A lifestyle that moves you to eliminating all debt, including mortgages, always betters your long-term financial condition because it positions you to always be able to honor God with your tithes and offerings so the windows of Heaven are opened to you for the pouring down of greater future rewards.
Some financial advisors tell people it is not good to pay off a current mortgage because you can make more money by investing in the stock market or by leveraging your money to obtain more loans to get investment real estate and the monthly rental payments they believe will come from it. However, this is tricky at best because even with investment advice most people are not good enough investors to be able to get greater annual investment return than the interest charged on their mortgage(s).
Financial advisors have their place and reputable ones should be consulted to help educate you to be a responsible manager of the money entrusted to you and to help you maintain emotional composure and reasonable investment allocation / diversification when the economic environment looks good, bad, or indifferent over short and long periods of time. But, you should not use them because you believe they have the ability to pick the greatest investments and guarantee gains on investments. For good reason the SEC requires investment firms to put the following type of statement on their investment literature, “Past investment returns are no guarantee of future investment results.”
In addition, most people are simply not good landlords and managers of rental property business or good at fixing up and flipping properties and so they lose money on these investment choices and find that over the years they are not in a better financial position than if they had simply paid off their mortgage and saved and reasonably invested over the course of the years of their lives. The problem is exacerbated when the properties are not within close proximity to where they live.
Another thing that people are often told by financial advisors, accountants, and tax preparers is that they should keep their mortgages because of the tax reduction that the interest payments afford them each year. However, they usually make a flawed analysis of this situation in that the amount of interest you pay needs to be greater than the standard deduction on your federal tax return in order for you to itemize deductions to be able to get a tax reduction.
For this and other reasons, many people with mortgages do not itemize their federal tax returns. In addition, even if you could get a tax reduction, you should consider whether it is smart to pay out $1,000 when you do not need to in order to get 15 to 25% of it back through a tax reduction ($150 to $250), especially when you cannot get a guaranteed return on the investment that you would supposedly engage. Let’s be honest, most people will never make or maintain an investment when they don’t employ rapid mortgage debt reduction plans. They usually spend the extra money on frivolous stuff that they cannot remember a few years down the road. Yet, rapidly paying off your mortgage will build the right kind of discipline and always be remembered and cherished.
I understand that part of the benefit you may get from a mortgage is the ability to get a house that you want right now with the price locked in because you do not currently have the assets to immediately pay the full asking price. However, that does not make it smart to continue paying mortgage interest when you could in fact pay off the mortgage.
You will lift a great debt burden off your shoulders and will feel extreme freedom and will have removed the possibility that you could one day be in a situation where a financial institution is foreclosing on the home(s) that you have made monthly payments on for so long. You can at the point of mortgage payoff begin saving what was your monthly mortgage payment and then not have to worry about whether or not you can actually earn more than the mortgage interest amount.
You are also free to take extra investment risk with a portion of the money if you choose to do so without running into the possibility that you may one day owe financial institutions money that you cannot pay them. This type of financial freedom relieves stress and pressure and puts you in a position where God can entrust you with far more money and resources because you have proven to be a good steward whose eyes and actions are on Him and His way rather than the way of the world.
If this situation is best for mortgages, it is even better for other type of loans (car notes, revolving charge cards, student loans, etc.) because they generally offer none of the tax reduction options that home mortgages provide and have much higher finance charges.
That is why I implore you to save a one month emergency fund, then pay off all non-home mortgage debt (car loans, credit cards, etc.), then save at least six months of emergency funds or at least twelve months if you are self employed or have uneven / uncertain monthly income, and finally to pay off your mortgage as fast as you can by making extra principle payments on it.
Eliminating debt and being debt-free for ten, twenty, or more years will usually afford you with hundreds of thousands and sometimes millions of dollars more of assets that you get the gains from and use of in order to properly care for your family, fund the gospel, pursue your God-given purpose, and enjoy good things without being stressed out and pressed out. Therefore, paying off loans always makes sense, so that you are not ensnared by the awful consequences of debt that can so quickly overtake you when you least expect it.
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!!!
Deuteronomy 28:12, Proverbs 22:7, Romans 13:8, 1Peter 5:8
Please forward these bondage breaking articles to other people who can use helpful insight!!!
You can find books authored by Randy and Karen Parlor at www.Amazon.com
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