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4 Reasons Why Paying Off the Mortgage Early Was Right for Us

Paying off the mortgage early is a hot topic when it comes to money management. There seems to be a good amount of quality logic for keeping it and equally valid logic for paying it off early. So what’s a homeowner to do?

paying off the mortgage earlyAfter we bought our first house, I began to look into this issue. I read many opinions and ended up agreeing with the major arguments for NOT paying off the mortgage early. These points seemed solid to me. The logic goes like this:

“You have such a low interest rate.”

“You could invest instead and get a better rate of return on your money than putting into extra mortgage payments.”

“More of your money is tied up in your house and you can’t get to it for a big emergency.”

“You are getting tax breaks for carrying a mortgage.”

“A mortgage is a hedge (protection) against inflation, especially with a fixed rate mortgage.”

Then during 2010, my wife and I went through some life changes. We began to rethink many money related things including our mortgage. After a lot of back and forth, we decided to pay off the mortgage early. The reasons may surprise you because only one of them is based on a mathematical concept or equation.

The One Qualifier

Let me preface what I’m about to share by saying that we could not have paid off the mortgage early unless we had the extra money to do so. That’s seems obvious, but I think it’s an important point to make.

That was a one part of the 2010 life changes I referenced above. We reached a point in our lives where all other debts were paid. Additionally, all the other aspects of financial planning – emergency fund, kid’s college, retirement – were covered or being funded

Related Content: How to Get Out of Debt and Win in 5 Simple Steps

So that freed our budget up to throw extra money at the mortgage. We moved money to the mortgage balance from our excess monthly income. We also used income from our rental properties, from tax refunds, from investments and from any other money we could get our hands on. All in all, it was a four year journey to complete once we finally became serious about it.

Here’s why we did it.

Reasons to Be Paying Off the Mortgage Early

The following reasons led us down the path of paying off our mortgage early:

Reason #1: A Personal Conviction

Sometimes a person takes a stand or makes a decision based on a personal conviction. In those instances, nothing else really matters, not even a mathematical equation that shows you might get a better return on your money elsewhere.

You might think I’m talking blasphemy here and giving bad advice. It might seem like we let our emotions get the best of us instead of thinking logically. I understand all that. I also realize the peace we felt over this decision. That makes me not question the legitimacy of it.

The conviction for us to be paying off our mortgage early came from what many would consider an unlikely source – my faith. In 2010, I embarked on a personal journey to read through the Bible and catalog all the verses about money I could find. What I found astonished me – over 400 passages (many with multiple verses about money) in all.

Related Content: Bible Verses About Money

It was on that journey that I felt God convicting me about being in debt. This wasn’t anyone’s program, the advice of a friend or the nudging of a spouse prompting me to get rid of debt. It was a spiritually experience and highly personal.

I really can’t explain how God works in the hearts of people. I just know He did in mine on this issue and I couldn’t ignore it.

And before you think this was a one-sided affair, my wife was completely onboard too. For me, that served as confirmation I was thinking the right things. I probably would not have moved forward if we hadn’t agreed.

So, if you are convicted about it internally, based on any reason, then do it. Don’t worry about what other people think. You will feel good about the decision.

Reason #2: Putting Aside the Servant Label

One verse that jumped out to me from the Bible was Proverbs 22:7. It’s a familiar passage that even non-religious people are aware of because it has worked its way into contemporary culture. It reads, “…The borrower is servant to the lender.”

Modern day translation – “Those who owe money have to abide by the rules and jump through the hoops of those who loaned it. If the rules change, tough.”

Our lender at the time was Bank of America. They had purchased our loan from Countrywide. We opened a checking account at a local branch so we could electronically transfer money from our main account at PNC into our BOA checking account. We would then make another transfer from the BOA checking account to the mortgage account to pay it down.

I found out after the fact that I couldn’t transfer in more than $1,000 from my PNC account without using BOA’s SafePass system. This system sent a secure, one-time use code to your mobile device as a text message every time we tried to make a transaction BOA codes as sensitive. In order to finish the transaction, you needed to enter the security code. It’s free for mobile phones, unless you are paying for text messages, which I was at the time.

Either way, this “free” service would cost me money every time I made a transfer (unless I broke the larger amounts up into multiple transfers each under $1,000 which I of course did.)

I’m explaining all this as an example of a hoop a borrower makes you jump through that causes frustration. This an other issues we experienced at our local branch caused us to become fed up with dealing with our lender. We became all the more motivated to paying off the mortgage early.

