Paying off a mortgage has been a dream for people all over the globe for the literally thousands of years that loans for real estate have been in existence. Yes, that’s right- there are even scripts dating back to at least 5th century, B.C. denouncing shady mortgage practices. In Scotland, people would paint their doors red to signify that their house was free and clear, and in the early 20th century “mortgage burning” celebrations became popular in the U.S. (Hint: If you do this, be sure to record it with the county first or potentially face a world of headache and red tape.) 

So is paying off your home right for you, or should you invest the money elsewhere? This is definitely not a “one size fits all” answer. While there is something incredibly emotionally appealing about owning your home outright, there may be reasons to keep the monthly payments going a bit longer. Try to remove some emotion and crunch the numbers. What other debt do you have, and what is it costing you? Today’s rates are very low, and they probably won’t stay this low. Chances are your mortgage rate is less than the rate of your other debt (cars, credit cards, other loans)- and generally speaking you should pay those in entirety first. Debt free other than your home? You may want the recurring monthly payments to keep your credit score healthy. What other investments could you potentially make that might offset interest paid on a mortgage with a higher rate of return? Does your current mortgage have a prepayment penalty? Consult your accountant for the tax benefits of other investments vs. a mortgage payoff on your primary residence. Need liquidity? Better make sure you have a healthy cash flow situation before putting it all on your house note. Everyone’s situation is a little different- and you would be wise to “over” research instead of “under” research when it comes to deciding. 


(Editor’s note: Hilary and Jay, of the Property Aces Team, are with Long Realty, a Berkshire-Hathaway affiliate.)

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