Is Your Mortgage A Deduction...Or An Expense? 

Some people say your mortgage is your biggest tax deduction. But in reality, the average American in a 28 percent tax bracket gets a rebate of 28 cents for every dollar paid in interest. In other words, for every three dollars you spend toward mortgage interest, you get about one dollar back - meaning 2/3 of your mortgage interest is money out the door!  You only get a tax deduction for the amount of interest that exceeds the standard deduction allowed for every taxpayer, which is currently $10,000 per married couple. This is often greater than the amount of mortgage interest many couples pay during a year. If your mortgage interest does not exceed $10,000 in one year, you receive no tax benefit at all!  Ask your accountant how much you are saving in taxes because of your mortgage interest. It might be less than you think.

A Better Investment than Savings Accounts, CDs or Savings Bonds! 

Due to  recent low interest rates, it is hard to find a good investment for your money outside of debt reduction. At this writing, mortgage rates are at about 6.5 percent for a fixed rate first mortgage.  Savings accounts and CDs are currently paying about four to five percent interest, with savings bonds showing a similar rate. To achieve a higher rate of return on your money right now you would have to invest in stocks, non-government bonds, mutual funds, or real estate to get a higher rate of return.  However all of these investments come with risk, more risk than if you just paid down your mortgage debt as fast as possible. Paying down your debt is risk-free and the return on your investment is immediate.

Pay It Off: Mortgage vs Credit Cards?

If you have high interest debt such as credit card debt, you're better off paying that first. This is especially true if you have excessive credit card debt at 17 percent or more.  The higher the interest rate, the more effort you should make to pay off that debt as soon as possible. Once your high interest debt is paid off, then you can concentrate on paying off your mortgage.  You might even find that your credit score improved in the process!

Are You Stuck With A Mortgage With A High Interest Rate? 

The higher your mortgage interest rate is, the higher your return on investing in your mortgage. This is because the rate of return on investing in your mortgage is roughly your mortgage interest rate. If you are lucky enough to have a very low mortgage rate, 4.75 percent for example, there is a better chance you can find an investment with a higher return then investing in your mortgage.  However, if you have a high mortgage interest rate, there is less chance of finding a low risk investment with a higher return.  In this case you are almost always better off paying off your mortgage early than looking to other investment opportunities. 

Investing in Your Mortgage Debt Can Be a Liquid Investment 

Years ago, if you wanted to get a lot of money out of your house you either had to sell or refinance, sometimes in a hurry. Today it is easier than ever to pull money out of your home if you find it necessary. There is a much more relaxed lending environment than years ago where more people can get a home loan--people with less than perfect credit and self employed people can get home loans much more easily than five or ten years ago. Even people with no income can can get loans! These loans can help you pay off your mortgage while still allowing you to access cash instantly.

Want More Peace of Mind?  Pay Your Mortgage Off Early! 

Peace of mind is not necessarily quantifiable when talking about return on investment, but happiness is not necessarily quantifiable, either...and yet, it is vital to everyone. Regardless, peace of mind is still important in terms of creating a secure future. Approaching retirement debt-free is important to many people, especially in these uncertain financial times. Many believe that we are now at some of the lowest tax brackets in history. This means that it is very possible that as you get closer to retirement, you might be in a higher tax bracket. If you're paying more taxes you will have less after-tax income and, therefore, will have to make more just to pay your mortgage.  It makes sense to pay off your mortgage early as you approach retirement.