When should you eliminate your mortgage?

Choosing to eliminate your mortgage is a goal every home owner has.

But when is the right time?

Consider the following and know that I am not going to tell you what you should be doing or when you want to eliminate that mortgage. Here’s why. And remember, I want to see you eliminate all of your debt. But you need to be smart about how you go about it.

Your mortgage is usually the cheapest debt you have, so if you have more expensive debt like compounded interest rate credit cards it usually makes sense to eliminate that first. Remember, your mortgage is simple interest and a tax deduction for most of you. Also, if you send in extra money on your mortgage, it does not lower you next payment due unless you are using a credit line. For this post, we’re talking about a standard mortgage that is amortized over time like a 30 year mortgage.

Many people have leveraged their mortgage and made an interest only payment so that they could put more money against their other debt, or to contribute to their retirement. Some of these people made a very wise decision in this area. Many people have paid down the balance due on their mortgage and then lost it to foreclosure, leaving them with a huge loss of equity and an inadequate retirement fund. They had the mindset that you have to pay off your mortgage as soon as you can. That isn’t a good rule of thumb anymore and comes from the mindset of our parents and grandparents who went through or knew someone who lost their home in the depression.

You have to be more financially savvy today. We don’t have $30,000 homes or guaranteed pensions like you did decades ago. And as the recent market has shown you can’t depend on where the market will be when you retire. If you go to retire during a downward cycle in the market you could lose a high percentage of the income you expected to have. You really have to look ahead and plan for your future.

If you are in the process of paying down your mortgage you might want to look at your mortgage periodically and figure out if it makes sense to refinance the mortgage to a lower payment while you continue to pay it down. Of course you need to compare the savings to the cost of the new mortgage, if there are any fees and whether or not you can get a no closing cost mortgage. Make sure you have a good certified mortgage planner or financial planner to help you.

You also want to check with your tax man. Far too many people have had a nasty surprise at tax time after losing their biggest tax write off. That’s a good reason right there to show you why you need a good financial consultant or planner.

These are just a few things to think about when deciding to eliminate the mortgage and your strategy to do so. Please get yourself a professional financial planner or consultant. Yes you want to eliminate all of your debt including the mortgage. You especially want to go into retirement debt free with a substantial retirement income to enjoy as long as eliminating the mortgage is your best strategy.

I suggest you use a flexible plan like our Financial Compass that allows you to make changes to meet your strategy which can change from time to time. For instance, we can take part of the payment that was going toward a debt and automatically send it to one of your investment accounts as each debt is paid off. There are a lot of different strategies and our program is designed to be flexible and to work with them.

While you are thinking about your financial strategies, go to FromDebtToHope.com and get your free debt elimination analysis to see how much you could save and when you could be completely debt free in a flexible program that works with your strategies.

Your friends at fromdebttohope.com

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1. The difference between the Financial Compass and Debt Settlement programs.
2. Credit Card Crunch is here…