Should I Pay Off My Mortgage Early?

Should you pay off your mortgage early? Well everyone’s situation is different. But here are a few things to consider as you think about this option.

The Opportunity Cost if You Pay Off Your Mortgage Early

The first thing to think about is the opportunity cost of paying off your mortgage early. The opportunity cost is essentially what you lose by choosing this path. 

For example, here are a few other things you can spend/invest that money on:

  • Investing in stocks
  • Buying a rental property
  • Going on a vacation
  • Paying off another loan
  • Starting a business
  • Increasing your emergency savings fund

The main thing to keep in mind with all of these is that some options will likely be a better long-term investment from a numbers perspective. 

One example is investing in stocks. If you pay off your mortgage early, you’re essentially saving money at the interest rate on your mortgage. For most people these days, that’s probably less than 5%. If you chose to invest the money in stocks instead, you can expect to get around 10% based on the history of the stock market. So you’d essentially be making 5% more on your money. 

Another option is paying off other loans. Do you have some student loans with a 7% interest rate, and your mortgage is at 4%? Again, from a numbers perspective it makes sense to pay off the student loans first.

There’s more to it than just the numbers though. 

Paying Off Mortgage Early- Are You Okay with Debt?

Some people are perfectly fine with debt. In fact, some people are a little too okay with debt, but that’s another discussion. 

The other end of the spectrum is people who absolutely hate debt. They see any kind of debt, whether small or large, as a heavy burden they carry around on their shoulders. 

If you’re the latter, it might make sense to pay off your mortgage early. Even though the interest rate is low, you might just hate the idea of going another day with this mortgage over your head. Even though real estate is traditionally a safe investment vehicle and you have the collateral of your home in case something happens, you just don’t want to keep paying the mortgage. You have the chance to get out early, and you’re going to take it. 

There’s one other thing to keep in mind, too. 

Pay Off Mortgage Early – the Milestone

For just about everyone, paying off their mortgage is a huge milestone. It opens up the door for some freedom, and to some, it might signal a new life event, such as retirement. 

If you’ve been counting down the days to become mortgage-free because it’s the next step in your journey of life, go for it. Life isn’t always about optimizing the numbers or having strong emotions against a mortgage. Sometimes you just want to move on with your life, and this is the best thing for your well being. 


There’s just no right answer to the question “should I pay off my mortgage early.” If you go by the numbers, it actually makes sense most of the time to invest your money in something else such as a business or stocks. But if it’s important to your psyche to offload the debt, we understand and recommend you go for it. For some more personalized advice, feel free to give us a call at (949)-651-6300. We look forward to hearing from you.