Mortgage plans have become extremely flexible for the last couple of years. However, the two most common ones are those of the 15 yrs and 30yrs. Now the question that we have proposed for you is that whether or not making minimum payments on a mortgage is actually something smart.
Well, the thing is that even though many people prefer making minimum payments on a 30yr plan, there are no benefits to the plan other than one. The only benefit of going with a minimum payment on mortgage is that you don’t have to worry about paying large amounts of money at a time. Still, despite its popularity, the fact remains that with minimum payments, you also have to pay a higher interest which gets you into a situation where you end up paying more than someone who is paying over a 15 yr period. The only benefit of a minimum payment is that it is flexible.
On the other hand, the experts recommend that it is a good idea to pay off your mortgage payments as soon as possible for the following reasons.
- The first thing that paying off a mortgage early provides is the ultimate peace of mind. Once you have no more payments to make, you can stop worrying and enjoy the house to yourself. The feeling of not owing anything to anyone is great, with the full mortgage payment paid there is no need for you to fret about debts and other such tensing situations.
- What, in your viewpoint is the greatest fear a person has to face these days? The fear of unemployment of course. With the recession going about on such a high scale, no one is safe and so most of us worry about losing our jobs. However, another fear associated with the fear of losing the job is not to be able to pay off the mortgage if you are jobless. Now consider a situation where you have lost your job but have also paid your mortgage payment in full, you will of course feel depressed but you won’t be as anxious.
- With the mortgage paid off, you can finally start saving money for future purposes. Also, paying it off will provide you with a motivation to reach the savings goals as you would have already reached one goal successfully.
- Once you have paid off the mortgage, there are no longer any interest rates. Plus, as mentioned, the shorter the mortgage period, the lower the interest rate. So let’s say you have managed to pay the full mortgage of a house in 10yrs instead of 15, in this case, the interest rate will be a lot lower than the original.
- Finally, getting rid of the mortgage is great because you no longer need to stop yourself when you want to buy little things. Now that you don’t need to save for the hefty mortgage price, you can shop as much as you want without having a care in the world.
So you see, making minimum payments on a mortgage is actually not such a smart thing to do. On the contrary, paying off the mortgage is something you should start thinking about.