Thursday, December 20, 2018

Pro’s & Con’s for Paying Off Your Mortgage Early

A mortgage can be a great way to make payments towards an investment instead of paying rent every month. Mortgages also provide several tax advantages, which are just a few reasons that people want to keep them around for the full 30 years. However, there are some times where paying off your mortgage could be a good financial decision. Whether you’re purchasing a primary home or buying a vacation home at the Lake of the Ozarks, here are the things you need to know about paying your mortgage off early.


First Things First

What you have to remember is that every financial situation is different. While it may make financial sense for one person to pay off their mortgage, it may not make sense for another. When you sit down with us to start your mortgage, we can discuss what your future goals are, and how to set up the mortgage to match those goals.

Pros


  • There are some pros to paying off a mortgage early. Depending on your situation and reasoning, it could be a great financial step. Here are just a few reasons you may want to pay it off early:
  • Paying off your mortgage early lowers your required cash flow. It also changes your potential asset allocation, which lets you be a little more aggressive in other areas.
  • For every dollar you pay on your principal, you’re making the interest rate back because you’re keeping it in your pocket. For example, paying off or down, a 4% mortgage makes you 4% with no management fee.
  • Paying off your mortgage is 100% safe, there is no market risk.
  • When you pay off your mortgage you can then free up that money in your budget towards other things.

Cons


  • There are always cons when you make any large financial decisions, so it’s important to take them into account while making your choice. Here are a few, though they are a bit intertwined:
  • It can reduce liquidity. It’s easier to access your funds when they are in an investment account or bank account. It’s a bit harder to access them when they are in the form of home equity.
  • If you should decide to borrow against your paid-off home in the future, it could very well end up costing much more. A rise in interest rates could impact your new mortgage heavily.
  • For those who are near retirement age, you are most likely paying less in mortgage interest. So little, in fact, that barring the deductions, the mortgage interest and other itemized deaccessions is no longer more than the standard deduction.


Mortgage Considerations

These are all things you can consider both while you get your mortgage at the Lake of the Ozarks and even years after you have it. There are a lot of things to consider when getting a first or second mortgage at the Lake of the Ozarks, but it does provide a great way make solid investments and also get your dream vacation home! Do you have more questions about mortgaging a lake home? Team Lasson is here for you! Visit our website to learn more about our mortgage company at the Lake of the Ozarks, or give us a call. We look forward to helping you buy your dream lake home!


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Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065

Direct: (573) 746-7211



**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

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