Pay off Mortgage or Invest – Which Option is Right for You?
If you have just recently come across some money, you may be wondering whether it would be more beneficial to pay off mortgage or invest. This is often a topic of hot debate, one which needs to be looked at from both angles. There are pro’s and con’s of doing either, so make sure you evaluate your own financial situation before deciding.
Paying off mortgage
The most obvious advantage of paying off mortgage early is the peace of mind it will give you. Once you have paid it off, you will never have to worry about it again. You will know that your home truly belongs to you. This type of security cannot ever have a price on it. You also will not have to ever worry about money if you pay your mortgage off, as you would with investing.
Another thing to consider when you pay off mortgage or invest is your own spending habits. If you pay off your mortgage, you will not have to worry about committing yourself to making the minimum payment every month. If you do not get your mortgage taken care of, can you really guarantee that you will set enough money aside every month to make the payment?
Also, if you go ahead and get your mortgage taken care of, you will have extra money in the future to make investments with, anyway! You will be killing two birds with one stone, so to speak. If you really want to invest, then you will be able to so with the money you save in the future from not having to pay interest on your mortgage. By taking this thought into account, you will not have to worry about whether you should pay off mortgage or invest—you will be doing both!
It should also be brought up that if you DO NOT pay your mortgage off, and sometime in the future you end up missing a lot of payments, you could ultimately get the house taken from you. You could also get sued. Even if you are gaining a lot in the stock market, nothing is worth getting sued over, especially your home. You will come to regret not paying it off, when you had the chance.
Investing
One reason why you may want to invest instead of paying off a mortgage is the potential opportunities you may waste. You will possibly give up very high investment returns that may outpace the interest rate of your mortgage. Why pay off a 4% mortgage when you could be profiting 8% on that money? When contemplating, whether to pay off mortgage or invest, you need to consider the fact that, if you make wise enough decisions, you could profit a great deal of money by investing.
Inflation is something else you should take into consideration. In time, inflation may erode the value of your dollar, which will make your future mortgage payments a lot less costly than they are right now. And, with the high returns you may be experiencing through your investments, the money you save from lower mortgage payments will add up a great deal.
Conclusion
Everyone’s circumstances are different, so there is no real way to determine which option would be best for you. You will have to consider the benefits and consequences of each. You could also consult with a financial expert and ask advice about whether it would be in your best interest to pay off mortgage or invest.