Pros And Cons Of Paying Off Your Mortgage Early

Paying off your mortgage early. It sounds like fairly shrewd advice. Especially considering that most homeowners have a problem with visualizing their mortgage as nothing more than an ever spiraling money pit.

But paying off a mortgage isn’t always practical. Or effective. In fact, for most homeowners it may seem next to impossible.

It’s been estimated that only 34 percent of Americans have fully paid off their mortgage to the point where they have 100 percent equity in their home. They’re lucky. An increasing number of homeowners are applying for loans with alarmingly high debt to income ratios. And while it’s tempting to own your home free and clear in an investment period marked by independent entrepreneurship and a highly volatile stock market, it may not always be the wisest idea. Like everything in life there’s as much risk as there is benefit to paying off your mortgage.

Still, it’s perfectly normal to have a dream. That’s why you bought a home in the first place. If you’re one of the millions of Americans considering paying off your mortgage early, here’s what you should know about the pros and cons.

Is Freeing Up Your Equity Worth It?

There are hundreds of ways of tapping into additional cash reserves, no matter what your needs are. And investing in the real estate market has always been a cornerstone for budding entrepreneurs. After all, it’s why we formed our association. But consider the very real cost of the market. 

Inflation’s a great example. The only thing it diminishes is your cash value. And the only thing that accumulates faster than inflation is property costs. By paying off your mortgage early (as opposed to saving), you’re not offered much of a buffer from both.

But maybe you’re not a real estate investor yet. You’re just an average homeowner looking to take an incredible leap. Your mortgage payments are a risk free form of investment. It quite literally reduces your risk load, whereas money placed in high venture stock market gambles aren’t necessarily going to yield the returns you once hoped they had. Let’s look at how you can turn mortgage payments into an investment.

The Investment Strategy Of Mortgage Payments

Most homeowners don’t stop to consider what a potential cash cow their home can be. It might be a huge source of funding for their banks and realtors. Just not themselves.

An astonishing 36.6 percent of Americans currently rent their homes and apartments. And that number is only likely to increase.  Only 37 percent of millennials—the largest American generation in history by far, numbering at some 75 million—are homeowners. Some have cited student loan debt. Others attribute it to uncertainty about the global economy. But the need for shelter, the cost of living and investment opportunities have never been higher.

There’s a reason why many Americans view apartment rental agencies in an exceedingly negative light. While many are no doubt reputable, many are run by fairly unethical individuals. Subsequently many are looking at renting single and multiple family homes from property managers they know, trust and can establish a working relationship with. Shouldn’t all that money you’ve spent on refurbishing and remodeling actually pay you back without having to sell your home—particularly in an uncertain market?

The Pros Of Paying Off Your Mortgage Early

Let’s face it. Interest rates on your mortgage are probably more than you’d like them to be. They’re more than most Americans would like them to be. And there’s always going to be a need for additional cash for emergencies. So it only makes sense to free up the equity in your home, whether it’s through refinancing options or paying off your mortgage early.

But there’s an additional bonus to paying off your mortgage. Unsecured personal loans are risky business. Not only do they put you at greater risk for liens and come with absurdly high interest rates, but they can come with a drastic risk for fraud—an estimated $905 million in 2017 alone. Cashing out your home through a home equity line of credit may temporarily increase your interest rates, but you’ll have a much greater sense of security in the long run.

The Bottom Line? Decide For Yourself

Maybe your lifestyle is fortunate enough that you can afford to pay off your mortgage early. Maybe it’s secure enough that there’s a much greater safety in doing so compared to the actual risks. Or maybe you are in dire need of emergency funds and it’s one of the few avenues left for you.

Real estate investments have come a long way in the past twenty years. The demand for commercial real estate is booming. House flipping isn’t just making a comeback… it never went away. And investment opportunities in the market have never been greater. Sometimes you find them where you least expect them.

Right in the comfort of your very own home.


If you’re ready to get serious about real estate investing, Colorado is the state to do it—and we’re the professionals who can guide you. With close to 75 years of combined experience, the Colorado Real Estate Investors Association presents you with the insight and resources only three investors who have brokered over 2,500 deals can. Real training. Real success. And real money. That’s the Colorado REIA difference. Find out more at or call (303) 816-3653


Brandon Boyd