Paying off house - Good or Bad?

Typically a home loan is at a reasonable interest rate, i.e., you might be able to make more money investing the excess cash instead of paying down the mortgage.

That being said, there is nothing "bad" about paying it off.

 

I know absolutely nothing about financial advising or house notes or anything of that nature, but I don't have to to advise you to not listen to your wife's friends.

 

What Rhad said. If your interest is say, 5%, it's possible you could earn more by investing or if you have other debt (say a credit card at 18%) it might make more sense to pay that off first. Not bad to pay off the debt though.

 

Your taxes will go up since you won't get the mortgage interest deduction, but I don't see that much downside since it appears you're pretty close to the end anyway.

Though if you do want to lower your rate, you could also refinance it at low rates now if you wanted too..

 

I don't think there's anything bad about paying off a home. Just make sure you don't forget that you'll still have to pay taxes and insurance. I once met someone that came into some money and paid off their home, and thought they didn't have to pay for anything anymore lol.

 

Nevermind...

 

Everybody hit on it already.

Got debt that has a higher % on it? Pay that off first.

Got an investment that pays a higher % than your mortage rate? Invest in that first.

 

Another case...

if you have a 401(k) and you aren't contributing to your full employer match level right now, 1st, shame on you, second do that before you add to your home payoff.

 

this is why you don't let you wife have friends.

If you can still cover all you other bases, e.g. retirement, college fund, any other debt, etc, then there is nothing "bad" about paying off quickly.

 

If only it were that easy ... not a lot of guaranteed investments can after taxes outpace the mortgage interest rate.

 

What everyone else said. A note on a house tends to be considered as good debt because the interest rates are so low, so if you have high-interest bad debt, pay that off first. Still, low interest rates on a typical 15/30 year mortgage still adds up to substantial numbers over the life of the loan, so paying it off early is definitely not a bad thing.

 

You have no debt and you have the money to spare? Make sure you have the savings you need and then make sure you are maxing your 401(k) for employer match (if applicable) and then if you want to pay off the house go for it. There is nothing "bad" about it aside from the fact that you'll lose the mortgage deduction when you do! (But you'll get the extra monthly income!)

 

Doubtful. For a middle class family the standard deduction usually is larger.

 

Well it is a deduction from your taxable income. I'm assuming the only way it would make a material dent in your taxes owed is if you're on the edge of a marginal tax rate and by taking the deduction, you fall into a lower marginal rate for the top tier of your income. If you stay in the same marginal rate w or w/o the deduction - then take that marginal rate and apply it against last year's deduction to figure out how much in taxes you approximately saved with the deduction.

 

It is hard to get a second home loan, when you do not have a first, right?

Having a mortgage with no late payments also might improve your credit score, since it shows that you can be responsible and pay your debts over time.

My advice is that if having no mortgage make you sleep better at night, go for it.

 

I wouldn't go that far. I used the standard deduction until I bought my first house years and years and years ago and started itemizing... You'd be surprised how many potential deductions there are out there and they quickly add up to surpass the standard deduction. I was a 26 year old single guy when I started itemizing and it far suprassed the standard.

 

Bottom line?

That's not a bad thing, that's a good thing!

 

Absolutely true. I'm just pointing out that statistically, it's not as huge a benefit as typically argued.