There are several kinds of borrowers and the most common are the good payers and the bad ones. The bad ones are usually those who get loans even though they aren’t capable of paying them in respective due date signed in the contract. And there are those who are really good that they even pay in advance. However, some mortgage experts say that paying off mortgage early isn’t a good thing at all as well. There are also things you need to consider before you do it. Here are some that you need to think about.
We know that you want to pay off your debts as early as possible so you can stop yourself from all the worries and all the hassle of being in debt. However, once you pay in full cash, you are losing the chance to invest your money in some other things and you’ll lose the chance of earning more. Yes, you can decrease the interest rates that you need to settle once you pay the loan early but the taxes and other opportunity costs that could be a helpful investment would be lost too.
If you have plans of staying in your home for a longer time then you may want to not pay in early because you’ll get to stay in the property anyway. But if you have plans of moving and selling the property then paying off the loan early is your best option. You will not only get the ownership to move to selling part but also you’ll lessen the taxes and other stuff that you need to pay. This will add to your total earning in the later part.
Not getting into another loan
Let’s say that you have the money to pay the loan that you borrowed months or years ago. It’s your money so you can actually do whatever you want with it. But before you pay in full, you need to consider your other expenses too. Are you sure that you won’t need another loan next time just because you lack funds for student funds, reconstruction projects and other home expenses? You may paid off the loan earlier than expected but if you’ll just end up getting another loan for your future expenditures then you need to think again.
We are not saying that being a good payer is bad. It’s not bad at all actually but you need to consider a lot of factors before you do it. Not because you have the money to pay now is that you have to do it in a blink of an eye. You need to take your time and think things through.