Paying Off Mortgage May Not Be Best Move

Homeowners with extra cash should think twice before repaying their mortgages early. If they eliminate their loan, they can't take advantage of tax-deductible interest, which typically surpasses the standard deduction. They also will lose the equity benefits associated with rising property prices. However, other investments are more liquid than real estate, enabling them to cash in quickly when they need money.
Consumers must compare their mortgage returns, which are equivalent to the interest rate, with other investments in order to determine the course that best fits their needs. Many homeowners who repay their mortgages use the freed-up cash to purchase other properties, but experts urge them to proceed with caution. Higher interest rates and a slowdown in price appreciation may indicate an unfavorable climate for real estate investments. For those nearing retirement and the end of their mortgage terms, however, as well as those whose investments of choice are bank CDs and low-yielding bonds, repaying a mortgage ahead of time may be a viable option.