Is Now the Time to Prepay Our Mortgage?

I think all the time about whether or not I should include prepaying our mortgage into our financial goals for the next however many years. I have calculated how much we need to prepay to knock our mortgage down to anywhere from 5 years to 20 years.

I have read all the articles about tax savings (which are negligible for us) or how you can make more in the long run if you invest it instead. But, there is still something about no longer having a mortgage every month that just calls to me.

So, as I invest money every month into our failing 401k and Roth IRAs, I have to wonder…would I be better off putting that money into my house? I’m at least getting what my interest rate is worth, in terms of a ‘return’, right? And even though in my mind I know that the stock market is on sale, so I should be investing, I can’t help loving the idea of knocking out the very last part of our debt.

Moolanomy wrote about it the other day. His stance is not to prepay. He feels you should instead beef up your emergency fund to a year’s worth of savings. Now, this feels a bit overkill to me. He also feels investing is still the better option if your emergency fund is in good shape. I can’t really argue with this.

But, there is still that nagging, “wouldn’t it be great not to have a mortgage payment”? Wouldn’t it be great to not only have no debt, but to free up that amount every month for savings or whatever?

I’ve read on a couple of blogs where they are saving up cash to buy a house. I would think this would almost be in the same vein as paying off your mortgage early vs investing, but even more so since you aren’t paying any interest (unless you include lost earnings by not investing).

I think what I need to do is find someone who is really good at math and finances and do an analysis of which would be the better option for us. If I find this person and get the analysis done, I will post it here.

Until then, I will probably just keep looking at the numbers, thinking of way to tweak our budget, dreaming of our future of financial freedom from the “death pledge” (this what mortgage means in French!).

In the meantime, do you prepay your mortgage?

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