Do I have to pay my mortgage?
"If you want to find financial freedom, you have to eliminate all debt, and yes, that includes your mortgage," the personal finance author and co-host of ABC's "Shark Tank" tells CNBC Make It. everything from student loans to credit card debt has been paid off by age 45, says O'Leary.
Can you get a 30-year mortgage loan when you are older? First, if you have the means, no age is too old to buy or refinance a home. The Equal Credit Opportunity Act prohibits lenders from blocking or discouraging anyone from obtaining a mortgage based on age.
Why shouldn't you write off your house early? By paying off your mortgage, you are ensuring a return on your investment roughly equal to the interest rate on the loan. Paying off the mortgage early means you are using money that could have been invested elsewhere for the rest of the life of the mortgage, up to 30 years.
Paying off the mortgage early is a good way to free up monthly liquidity and pay less interest. But you'll lose the mortgage interest tax deduction, and you'll likely earn more by investing instead. Before making a decision, think about how you would use the extra money each month.
Life after paying the mortgage
Di Johnson has in the past received research funding from the Financial Planning Education Council (FPEC), and has contributed to projects partially funded or supported by partners in the financial planning industry. He is a Fellow of the Academy of Higher Education, an Academic Fellow of the Financial Planning Association (FPA), a Fellow of FPEC (Australia), the US Academy of Financial Services (AFS), and the Australian Economics Society. (ESA), including the Women in Economics Network (WEN). This article is part of a series on financial and economic education funded by the Ecstra Foundation.
If your emergency cash reserve seems fine and you have enough to cover you for three to six months in case you lose your job, the question of a mortgage or retirement is a good option to ponder. There is no single answer for everyone.
At first glance, there are compelling arguments for accumulating retirement; you can take advantage of the magic of compound interest (and potentially some tax breaks too), all while mortgage rates are low.
Why should you never pay your mortgage?
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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing interactive tools and financial calculators, publishing original and objective content, and allowing you to conduct research and compare information for free, so you can make financial decisions with confidence.
The house is paid in 45
Think of good debt this way: Each payment you make increases your ownership of that asset, in this case your home, a little more. But bad debt, like credit card payments? That debt is for things you've already paid for and are probably using. You will no longer "own" a pair of jeans, for example.
There is another key difference between buying a home and buying most goods and services. Very often, people can pay cash for things like clothing or electronics. "The vast majority of people couldn't afford a house with cash," says Poorman. That makes a mortgage almost necessary to buy a house.
You are accumulating savings for retirement. With interest rates so low, "if you put the money you would have used to pay the mortgage into a retirement account, the long-term return can outweigh the savings from paying the mortgage," says Poorman.
Tip: If you're lucky enough to be able to pay off your mortgage faster and the idea fits your finances, consider moving to a bi-weekly payment schedule, rounding up the total you pay, or making an extra payment a year.
