Is it a good idea to pay off my mortgage, and transfer those payments into investments?

There are pros and cons to paying off your mortgage and investing those now unneeded mortgage payments, versus not paying off your mortgage and investing that amount of your mortgage.

Cool benefits to finishing your mortgage and investing those payments

Obviously, paying off your mortgage creates a much-liked peace of mind. You now have one less major debt to worry about each month.

With that one less debt, you no longer have to worry about spending interest for the loan, no more PMI (private mortgage insurance) fees and you will actually have equity in your home.

One other cool benefit is that you can split your mortgage payment into savings and investing. This will give more monthly household cash on hand. Or, will allow you to purchase those higher ticket items that you can now save for faster.

Issues with paying off your mortgage instead of investing it all now

One of the problems with paying your mortgage off versus investing is that your home is not liquid. You cannot go out tomorrow and sell it in a day and have cash on hand.

There is also an opportunity cost that you miss out on. For every dollar that you spend on paying off your mortgage, you lose a dollar that could be invested. And if that investment is a guaranteed return, this could mean a lot.

Other issues to consider

One thing to consider is that your ROI and interests are different when you invest versus sell, as well as when you pay off your mortgage and invest long-term.

Another thing to consider is your current interest rates, versus the returns that you would have on an investment. Are you making more with an investment over what you pay in interest on the loan?

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