Credit: Plume Ploume
I've read a lot of interesting articles about this topic. Some people advocate paying off their mortgage with extra money and others advocate investing the money. Where do you stand on this topic? I am totally on board with paying off the mortgage. This is for a few reasons: (1) I hate having debt, (2) I hate having a mortgage, (3) If something bad happens (like job loss) I would prefer not to have a mortgage payment to make, (4) I don't plan to make this house my forever home and I would like to have as much equity as possible when I sell so I have more money to put down on my forever home, (5) I want to make sure that even if the house market drops again that I will not be underwater on my house in the event that I am forced to sell and (6)I have PMI on my mortgage and I am trying to pay down the balance of the mortgage so that PMI is no longer required (maybe by early next year!). If any of these scenarios occur, I think paying extra on the mortgage now is the best option for me.
Just for informational purposes my mortgage balance is $206,466 and the interest rate is 3.375%. I have a 30 year mortgage. The payments (without extra principal) are $1,481 (that's principal, interest, insurance and property taxes).
Now, to be clear, I set annual goals for investing (See previous post here). I don't completely ignore my retirement or investing needs, I do plan to add $10,500 to my retirement accounts for the year. I just budget $400 extra for my mortgage payment. Other people would use that money for investing. After all of my yearly financial goals are accomplished I hope be able to add a large lump sum to my mortgage payment at the end of the year.
So what do you do? Pay off the mortgage early or invest?