![]() There are many reasons why you might choose to either pay your mortgage early or invest more. Of course, life isn’t just about cold, hard numbers. Pros and Cons of Paying Off Mortgage Earlyįrom a financial perspective, it’s usually best to invest your money rather than funneling extra cash toward paying off your mortgage faster. There are many reasons why you might choose either to pay your mortgage early or invest more. Should I Pay Off My Mortgage or Invest?: How To Decideįrom a financial perspective, it’s usually best to invest your money rather than funneling extra cash toward paying your mortgage off faster. If you decided to pay your mortgage early after all, you could use your investment funds and still have $55,293 left over. ![]() In fact, after that length of time, you’d have about $105,487 left on your mortgage. That’s more than double your potential interest savings. If you want to be extra conservative, however, we can assume an average annual return of 8% on your investment.Īt the end of 19 years (about the length of time it would take to pay your mortgage early), you would have $160,780. Historically, the S&P 500 has returned an average of 10% to 11% annually since its inception in 1926 through 2018. On the other hand, you could take that $300 per month and invest it in an index fund that tracks the S&P 500 Index instead. You’d shave off 11 years and one month from your repayment period, plus save $67,816 in interest. Now let’s say that you’re able to come up with an extra $300 per month to put toward your mortgage. Your monthly payments would be $1,013 (not including taxes and insurance), according to our mortgage calculator, and you’d spend a total of $164,813 in interest over the life of the loan. Say you have a 30-year mortgage of $200,000 with a fixed rate of 4.5%. ![]() That leaves the opportunity to grow your wealth more through other investments. Especially now, with mortgage rates so low, it’s cheap to hold debt. Being debt free is an admirable goal, but it might not make the most sense financially. You probably dream of the day when you no longer have a mortgage payment hanging over your head. On Datalign Advisory's Website Should I Pay Off My Mortgage or Invest?: How To Decide
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