Mortgages are generally considered one of the good types of debt as they allow the purchase of a home which is too expensive for most people to ever consider as a cash purchase. Whilst the mortgage is being paid no money is being wasted on rent, which you could equally pay for the same term, yet have nothing to show for it in the end. Nevertheless a mortgage still remains a debt and there are several good reasons to pay it off early.
When mortgages are taken which extend over a 25, 30 or 40 year period it is impossible to foretell what changes in circumstance may occur in the future. With uncertainty in the job market or the possibility of future ill health, it is wise to free yourself of any debt early on. This is particularly true of your mortgage as if circumstances lead to an inability to meet the payments you risk the chance of losing your home. Your home is effectively owned by the mortgage issuer until the day it is redeemed in full.
There are huge savings to be made on interest payments if the mortgage is paid off early. Each year which reduces the term results in less interest paid, and just a short reduction in the term can save thousands of dollars. Easy steps towards paying your mortgage off early include reducing the term, or making overpayments to the principal. Interest payments are a necessary evil but there is no need to continue paying them until retirement.
If you can clear your mortgage early then you find yourself with much more monthly disposable income to spend as you choose. Investments can be made, savings made towards college fees, and retirement savings. It also brings the opportunity to really spend your money as you wish by indulging in vacations or even purchasing a vacation home as a sound investment.
Those who own their home outright are considered safe risks by lenders, thus command higher credit scores. Whilst those who do achieve early mortgage redemption are most likely not prone to borrowing, they will benefit from lower insurance rates, and the best credit card offers which carry cash backs. Maintaining a high credit score has many advantageous uses.
When you have no mortgage debt it gives you the freedom to easily move home when you choose. You have the option to trade up to a larger property with a small mortgage and considerable equity, or the advantage of being in a position to make a cash purchase.
The most compelling reason to pay your mortgage off early is the sense of relief and security it brings. No longer answerable to a mortgage lender or concerned about fluctuating interest rates, there is the security of knowing your home is truly your own with no more monthly payments to find.