Four Benefits to Paying Off Your Mortgage Early

Paying off your mortgage early is a great way to save money and start building a nest egg that can last for years. If you do it the smart way, paying off your mortgage could be the smartest financial move you will ever make. Here are four common benefits of paying off your house months or even years before you are scheduled to do so.

1. Guaranteed Return – Paying off your mortgage is guaranteed to bring a great return to you. If you plan on staying in your home for several more years, it will appreciate in value which is always an easy way to save money. If you have money that you are uncomfortable investing in riskier investments like stocks, putting it towards your mortgage is a great and secure way to invest that money.

2. Increased Equity – By paying off your mortgage early, you have access to your home’s equity and more of it sooner. This is ideal in case you have a large emergency expenses occur, such as medical bills or home repairs. The sooner you pay off your mortgage, the sooner you can have access to the maximum amount of equity that it has to offer.

3. Stop Paying PMI – If you are paying private mortgage insurance because you don’t have enough equity built up in your home, paying down the balance on your mortgage will help you qualify to get rid of your private mortgage insurance. Private mortgage insurance, or PMI, can cost as much as 0.5 percent of your home’s value each year.

4. Peace of Mind – Paying off your mortgage will simply make you feel better and more financially secure. You no longer have to worry about making your house payment or stress out about what would happen to your home if you lose your income. The sooner you can pay off your mortgage, the sooner you will own your home outright.

There are several reasons why you should pay off your mortgage as soon as you can. Even if you have to make a few sacrifices in your lifestyle to have enough money to put towards your mortgage, it is definitely worth it when you send in that final payment. Before paying off your mortgage early, though, check with your bank to make sure there are no penalties or other charges for early payoff. Even if there is a penalty, it is probably less than you would pay over the term of the mortgage loan.

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