When the entire mortgage has been paid in full, homeownership takes on a new meaning as those living in a home that is personally owned without any obligation to a financial institution feel a sense of security in their family. Improvements made to the home become investments in the future. Never having to make another mortgage payment removes the sense of simply paying rent and never making progress toward the final goal of repaying the note. When a change in monthly income occurs, the one known fact is that the family has a place to live without fear of loss or displacement.
2. Pay less for the house
Interest payments are included in the overall repayment total to the bank. When the mortgage debt is repaid early, less interest is paid on the mortgage and the overall cost of homeownership is lower. While calculating the entire cost of the house is not a common practice, homeowners who strive to repay the mortgage early can often point to the exact amount of money saved as a great relief to the family budget.
3. Reach other goals
In the life of a family, many major events occur that require substantial amounts of money. A young family shoulders the burden of the mortgage so that as the children near college age, the mortgage can be repaid in time to shift the resources to pay for college expenses. Once the college years have been completed, the money that was once focused on repaying the mortgage, and then college, can be used to enhance retirement savings or travel. Every family has dreams where the money could be directed, and maintaining a list of long term goals is the motivator to repay the mortgage early.
4. Help younger generations
Many older couples are heavily invested in the lives of their children and grandchildren. When their mortgage is paid in full, the cash is available to visit those family members as often as you wish. The mortgage-less have the cash available to treat everyone to adventures (amusement parks, travel, etc.). When the younger generation encounters financial difficulty, funds are available to assist. One of the most tangible ways to help younger generations is by setting a positive financial example that encourages others to repay debts early.
5. Gain peace of mind
Many homeowners worry every month about how they will support the family if a major life event occurs. When emphasis is placed on repaying the mortgage early, the family feels a sense of control over the coming events. Repayment requires focus, but offers tremendous peace of mind when the goal is reached.
During the years when the mortgage is being repaid, other expenses must be restrained and managed while meeting the needs of the family. Frugal financial habits build discipline and show everyone in the family that entertainment and fun can be found without spending money. When that final mortgage payment has been made, the family will find freedom to pursue other goals. Savings and investments can take on new meaning when the family home is paid in full. Over the years the home will become the family center as younger generations return for special family celebrations and revisit memory lane.