After paying extra on my mortgage for the past 8 years, I've decided to stop. I am finally at the point where I feel financially secure enough to trust that I'll be able to keep my home for the rest of my life. In the past, I wanted to pay my home off early so that's I'd have a financial security blanket. Now I know that there are smarter ways to use my money. I currently owe $103,000 on my mortgage at 2.75 percent. I just started a new loan after refinancing to a 15-year fixed rate mortgage.
I'm willing to retire in place
One of the reasons I no longer wish to pay off my mortgage early is because I am not retiring for another 25 years. When I do retire, I'm willing to save money by retiring in place. I'll have had my home paid off for 10 years prior to my retirement. I think that gives me plenty of time to squirrel away any last-minute dollars to fund my retirement. I don't want to worry about paying a mortgage every month during retirement.
I have a crazy low interest rate
Another reason I am not trying to pay off my home early is because I now have one of the lowest interest rates out there on a home mortgage. I never thought I could get an interest rate of 2.75 percent. Now that I've achieved this surreal financial dream, I am ready to move onto other financial goals.
My mortgage is less than rent
I now have a mortgage payment that is less than the going rent in my area. My mortgage payment is only about $900, which is much less than the going rent of about $1,200 to $1,300. Even if I lost my job, I wouldn't be able to find an apartment that cost significantly less money to live in than my own house.
I'm saving money as a backup
Instead of taking my refinance savings every month and spending it, I'm saving it as a backup emergency account in case I ever lose my income. I can use money from the emergency savings to pay my mortgage. Having the money in savings is my new security blanket.
The interest is the cost of a car
Over the course of my 15 year loan, I'm only paying $22,816 in interest. In my mind, that means I'm paying for one new car by having a mortgage loan. If I tried to pay this loan off in 10 years instead of 15, I'd save $7,892. In order to accomplish that goal, I'd have to pay an extra $284 a month on my mortgage. While that's certainly doable, I have better ways I could spend or save that money. I could fully max out my Roth IRA account with that extra money, or I could use it to improve my quality of life each month.
When it comes down to it, paying off my mortgage only made sense when I had a higher interest rate. I'd also be more motivated to pay off my mortgage early if I was closer to retirement or underwater on my mortgage. I won't be refinancing in the future unless interest rates fell below 1 percent. I don't imagine that would happen even in this surrealistic new world.
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