Reason #3: Those Pesky Interest Payments

I don’t think this issue needs much explanation. Everyone understands the issue of paying interest over the life of a loan. When I took the time to do the calculations and really processed what it meant for my financial future, it made me sick. I couldn’t bear paying that much extra in interest and it really helped motivate me to be paying off the mortgage early.

In case you need a visual for my sickness, here’s how much interest you’d pay on a $150,000 loan at 4.5% interest over 30 years:

graph showing mortgage principal and interest payments

As you can see, the blue line represents the principal of the mortgage paid. The yellow line shows how much will be paid in interest over the same time frame. In this example, the interest paid is almost as much as the original loan amount. Yuck!

Above graphic courtesy of Zillow.com

Reason #4: Flexibility, Freedom and Choices

About the same time I was getting frisky about paying our loan off, my wife was embarking on a different journey of her own. She had decided to make a career change from math teacher to CPA. It would require her heading back to school to get an accounting degree and then passing all the necessary tests to acquire her CPA license.

Related Content: 5 Practical Steps to Consider When Making a Career Change

When she began, we really didn’t know what to expect. The prospects for work in that field are good but there is always a level of uncertainty in how the future plays out. At the minimum we hoped she would be at a new job in three years, one that might have significant impact on our financial lives.

Not knowing how the future would unfold, we decided to save money and reduce risk as much as possible. We kept our budget tight, bolstered our emergency fund, and purchased additional life insurance coverage. In our minds, we wanted to have the flexibility and freedom to make choices along the way.

Having the freedom to make financial and lifestyle choices is one of the biggest reasons for paying off the mortgage early. Without that burden weighing the budget down, a person’s options for use of their money really opens up.

Your Mortgage, Your Choice

I can’t say whether my reasons will be right for you. Paying off the mortgage early, is a highly personal decision. You will have to assess your situation to determine what’s best.

All I can tell you is that the air smells a lot cleaner from where I’m now sitting. Looking back at that decision, I consider it one of the best ones we ever made in relation to our personal finances. It created a lot of margin in our lives and space for our money to be used elsewhere to grow our net worth.

Leave a Comment or Answer a Question Below: Have you ever made a financial decision based on a personal conviction? Does it make you sick to see how much interest accrues on a mortgage? What hoops have you had to leap through as you’ve paid off debt? Do you feel like your mortgage has you financially stuck? Have  you ever considered paying off the mortgage early?

Image courtesy of Unsplash.com

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  1. Ron Cameron says

    Thanks for putting into words your thought process. Often we try to “game the system”, and having the extra money invested versus paying off the mortgage -is- a fine financial strategy. But it’s still debt! And I’ve never heard of anyone who regretted paying their mortgage off early. In the end, I think of it this way: If the house was paid for, would you want to take a mortgage out and invest the money? Probably not!

  2. Thank you for sharing the article. It’s very useful. Hope to hear more from you.

  3. Sandra Mercier says

    Thank you for sharing the article. It’s very useful. Hope to hear more from you.

  4. Kassandra says

    When I was paying off debt, I made some decisions on how I was going to do it that likely others wouldn’t have agreed with. Being free of debt allows you to explore more choices with regard to how you want to live your life as evidenced by your wife being able to return to school and have a new career. If I ever choose to have a mortgage again, I will pay that off as fast as possible! Again congratulations to you and your family!

  5. Congrats! I am all for paying it off early. I have been writing about mortgages a lot lately. Everything from “why you should pay it off” to “a compromise between paying it off vs investing the money”. It’s more than just a financial issue. There are countless reasons to pay off your mortgage. Good job on knocking it out!

  6. Holly Johnson says

    We prepaid our old mortgage heavily, and we continue to prepay our new one. I haven’t done the math, but we’re paying about 40% more than our mortgage every month and it’s only a 15 year mortgage to begin with.
    We do it for the same reasons you’ve mentioned. I hate debt, interest, making payments, etc. I also don’t like being beholden to anyone.

