Should I Pay off My Mortgage?

Martin County homeowners may dream of the day they can pay off their mortgage. Financial advisers across the country say they are hearing questions all the time about the wisdom of retiring the mortgage early.

The pros:

The obvious reason to do it: Paying off the home loan on your Martin County home could save tens of thousands of dollars in interest during the time you would make payments.

The second reason is the peace of mind you have from owning your Florida home free and clear.

Most experts recommend owning your home free and clear before you retire.

If you still have a higher interest mortgage, paying down your principal will make refinancing easier.

The cons:

Some financial needs should come first: Max out your 401(k) contributions. Pay off credit cards. Create a 6-month emergency cash fund.

Mortgages are cheap money. When you pay down your mortgage or pay more every month, you are probably hoping for those big dollar savings on interest. But remember these are future dollars and they will be worth less 20 years from now. Keep your higher value dollar today and pay the bank its lower value dollar in the future.

If you plan to move to another city or trade up or down in the future, it’s not wise to pay off the mortgage. You would tie up your money in a home you might not be able to sell very soon when you want to buy another one.

The mortgage interest tax deduction doesn’t help everyone. If you are in a high tax bracket, it’s more valuable. If you are retiring or in a lower tax bracket, it’s not worth as much.Check to see if the investment you could make with the payoff money would earn more interest than what you are presently paying on your home loan. A 50/50 stock/bond portfolio has historically earned 8.2 percent in the long term, but might only make 6 percent now, according to Money magazine.

Their conclusion:

The Money experts say that if paying off the mortgage would give you great satisfaction and a sense of security, go ahead and do it.