Wednesday, 5 February 2014

Why It Is Not Good To Pay Off The Mortgages Faster? - PART I

Mortgages are a tough financial aspect that all homeowners have to face someday or the other. Some might argue that it does not fall under the financial interest now. In fact, they take it as the last thing to do. They ask to pay of the mortgages late and make ways for the retirement savings.

There are two reasons why people argue on the fact whether or not to pay off the mortgages faster.
  1. Fixed-Rate mortgages are quite cheap now.
  2. Inflation and interest rates might rise in the coming future.

Here, in this article we are going to share some popular reason as to why you should not payoff the mortgages early. Check out the cool tips and stay away from the overpayment of your mortgages.

Pic Courtesy: HomeForHer

Lower interest rates can beat down your investments

This is the common argument that financial experts face while clients ask about while paying down their mortgages. Today low-interest-rates have affected the market environment, and hence it allows people to lock 3.25% mortgage. Thus, you can invest all the extra money into the index fund and join the profitable share in the stock market.

Maintaining a mortgage is an enclosure against inflation

There are instances when we find that our clients have paid down the mortgages quite early. They look down as this process as a way to save large for the future, but what you got to save now was larger when you paid down the mortgage, however now it is nothing more than peanuts. Price all around us goes up and hence having that one bill will remain the same. The payment becomes cheaper with time.

Get some awesome tax savings

As soon as you buy a home, you get loaded with sweet packages of tax breaks to keep more money away from the government and put more money in the bank. You can deduct the interest on your mortgage payments, real estate taxes, points paid on the mortgage, mortgage insurance or if you have  a small business.

You screw up yourself while saving for the emergency funds

Before you send the extra dollar to your mortgage company, but strengthen your cash reserves. You might be saving large on interest than you earn through the bank account. What will happen if you lose your job? The bank is not going to give you a loan, as you are unemployed. 

Check out for more cool tips in the last part and see what you can do with your mortgage this season.

Author's Bio: Moumita Dasgupta, a financial blogger and the owner of bizandfiz, shares her knowledge and expertise of various financial topics. A clear view on market, business, Forex, funds, personal finances etc. are the subjects she perfectly underlines through her articles.  Find Moumita on Google+


Post a Comment

Twitter Delicious Facebook Digg Stumbleupon Favorites More

Design by Free WordPress Themes | Bloggerized by Lasantha - Premium Blogger Themes | Free Samples By Mail