Suze Orman says that if you have a home you love and want to live in your entire life, then you should pay off your home loan.
She says that by paying off your home loan sooner than later, you will be able to put more money into your retirement home. In addition, if your mortgage is paid in full before you retire, that retirement money will go a long way.
I completely agree that with the advice to pay off your home loan.
If nothing else, the emotional security of knowing that you do not have to pay a large house note each month is priceless.
Plus, I feel that the extra money can go into savings and eliminate stress during lean times.
The experts suggest that if you plan to move again, however, that you should not pay off your home loan. This suggestion caught me off guard.
If you use your resources to pay off your mortgage, you’ll have less money to devote to growing your investments. If the interest rate on your loan is reasonably low, you may be able to earn more by investing. You can build wealth by investing in higher-rate earnings vehicles. This drawback particularly applies if you have more than 10 years remaining before retirement. Source
Now, I do understand that during the first 15 years of a 30-year mortgage you have an elevated benefit of tax deductions, so by paying off your loan too soon, you can lose some benefits at tax time.
In my little mind however, I think that no matter how soon you pay off your loan, you can take that extra money and save it, invest, or give it away. You can find tax benefits one way or the other.
If I have the money to pay off my home loan with, I believe I would go ahead and pay it. I could donate money to the church and get tax benefits that way. More money could go into retirement, and I would have a better peace of mind. Even if I planned to move again, I would still pay it off because I would have cash in hand when my house sold that I could then use to buy my next home with little to no mortgage note.
I have been a certified tightwad striving for financial freedom since I became pregnant with my first child — and I decided to find a way to stay home with him full-time. I enjoy sharing my personal experiences in my journey back to financial health and planning for a future — which will include sending 2 kids to college and early retirement.