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

In the first part of this blog issue you have find some healthy tips on mortgage. It laid down the former reason why you should not pay off the mortgage faster. As payment of the mortgage for a longer time will let you enjoy lower interest rates, get enclosure against inflation, have some optimistic tax saving option and finally keep the emergency fund untouched.

After summing up the first part of this discussion let us jump into the next section where we have several other reasons to tell why paying off mortgage slowly is a benefit to the users.

·       You have a credit card debt or an auto loan to pay

You have to pay down the consumer loan first. The credit card rates are higher than the mortgage rates and the mortgage interest might offer you a tax deduction that you are unable to get a credit card or auto loan. You should start working on the consumer debt to zero before considering the pay down of mortgage.

·      Getting hold of the arbitrage

Recently online banks where paying 3.5% of interest rates. That is what you can get from a 30-year old fixed mortgage for these days. Economies are cyclical in nature and the deposit rates might return and can go even higher. You will glad to gain interest on the savings on your bank, rather bank charging you for your mortgages.

·      Failure to maintain the cash flow

Overpaying the mortgage almost seems like the stretching of finances close to the limits. If you are struck with hard times, you may not be able to make timely payments and this could put your home at risk. If you invest instead if overpaying the mortgages then you will get a great liquidity during your hard financial times. Banks are never impressed by over-payments. As the home is yours so until you pay off every penny whether sooner or later is of little concern to them.

·      You fail to save enough for your retirement

Many people make little contributions towards retirement savings. Putting the extra money towards the retirement savings is a smart move. As soon as you near your retirement max out your contributions, you can get the advantage of compounding your money. You have a fair chance to gain some extra bonus if you add up for retirement savings.

Will fail to maintain a higher credit score

If you make over-payment of your mortgages, them you are surely going to suffer from a poor credit score. Keep the largest debt account in a good position  to keep your credit limit at bay and help your credit score to soar high and thus you can continuing with your borrows.

Keeping a mortgage is not for everyone, if you have a habit to avoid debts then it is better to pay off the mortgage. If you have financial aspects in their due place, if the emergency fund is stocked well and you have a good saving for your retirement, then carrying any other debts may haunt you at night. Go ahead and clear off your mortgage payments.

If you want to take the advantage of the low interest rates then you can bypass those extra mortgage payments. However, the money you thought to invest in mortgage are valuable, so out them in better investment schemes do not concentrate on lifestyle spending with that extra money. Being purposeful with your money in the key to unlock success!!

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+

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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+

Read more »

Posted in: tips on mortgages