Negotiating + Financing

3 reasons not to pay off your mortgage early

By Jennifer Laing  | August 18, 2014 - 3:59PM

It may be tempting to pay off a mortgage as soon as humanly possible—say, when those first few bonus checks roll in. (That line of thinking is especially true in New York City when a huge mortgage is often associated with a comparatively tiny apartment.) But, according to Zillow, there are cons to getting rid of that mortgage ASAP, and they go beyond prepayment penalties. Before you give your bank a huge chunk of change, remember these points: 

1. Your retirement: If you're not already contributing to your retirement savings, you may want to start doing that before paying off your mortgage altogether. Carrying mortgage debt lets you devote more of your paycheck to the here and now—like, socking away money for your retirement.

2. Other debts: This almost goes without saying, but if you've got credit card or other debt with higher interest rates, pay those down first. 

3. Inflation: Your monthly payment may seem high today, but in 30 years that same amount will seem like a joke. Keeping your mortgage may actually be a hedge against inflation if you have a fixed-rate loan. 


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