  7. Six Figures Under says

    Personal convictions or spiritual promptings have been a deciding factor (over numbers) in all of our major decisions. For example, making the decision for my husband to go to law school was like that. It’s a good thing too, because now we are in debt and making a lot less than before he went to law school. Since we knew going to law school was the right thing for him to do, we don’t regret it.:)

  8. I think personal conviction is a reason many of us do the things we do, even with the majority may feel differently. As long as you have taken the time to really make sure you’re doing the right thing for you and your family, even if there is favorable math that says keep your mortgage and you don’t want to – then you need to follow your heart. There is definitely no crime to paying your mortgage earlier (unless you’re the lender. They might be bummed). Plus, Kim is a CPA and I’m sure she knows the tax advantages backwards and forwards and both of you still felt strongly that paying off your mortgage earlier was worth far more to you than the tax advantages. I have no doubt it felt absolutely amazing to go into BOA and make your last payment. 🙂

    • I was talking with Kim last night about the tax advantages to a mortgage that so many people cite as the reason to keep it. The amount of money you save on taxes is negligible compared to the interest one accrues on a loan. We pretty much don’t make financial moves ONLY for tax purposes.

  9. I’m actually not surprised at this -> “The reasons may surprise you because only one of them was based on a mathematical concept/equation.” I think most of the time when someone decides to pay off their mortgage early it has more to do with some of the personal things you mentioned than with a financial equation. I also absolutely understand what you are saying about personal conviction from God. God’s calling won’t always make sense financially or based on equations.

    As someone who has student loans, an auto loan, a wife headed to grad school, and a mortgage, I can say that it’s inspiring to see someone pay off all of these things. It’s hard for me to imagine being at that point, but I hope to be in a place that paying off all my debt is an option.

    • Maybe you are right about more people doing it for personal reasons. I’m certainly one of those. Perhaps it’s just my immersion in the PF world that makes me think people always look at the math first.

      Keep knocking off the debts one by one. Slow and steady wins the race. You will eventually get there my friend!

  10. I’m a firm believer in doing what will make you happy, even if the math doesn’t add up. I’ve never had a mortgage before, but I know it caused my parents a lot of stress when we were at our old house. I’m sure it feels much better not having to worry about debt whatsoever! Especially with that graph showing the interest paid…awful.

    • Mortgage = creator of stress. Yes! For that reason there is no rush to get one. I’d rather rent and save money for a down payment until I was ready to handle the burden.

  11. Debt IS servitude, but the reason I paid off my mortgage 20 years early was because of a bank clerk who refused to waive a $50 late payment fee. The bank got its $50 in the end, but it lost tens of thousands in interest payments that it would have received had the mortgage continued.

    • Love it! If banks only knew how much this type of behavior ticks people off. They are probably thinking, “That’s our policy and it’s only 50 bucks.” Meanwhile the customer is raging.

    • Noonan,
      Good for YOU!!!!!!!!!!!!!!!! LOVE IT! They offended you over $50 and you paid them back by offending them by $10,000+! Good. for. you.!

  12. #2 is the sole reason we’re paying off our mortgage early. In fact, we have an appraisal this Friday to refi from a 30-year fixed to a 15 year-fixed. This will lower our interest rate and monthly payments and shave 8 years off our mortgage even if we don’t pay the 15-year fixed offer early. The sooner we have $0, the sooner we retire.

  13. John S @ Frugal Rules says

    Thanks for sharing the reasons behind your decision Brian. We’re feeling very similarly in regards to having that conviction that we don’t want to be obligated to someone else. We weren’t there when we bought our place, but now that we run the business we don’t want to have to owe anyone. We want that flexibility to be able to do as we want and not be tied down to a mortgage or anything else.

    • With as much as you’ve shared how your business fluctuates in income, I can see how you would want to clear away all debts. I really believe conviction trumps numbers, although many would disagree with that.

  14. Laurie @thefrugalfarmer says

    We’re with you on this one, Brian. We too will be paying our mortgage off early, and the sooner, the better. We just love the freedom it allows for, knowing that you “owe no man”.

    • “…owe no man”. I really can’t put into words how big a deal that is. You just have to experience it…and with your level of commitment, I know you guys will get there one day. 🙂

  15. Shannon says

    Thank you for sharing Brian and congrats again on reaching your goal! I think no matter how people feel about paying off their mortgage, it is important as you say to have a conviction about your money and to make a plan and stick with it. I know that this journey was not an easy one for you and your wife, but you stuck with it anyway and now you are benefitting from your conviction.

    • I appreciate those thoughts Shannon. Without conviction – and this applies to any area of life – we will shift as the winds change, following any idea that we may come across that sounds good. I’ve avoided making many mistakes by sticking with what I believe in.


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