Does Paying Off Your Mortgage Early Make Sound Financial Sense?

Pay Off Your home early or not
Home Sweet Home

At one time or another you’ve probably thought about what it would be like to finally pay off your mortgage. You’ve likely dreamed about living the life you desire, unfettered by the ball and chain of having to pay your loan payment every month.

Before you make a decision, take a close look at your financial options to determine if it really would be wise to pay off your loan early. In some situations, it’s better not to pay it off.

Consider these reasons, both for and against, an early payoff in your situation.


Benefits of Paying Off Your Mortgage

You’ll save big on interest. Depending on where you are time-wise in the term of the loan, you stand to save literally thousands of dollars that you would have paid in interest over the life of your loan.

You won’t have the monthly stress of a house payment. This can be a great relief!

As retirement approaches, paying your house off means you won’t have to struggle with house payments on a reduced income.

You’ll have hundreds of dollars to spend or save monthly. It’s empowering to know that whether you want to take a couple more trips a year or concentrate on saving for the kids’ educations, you’ll have money to put aside for it.

Your confidence about your financial situation will increase. After all, if you pay off your mortgage early, you’re likely doing something right with your budget. You have a lot to be proud of!


Why You Might Not Want To Pay Off Your Mortgage

Taking all of the above into account, sometimes you can still come out ahead without paying off your mortgage early.

Here are some reasons why paying off your mortgage early may not be wise

Home Sweet Home


Paying interest has its advantages. With mortgage rates being so low now, you might be paying only 3 or 4% on your mortgage. Yet you might find an investment that pays you a 10% return. So you would make more money if you used your extra funds to make a higher rate of interest from an investment rather than pay down your mortgage.

  • Bear in mind that if you’re getting an income tax deduction on your mortgage interest, that interest is costing you even less overall.

Keeping your dollars in hand may be wiser. Paying off your mortgage in one lump sum might not work in your best interest. Doing so doesn’t increase your net worth because you’ll have less cash.

  • Also, paying all your cash into your house means you have substantially fewer liquid dollars. You’d have to sell or refinance your house to get your cash back if you need it. It’s unwise to use all your cash to pay off your mortgage, especially if you could be earning interest on it.

Avoid taking cash out of your 401(k) to pay off your house, especially if you’re less than age 59-1/2 because of the extra penalty. Plus, all the money you take out is taxed at your ordinary income rate.

Paying off loans with higher interest rates first makes more sense. It’s smarter to pay off a higher interest debt than your mortgage, if your mortgage has a lower interest rate.


Answering the question of whether to pay off your mortgage early takes some deliberation. Ensure you take into account your specific situation. Strive to determine how you can save or make the most money and you’ll be happy with your choice.

Are There Advantages of Buying Foreclosed Homes?

In today’s uncertain economic times buying a foreclosed home may be a good choice. Foreclosed homes always attract Real Estate investors as well as people who intend to buy a home to live in. There might be some reasons behind this popularity of foreclosed homes. Other than the possibility of a better deal, there are other advantages of buying foreclosed homes. What makes foreclosed homes a much better option? Read on and find out:

I.  Available at Lower Price

Foreclosed homes are usually available at lower prices than their counterpart market values. Usually, the prices of foreclosed homes are the pending amounts to be paid to the foreclosing lender, which will have been partially paid off by the previous owners. As far as a buyer is concerned, that will be one of the best deals he can get. Foreclosed homes are available at a much lower price than their counterparts in the real estate market. There is also a huge possibility of bigger discounts on such homes.

II.  Good for reselling

Usually foreclosed homes are fixer upper homes that require some amount of repairs and renovation. Mostly, buyers of foreclosed homes resell the properties after making small-scale repairs, which will be very profitable for them. This follows the format “buy low, sell high.” This deal will attract a large number of investors because the reseller will be selling it for a price that can compete with the market value in the real estate market.

III.  Attractive Closing Cost

Foreclosing lenders are normally banks or government agencies. They will be in a hurry to sell the home to recover their losses. They will be ready to accept lower offers even on down payment, financing options, closing cost and other miscellaneous costs associated with buying a home. Many of these sellers offer such homes at attractive lower prices to overcome their business losses as fast as possible and these affordable prices turn out to be great deals for the buyers.

IV.  Ready to use immediately

Normally a foreclosed home will be vacated and so it will be ready for use by the new owners as soon as they buy it. They will not have to wait any longer for the previous owners to move out thus, the winning bidder can do some procedures freely like renovating and reselling the property or settling down with their family as soon as possible. As it is a publicly owned property after foreclosure, the negotiations with the previous house owners will be reduced to a great extent. So a foreclosed home is really a “safe buy” for the investors.

V.   Easy availability of finance

As foreclosed homes are mostly owned by banks and are more concerned in overcoming their losses on the quick sale of the home, they will not be much worried about the profit unlike individual sellers or real estate investors. Financial flexibility and great offers will be available from the foreclosed seller when buying a home at foreclosure auction. This means that buyers at an auction will have great payment options upon purchasing a foreclosed home.

How to Simplify Your Budget

Finances have a knack for becoming complicated. Therefore, making your budget as simple as possible will allow you to get a better handle on your finances so that you can focus on matters that are more important. Simplifying your budget can have positive effects on all aspects of your finances by helping you keep everything under control.

