LoanCentral's Real Estate Lending Blog

Many homeowners strive to pay their mortgage off as quickly as possible. Many strive to own their home free and clear. Most people do this because it’s what their parents always told them they should do. However, for most people, this isn’t the smartest financial move.

Before you pay off or pay down your mortgage, there are several questions you should review first, including:

• 1. Are you maximizing your contributions to your 401k each year?
• 2. Do you have all credit cards, car loans and personal debt paid off?
• 3. Do you have 12 months of liquid assets in case of emergency?
• 4. Do you have college fully funded for your children?

These are just a few of the areas you should consider before you start paying down or paying off your mortgage.

It is much wiser to satisfy the above objectives first, before you consider paying off your mortgage. Even if all of the above are satisfied, many still choose not to pay off their mortgage.

Your home is an asset that typically appreciates over time. It will appreciate at the same rate whether you owe a mortgage against it or not. You have the choice to either use your money to pay off your mortgage, or you can instead accumulate that money into an investment, which allows your wealth to grow both through your home appreciation, and the growth of your investment account, increasing your overall wealth.

Furthermore, having your home fully paid for is little consolation if you lose your job. Without a job, it’s difficult to tap into that equity to help you get by while you aren’t receiving a pay check.

At LoanCentral, we help you look at your overall financial goals and choose a mortgage which will help you achieve those goals!