Pay Off a Mortgage, Should You Pay Down Now

By: EconomyWatch Content Team   Date: 29 March 2010

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When it comes to your mortgage you may stop and ask yourself the question- Pay off a mortgage: To pay down or not to pay down? Should you put your money and efforts towards this end or should you not? The answer to this question depends upon two different things. First of all, what is the likelihood that you will leave any extra money you have in your savings account? Secondly, how significant is it to you to get rid of the debt you carry on your mortgage years before it must be paid in full? 

Let us look closer at this issue of pay off a mortgage: to pay down or not to pay down? Making extra mortgage payments is not wise to do if you already have plenty of other debts to pay. This is especially the case if the debt is connected to your credit cards. Always pay your higher interest debts before you worry about your mortgage payments.

If you are not presently saving enough for your savings to be matched by another account such as your employer’s 401k then it is imperative that you build up your savings first. In the same way, do not think about making extra mortgage payments if you do not have an emergency fund at your disposal.

Pay off a mortgage: To pay down or not to pay down? That is the question you are faced with here. Consider the interest rate you pay on your mortgage. You may believe it is five or 10 percent but if you are getting some of the interest back by way of tax deductions then you are actually not paying as much interest as you may think you are.

In order to get a better return on your money and in order to set aside extra money to put towards your mortgage bear this in mind- you must earn more than 3.25 percent on a yearly basis. This may be easier to achieve than you realize once you sit down and contemplate it.

To protect your money from being eaten by taxes, shield it in an account that is meant for that express purpose. Some examples of these types of accounts include the 529 college savings account, the health savings account and the Roth individual retirement account.

The decision to pay down your mortgage or not is one you should never come to lightly. Consider all of the facts before you decide to put any extra money you have towards your mortgage, as opposed to towards other aspects of your life. 


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