It may sound like a great idea for many Medina County homebuyers— paying off your mortgage, losing one more payment each month. But the reality is, paying off your mortgage may force you to pull resources away from other investments and some that will prove to be a better place for your finances.
So before you pool all of your money to pay off your Ohio home’s mortgage, consider this: it is a far better decision to pay down your other debt and invest in your retirement or 401K instead. Financial experts agree that high interest credit card debt should be a top priority, especially for homeowners. These credit cards can have an APR rate of over 20 percent, while mortgage rates are significantly lower, most around 4 percent.
Credit cards can also come with annual or monthly fees that can add up on top of that high APR percentage. While your mortgage may have the higher amount, its interest rates make it worthy of paying over time. If you’re in this situation now, deciding which to pay off first, all signs point to your high interest credit card debt.
For other homeowners in Medina and Cuyahoga County, perhaps a retirement plan or 401K is the better investment. Putting money into your retirement plan over many years will offer the opportunity for it to grow and, depending on your retirement plan, will likely offer a return much better than current mortgage interest rates. Families in Brunswick, Hinckley, Medina, Strongsville or Valley City might also choose to put money into a college savings fund for their children instead of channeling funds into paying off a mortgage.
One other important investment to make is the emergency savings fund. Homeowners in the Cleveland Ohio area should continue to build their savings of up to six months of living expenses should any unexpected costs arise. If you’re considering paying off your mortgage, you might like to save even more to be prepared in an emergency.
While paying off your mortgage may sound like an intriguing concept, it is best to examine your finances to see if you can yield a better return by placing money elsewhere.
At BOLD Real Estate Consultants, we are happy to help you make important decisions regarding buying or selling Medina or Cuyahoga County real estate. We look forward to hearing from you!
Sajag Patel
BOLD Real Estate Consultants
440-879-7260
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