The Pros and Cons of Paying off your Mortgage Early

Posted by Kris Lindahl on Tuesday, October 27th, 2015 at 8:02am.

While the benefits of paying off your mortgage early seem obvious, financial experts are divided on whether it’s a smart financial move. Let’s take a look at some of the pros and cons of paying off your mortgage early.


You’ll save all that interest that you would otherwise have owed. Keep in mind, however, that this can be both a curse and a blessing, since this interest provides you with a huge tax deduction. 

  • Peace of mind. What’s not to like about not having a monthly house payment? The additional money every month gives many who pay early a feeling of security and freedom.
  • A reverse mortgage can become a financial fallback for seniors. With a completely paid off home you’ll get more in a reverse mortgage than you would otherwise.
  •  It’s kinder on your heirs. A paid off home has a better chance of remaining in the family and causes fewer headaches for your heirs.


Remember the interest that you’ll save if you pay off your home early? You also will no longer be able to take the interest tax deduction. However, “if the interest on your mortgage is less than the standard deduction, you aren’t getting an additional tax benefit,” anyway, according to Forbes contributor Nancy Anderson.

  • Take care of other priorities instead. Many financial experts claim that homeowners should use the money they would’ve used to pay down the mortgage to create an emergency fund equal to at least three months of expenses and fully fund their retirement savings, such as an IRA or 401(k)
  • Other experts say that a better way to deal with that extra money is to put it into investments instead. Your interest tax savings and the amount you make off the investments will typically be more than what you would have saved in interest by paying off the mortgage, or so they claim.
  • Money is cheap now, so pay off your other debts, such as those with high or variable rates.

Not everyone’s financial situation is similar so if you’re considering paying off your mortgage early, see a financial planner for advice.

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