First, I ALWAYS enjoy your segments on WGN. Thank you for volunteering your advice.
I have often heard it’s better to NOT pay off your mortgage because you lose the “tax benefits” at the end of the year. By I see it as, you save 10’s of thousands off your mortgages interest vs. going full term, AND you now have cash flow (mortgage payments in OUR pockets) that we wouldn’t otherwise have. As far as I can see, that’s also like an extra income.
Am I missing something, or should we pay off our mortgage?
I am 58 and my wonderful wife is 54, By just adding $500/month extra, I can pay off our mortgage in only 8 of the remaining 13 yrs we have on it (at 2.875%). At an extra $750/mo towards principal it would be paid off 8.5 yrs earlier, or in only about 5 years!
Your thoughts, please?
Terry Says: I happen to agree with you 100 percent! But don’t just judge my advice by what I say — here’s what I DID! I paid my mortgage off long ago, doing just as you suggested, adding extra every month. And I can tell you that it is a great feeling to own your home free and clear.
Tax benefits are nice, but you’re only fooling yourself, because as you point out, the money is adding to the cost of your house. The argument for borrowing and deducting the interest works ONLY if you “know” you can make a better investment with the money that is not tied up in your home equity. Or if you “know” that you can borrow at 4%, while inflation soars to double digits, and you are beating the bank by paying back with “cheaper” dollars. But there are no guarantees that inflation will return, or that the stock market, other real estate, or gold or any other investment will give you a better return AND peace of mind! And the latter is priceless!