5 Powerful Benefits to Paying Off Your Mortgage Early

Should I pay off the mortgage early?

This is a really difficult decision to make for some people and what seems so obvious to me with my first house didn’t seem so obvious when I had my second house. Inevitably, the big question that always comes with this is, “Should I invest my money instead of paying off the mortgage early? This is highly debated. Today, I’m going to discuss the benefits of paying off mortgage, why we ultimately decided to pay off the mortgage early, and why did it on a very aggressive schedule! If you are already convinced, then check out my other post to learn some tips for paying off your mortgage early.

My First Mortgage Pay Off Journey

My journey started with my first home. To me, paying off my mortgage early was something that just seemed obvious to me when I bought my first house, I didn’t think too much about it. I just did it. So, within a few months of purchasing it, I started making extra mortgage payments. I wanted to pay it off early and I was pretty aggressive in making extra principal payments.

A couple of years later, I got married and we continued to make extra principal payments. At the same time, we were saving for retirement and cash-flowing home renovations. 

We started to outgrow that three-bedroom home. I had been working at home for a few years by that point so I was using one bedroom as an office. The other room was our daughter’s room. We knew we needed more space as we wanted to continue growing our family. So we stopped being as aggressive with extra mortgage principal payments and began instead saving that money for a down payment on a new home.

So, after seven years in our first home, my husband and I moved. We purchased a larger home that was in a location that we more desired for growing our family.

Should we pay off the mortgage early?

So we moved into our new home, and you might think, well this is a no-brainer, pay off the mortgage. But, surprise, it took us five years to decide to do that!

When we moved into our second home, we already had one child and, shortly after that, I became pregnant again. New house, new baby! So our expenses increased. In addition, our new house needed a lot of renovations. And, my husband quit his job to be a stay-at-home parent. So, we were now on one income. So we opted to use that extra cash in other ways and leave the rest in the saving account. We made no extra payments on our house for the first five years.

During that time, I myself kept going back and forth about wanting to make extra payments and would bring it up to my husband from time to time. And then came the tipping point. We were literally about to buy $7,000 worth of carpeting, and I just couldn’t do it. I wanted to put that money down on the mortgage. And, that is how it all started and the serious discussions began.

It was a few months later that I started really coming up with mortgage payoff scenarios. Being the nerd that I am, I created a spreadsheet and created multiple scenarios for how we could pay off the mortgage. I showed my husband how we just might be able to do it in only 18 months if we stayed really focused. We decided to do what we felt was best for us and just went with our gut feelings. We finally agreed that we wanted to pay it off ASAP!

We paid off our house in 6.5 years!

We hit the 5-year mark of owning our home, and the extra payments began! It was a super-focused 18-month journey. When we started we had the goal of paying off the last 88k in 18 months, all while on one income. I also had two job changes during that time and cash flowed a new roof at the end. Changing jobs meant I gave up a big bonus, but we still met our goal.

5 Reasons to Pay Off Your Mortgage Early

But, why did we ultimately decide to pay off our house? Here are the main reasons we decided to pay off the mortgage.

Reason 1: Financial Freedom

Knocking out the mortgage frees up cash to solely focus on building wealth. We really wanted to pay off the mortgage and not have any debt so that we could work towards financial freedom. I want to “retire” early with a more flexible working schedule, so saving more is really important to me. The benefit of paying off the mortgage early has truly changed our lives.

Reason 2: Guaranteed Savings on Mortgage Interest

Paying additional money to the principal significantly saves on interest over the duration of the loan. It is guaranteed savings. While we could invest that money instead in the stock market, we don’t have a guaranteed earned amount. There are a bunch of different mortgage payoff calculators out there that show you how much you can save on interest over the life of the loan.

Reason 3: You Can Save for Retirement and Pay Off Your Mortgage at the Same Time

You don’t have to choose between mortgage payoff and retirement. We didn’t stop saving for retirement during our mortgage payoff journey. We continued to save for tomorrow. We decided we could do both: pay off the mortgage while still saving for retirement.

Reason 4: It’s a Short-Time Sacrifice

For us, it was good timing. We knew we could do it in a short period of time if we really focused, so it seemed to make sense to do it while our kids were little. We started this journey in late 2019, shortly before the Covid-19 pandemic! So, it all really worked out well for us since there wasn’t a ton of things to do during the pandemic.

Reason 5: Increased Cash Flow

The biggest reason to pay off the mortgage early is that it frees up so much cash. With the mortgage payment eliminated from the budget, there is a lot more money to spend in other ways. We didn’t want that extra monthly expense hanging over our heads. It’s a big payment. We also wanted to have more cash to be able to travel more once our kids get a little older. And lastly, there is more money to invest after the mortgage payoff!

You can do this!

If you are ready to start your payoff journey, read my tips to help pay off your mortgage.

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