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?

After 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:

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

The post 4 Reasons Why Paying Off the Mortgage Early Was Right for Us appeared first on Luke1428.