Paying Off Your Mortgage In 2008

Paying Off Your Mortgage In 2008

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This New Year’s Resolution May Be The Most Important One For You

It is the new year and the time when many people take stock of their lives. New Year’s resolutions are made by some in an attempt to bring about personal change including losing weight, exercising more, reading books, saving money, you name it.

Pay off mortgageIf you own a home, one resolution to consider is this — paying off your mortgage in 2008. Sure, not every homeowner can possibly consider taking this step, but if you have a small balance left on your mortgage, then paying it off sooner rather than later could save you thousands of dollars in interest payments.

Will 2008 be the year that you own your home debt free? It can be! Let’s take a look at the Pros and Cons of paying off your mortgage this year.

Pros — Why You Should Pay Off Your Mortgage In 2008

Peace of Mind — You may not be in a position to have to worry about losing your home, but just owing money to a mortgage banker (no matter how small the outstanding balance) can be uncomfortable for you. If you have the means to pay off your mortgage, why not just go ahead and do it?

Contributing to Retirement — Lots of people are house rich, but cash poor. Maybe you have another 10 to 15 years before retirement, but the funds to carry you during your golden years are rather limited. Instead of making mortgage payments, why not redirect your monthly contributions to your retirement fund?

Allows You To Take One Final Deduction — Maybe in 2008, you’ll need the I.R.S. mortgage deduction to help reduce your overall tax burden, but you won’t be needing that deduction in 2009 (especially if your income will be dropping due to retirement). Making your final payments in 2008 will still allow you to take a deduction for 2008 taxes as you prepare for a drop in income for subsequent years.

Cons — Why You May Want To Reconsider Paying Off Your Mortgage in 2008

Loss Of Tax Savings — If you are in your peak earning years and getting hammered by the tax man, don’t expect that the burden to get any lighter especially when the new president takes office in 2009. With some candidates promising to tax the rich, will the loss of tax savings due to paying off your mortgage cause you more harm than good in the long run? You may not be rich, but don’t expect a president bent on raising taxes to exempt middle income earners from paying more in 2009.

Diverting Cash From Other Investments — If paying off your mortgage now means diverting money from other investment choices, is that really a good option for you? Specifically, if paying off your mortgage means you cannot contribute to your 401(k) account, will the loss of company match and investment growth potential be worth it to you?

When seeking financing advice, you’ll hear both sides of the issue, but the decision to paying off your mortgage in 2008 rests squarely with you. A personal windfall could also be weighing in on your decision, so consider speaking to an investment planner before you make this important decision.

For additional tips on paying off your mortgage early, please read Paying Off Your Mortgage (Part 2) today.

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