In today’s financial climate, there are many different options and strategies that can result in personal success. Often times when we hear of a new strategy or trend, there are often as many “cons” as there are “pros”. That’s not to say that you should or should not try a new strategy, it’s just to say that you should do your research and best see how that strategy would benefit you.
In that vein, one question we get asked often is, “Should I pay off my house early?”
Our advice would not be to pay your home off early or don’t pay your home off early. Since mortgage loans are amortized with interest being front loaded because mortgages have an equal payment for the life of the loan, it is important to understand where you are on the spectrum of the loan. If you have already paid a significant portion of the interest, it may be more beneficial to direct extra money into a savings account. If you still have a significant amount of time on the loan, it can make sense to get principal paid down to alleviate the significant interest burden that exists on long loans.
Additionally, if you are in a high tax bracket, some of the interest burden is offset with a tax deduction. For the highest earners, this can be very favorable because a federal bracket of 33% or higher means that this is a deduction that needs to be considered for taxes.
Rarely do we view finances as purely black and white. Our goal is to help families make better financial decisions based on their personal situation through analysis.
If you’re interested in learning more about how Courage Miller Partners can help you, contact us today!read more