3 Reasons To Pay off Your House Early — and 3 Reasons Not To

Core Perspective - The decision to pay off a mortgage early versus investing funds elsewhere is a common dilemma for homeowners, with no universal answer applicable to all situations [1][2]. Group 1: Financial Planning Insights - Financial planners generally recommend aiming to retire debt-free, which includes paying off mortgages [4]. - Opportunity cost is a significant factor in financial decision-making, as it involves evaluating where money can yield the best returns [4][6]. Group 2: Investment Considerations - For homeowners with mortgages at low interest rates (e.g., around 3%), investing in higher-yielding options like money market funds or diversified stock portfolios may be more beneficial than paying off the mortgage [5]. - If downsizing to a property with a higher mortgage interest rate (above 6%), it is advisable to use personal funds and proceeds from the sale of the previous home to minimize borrowing [5]. Group 3: Reasons to Pay Off Mortgage Early - Paying down a mortgage is financially sensible if the mortgage rate is significantly higher than potential earnings from safe investments [7].