Stressing out over your finances is a waste of your time, so rein them in today with a simpler, easier to manage budget.

Follow these strategies to make your budget easy, workable, and effective:

  1. Start with a simple spreadsheet. Keeping things in a spreadsheet can simplify your budget significantly. Set it up however you like or download a free template for Excel or Google Docs; just choose something that works for you.
  2. Devote 60% to your expenses. The 60% Solution is a budget strategy that entails fitting your expenses into 60% of your gross income so that you can dedicate the remaining 40% to retirement, debt repayment, short-term and long-term savings, and fun or entertainment expenses.
  3. Devote 10% to your retirement. Put 10% of your gross income toward your retirement, such as in a 401(k) investment plan. Refrain from touching this money for any purpose unless the circumstances are dire.
  4. Devote 10% to debt repayment and longer-term savings. Invest in an index fund or stocks if these are your investment vehicles of choice. Otherwise, put the money away in a savings account and touch it only to repay debt or in financial emergencies.
  5. Devote 10% to your short-term savings. This money is for periodic expenses like medical expenses, auto maintenance and repairs, appliances, birthday gifts, Christmas gifts, and home maintenance costs. Spend this money when you need it, because that is precisely what you’re saving it for.
  6. Devote 10% to your “fun money.” You can spend this money in any manner that pleases you. This is guilt-free money that you can spend on movies, entertainment, eating out, comic books, junk food or anything else that you wish.
  7. Reduce the number of categories you use. Many budget software programs instruct you to use a million different categories or subcategories. If you want to simplify your budget, use as few as you can. Rather than having a category for every entry, combine some expenses into a larger category to keep it simple.
  8. Pay your bills online. Automate your bill payments as much as possible so that you don’t have to remember to pay your bills every month or buy stamps. Consider automatic bank withdrawals and pay bills online through automatic debit whenever you can.
  9. Automate your savings. Every time your paycheck is deposited into your account, have a transaction scheduled that will transfer a specific amount into your savings from your checking. Aim to find a high-yield savings account for this purpose.
  10. Keep your fun money in cash form. Take out your 10%, keep it in cash, and use it as you see fit. Watching the cash disappear from your wallet can actually teach you a lot about where the money goes.

If you investigate, you’ll find numerous techniques to simplify your budget. Do what works well for you and your family. Avoid struggling with a new budget plan because you think it must be better. If it isn’t actually helping you budget, then it’s not the “better” option for your needs. Sometimes simpler is more effective.

Disputing Credit Report Information

The information in your credit report can affect many areas of your life, so it’s important to keep track of what’s in it. If you find information that is incorrect for any reason, it’s your job to dispute that information in order to have it removed from the report. Only you are looking out for your own credit rating, so it’s to your advantage to pay attention to your report.

There are actually three credit reports: from Experian, Equifax, and Trans Union. Monitoring all three of these credit reports is essential because the information can differ from report to report.

Follow this process to ensure your credit reports are accurate:

  1. Request your credit report. The fastest way to get a copy of your credit report is to visit, where you’re entitled to receive a copy of each of your three reports for free once per year.
    • If you haven’t been following what’s in your credit reports, start out by requesting all three reports at once, because the information they contain can actually vary quite significantly, depending on who has reported what to them. The differences from one report to the next can amount to a significant credit score difference.
    • Once you’ve obtained and corrected past information in your reports, you can stay updated by spreading out your credit report requests to every 4 months. Simply request your report from one of the credit reporting agencies every 4 months, and over the course of a year, you’ll have received all three.
    • Of course, correct important mistakes in all 3 of them if you find an error.
  2. Verifying information accuracy. Comb over all three credit reports carefully in search of incorrect or inaccurate information. Any detail that isn’t right should be changed, even if it’s just a wrong address, because these pieces of information can have an impact on how lenders view you.
  3. Contact the credit reporting agency. If you find information that needs to be changed in your credit report, the next step is to contact the agency in charge of that specific report. It can take some time to dispute incorrect information, so the sooner you begin, the better.
  4. Writing a dispute letter. You can find sample dispute letters online that will give you a good starting point for writing this letter. Be professional and include all of the necessary proof that the information is incorrect so the credit agency can make the change.
    • Include copies of any documents that support your position. Do not include the originals.
  5. Disputing an item. Typically, the credit agency (Experian, Equifax, or Trans Union) will contact the company that reported the false information, and an investigation will follow to determine whether or not the information is inaccurate.
  6. Add accounts to your file. If not all of your credit accounts are being reflected on your credit file, then you may want to ensure that missing information is added. You can achieve this by contacting the companies that aren’t reporting your credit history and asking them to begin reporting for you.
    • Not every company is going to want to report this information for you, so it can take some time for you to have this information added to your account. However, if you’re diligent, you should be able to have the information added.
  7. Following up. Follow up on your requests if you don’t hear anything from the credit reporting company within 30 days, as this is the normal length of time for an investigation.

The power is in your hands to keep your credit report in good standing. If there is inaccurate information in your credit report, or if important information is missing, then take the steps to get the information corrected. Your next job, home, or loan may depend on it.