Pay It Off or Keep It?

by Doris Dobkins
Doris Dobkins is the publisher of $mart Money New$. You can subscribe by visiting her web site at http://www.creativefinances.com

Interest rates went down this week and many people are refinancing their home mortgages once again. When you refinance, it's important to make decisions based on your personal and financial goals in life.

In this article, we are going to discuss the topic of paying off your mortgage early and why you might or might not want to.

So, what about you? Where do you stand on this issue or are you as confused as many of us? The book called Ordinary People Extraordinary Wealth, A New York Times best seller, by Ric Edelman states in his findings that most of the 5000 people he surveyed with extraordinary wealth still carry a mortgage.

While most of us have heard all our lives that it is better to pay off our mortgage as quickly as possible, both sides make some strong arguments for their case.

Here are a few reasons for Paying Off Your Mortgage Early:

1. You want more than anything to be 100% debt free.
2. You want to have more choices and options for your future and no debt gives you this option.
3. You want to retire early. With no mortgage payment, you can save up for retirement faster and quit sooner.
4. You want a guaranteed rate of return. Paying off your mortgage guarantees you that savings rate. Investing in the stock market can never guarantee you anything.
5. You don't itemize but take the standard deduction.
6. You live in Canada or another country where there is NO tax benefit to carrying a mortgage.
7. You are disciplined enough that once you have paid off your mortgage, you will invest the same payments into a retirement fund until you have enough to meet your retirement needs. (Remember, with no mortgage, your required retirement income will be greatly reduced.

Looking at the other side, here are a few reasons for NOT Paying Off Your Mortgage Early:

1. Your primary financial goal is to obtain great wealth.
2. You want to leverage your assets to help you achieve your goals more quickly. Using someone else's money is better than using your own.
3. You are in a high tax bracket and this additional deduction lowers your income tax bracket as well as your taxes.
4. You think you can get a better return in another investment (i.e. stock market, real estate, rental property, etc.)

So the decision to Pay It Off or Keep It As Long As Possible boils down to your personal goals. What do you want to accomplish with your money and what do you want to achieve financially?

Personal Peace of Mind and Financial Freedom isn't for all. Some would rather take risks where the rewards can be significantly greater than playing it safe. Bottom line? We all need to decide for ourselves what will work best for us.