Should I Pay Off My Mortgage?

Financial Advisor Financial Advisor for Gay Couples Financial Planning Financial Planning for Gay Couples Mortgage Lending July 17, 2017 Author: Woody Derricks

If you search the internet, you can uncover as many articles telling you to pay off your mortgage as ones encouraging you to keep it forever. Why are so many financial advisors divided over this one issue? The truth is that it’s simply a matter of strategy, and what works for some people may not work for others. If you are approaching retirement – or simply planning for it – consider the benefits of each option before deciding what is best for you.


The Advantages of Paying Off Your Mortgage

Many people dream of the day that they no longer have to hand over a significant portion of their monthly budget to the bank. In fact, there are companies everywhere advertising how much money you can save if you pay off your mortgage in 15 years instead of 30. Owning your home outright will undoubtedly give you a sense of accomplishment, but there are other advantages, too.

The Benefits of Paying It Off

  • Be completely flexible – Once your home is entirely yours, you have options. You can relocate to a new state or downsize to a condo that requires less upkeep; you don’t have to wait until the real estate market is robust enough to get you out of your home. Conversely, if you want to stay where you are forever, you will have peace of mind knowing that you have a considerable asset at your disposal.
  • Say goodbye to monthly payments, especially during retirement – Not only can you live on less income with your biggest expenditure off your plate, but you can use that money to enhance your nest egg or have some fun.
  • Give your children a choice – With your home paid off, your heirs can decide whether or not to keep the house when you pass away. If you still have a mortgage on it, they may have to sell it just to get rid of the debt.


The Advantages of Keeping Your Mortgage

While the benefits of paying off your mortgage are significant, there are also some advantages to keeping it. Mortgage rates have been at extremely low over the past few years, making it even easier to use your extra cash in other, possibly more favorable, ways.

The Benefits of Keeping It

  • Earn money somewhere else – Instead of paying off a debt with a low interest rate, you can take the extra payments you would have made and invest them to target a higher return. Keep in mind that most investment returns, such as stock or bond investing, are not guaranteed.
  • Use the money for other needs – Depending on your age and your stage in life, you may want to use your extra cash to pay for other items – like childcare, home improvements, or educational expenses.
  • Preserve the tax deduction – Depending on your income level, it’s likely that you are receiving some sort of tax deduction from the mortgage-interest payments you make. That deduction may be what allows you to file a Schedule A and deduct other items such as medical expenses and state income taxes, etc. Consult your CPA about the benefits of deducting mortgage interest.
  • Maintain an escrow account – People often forget how much property taxes and insurance can amount to every year. By escrowing these expenses, you don’t have to worry about paying them separately. You’ll also never forget to make a payment!


Choosing What’s Best for You

Many things should be considered when it comes to dealing with such an important asset. Your tax bracket, income needs, and retirement funding could impact which decision is right for you, as well as its psychological impact. If you need guidance, you can seek advice from a tax professional and a Registered Investment Advisor. Together, they can work out scenarios for both options and help you choose whether or not a mortgage payment should remain in your future.


The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. This information is not intended to be a substitute for individualized tax or investment advice. We suggest that you discuss your particular situation with a qualified tax or financial advisor.


As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them make the most of their investments. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started: