I could pay off my mortgage tomorrow if I wanted to. That’s why i won’t

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Technically, I have enough savings to fully recoup my home. But I don’t think this is a good idea.

When my husband and I first met, I rented an apartment in New York, and he lived in his own house across the river in New Jersey. As soon as we decided to move together, it became an obvious task – I will give up my apartment and stop paying rent, and we will channel our resources in his favor. mortgage

Several years later we bought a new building in our area, believing that we will need more space as soon as the children arrive. And while this house meant getting a higher mortgage than the one we paid, we also made a good profit on the sale of our former home, so we were able to make 50% down payment in our new home.

Between making such a large down payment and not buying a home at the highest price in our price range, we didn’t have to take on an extremely large mortgage to begin with. And now, over ten years later, we have made good progress in paying for our home. We’re also a couple of fairly disciplined contributors, so we’ve increased our savings account beautifully through the years.

At this point, between our savings and our lower mortgage balance, my husband and I do have the ability to pay off our home and own it completely. But as tempting as it is, that’s why we will continue to take out mortgages.

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1. It is so cheap for us to borrow

Last summer, when mortgage rates hit an all-time low, we decided refinancing from a 30-year loan to a 15-year loan. In the process, we got an ultra-low rate on our home loan, which forces us to pay minimal interest. Because of this, it makes sense for us to keep taking out loans and investing money in another matter – for example, investing it with a higher rate of return than the interest rate on our mortgage.

2. Mortgages provide tax breaks.

My husband and I list on our tax return and the mortgage is a good deduction for us. While you cannot deduct the entire mortgage payment for tax purposes, you can deduct a percentage of your loan. Between that and our (unfortunately) sky-high real estate tax and state income tax deductions add up.

3. We like savings more.

If we paid for our home right now, we would have less financial flexibility because our money would be tied to our home. And houses are quite illiquid, which means that selling a house for cash is much more difficult than selling shares or simply withdrawing money from a savings account. We would prefer to have easier access to our money and the ability to spend or invest it, and if we pay for our home in full, this option will largely disappear.

Some people hate the idea of ​​having money and work hard to pay off their mortgage ahead of schedule. While I also treat high interest debt, such as credit card balances, I firmly believe that mortgages are a healthy type of debt. And since the rate we have locked in for the next 15 years is so low, I don’t feel like I’m throwing my money away at interest. Rather, by carrying a mortgage, I am giving myself more financial freedom.

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