The answer to this question is that there really is no simple answer. Many people wonder if they should pay off their mortgage as soon as they can and it is a topic that shows up on many finance blogs and forums. But there really isn't a clear cut answer. It can actually turn out to be a lot more complicated than you may initially expect.
Before we get any further into answering this question, we need to figure out why people feel as if they need to pay off their mortgages quickly. We can then see why others choose not to.
Reasons People Pay Off Mortgages
For many, they are looking for the peace of mind knowing that their home is paid for in full and they won't risk losing it if they can't make payments in the future for any reason. All they will have to worry about are the property taxes, insurance, and any costs for maintenance.
They also may feel a sense of accomplishment and freedom after paying off their mortgage. It is then also possible for them to use that money elsewhere or begin to stack up their savings.
For others, they just don't want to have a significant debt like a mortgage hanging over their heads. In fact, they try to clear themselves of any and all debt they have.
Reasons People Avoid Paying Mortgages Quickly
On the other hand, there are still others who choose not to be so eager to pay off their mortgage. Depending on current interest rates, they may feel that they can make more money on other investments. Additionally, a big portion of their net worth may be tied up in their home which can make their funds much harder for them to access.
They may even be underwater and simply can't afford to pay off their mortgage, so they continue making the regular monthly payments.
Now that we know both sides of the story, let's cover a few alternatives. Instead of paying it off completely, why not make an extra mortgage payment a year or pay biweekly instead of monthly? Doing so can help reduce the interest you are paying over the loan's lifetime.
Instead of refinancing the home, you can also pay more toward the principal to re-amortize the loan with the current balance, interest rate, and term. This can ultimately result in lower monthly payments.
So, when it comes time for you to decide if you should pay off your mortgage as soon as possible or continue making your scheduled monthly payments, you should take a look at your current finances and your Sacramento mortgage loans and term to decide if it would even be in your best interest.
The alternatives we listed above are also a good place to start if you still find yourself on the fence and unsure of what you should do.
For more information on mortgages, contact the professionals at Professional Mortgage Associates today to discuss any options that are available to you in Sacramento, CA.