Should You Pay Off Your Mortgage Early?

Andrew Barnhardt, CFP®, and Brett Herron, CFP®, explore a question they regularly hear from clients: should I pay off my mortgage early? Andrew and Brett discuss how to weigh the peace of mind of being mortgage-free against other priorities, including maintaining emergency savings, investing, and preparing for retirement. They explain why your mortgage rate, the source of your payoff money, and your spending habits all matter. They also unpack mortgage interest deductions, how payments change over the life of a loan, and whether paying off your home before retirement should be a hard-and-fast rule. Throughout, they emphasize balancing the numbers with your personal goals and choosing a plan you can comfortably follow.

Tune into this episode to also learn:

• How to compare paying down your mortgage with saving or investing.
• Why paying off your home should not leave you short on emergency cash.
• How mortgage interest deductions and your remaining loan term affect the decision.
• Why being mortgage-free before retirement is a personal choice rather than a universal requirement.

What we discussed

• [00:00:31] Kicking off the episode: should you pay off your mortgage early?
• [00:01:24] The peace of mind that comes with owning your home free and clear.
• [00:02:23] Why using extra cash versus withdrawing investments changes the analysis.
• [00:03:55] Comparing mortgage interest savings with potential investment returns and market risk.
• [00:05:35] Considering savings rates and protecting your emergency fund.
• [00:07:11] How an aggressive mortgage payoff can leave you without cash for unexpected expenses.
• [00:08:08] Factoring in spending habits and handling property taxes after your mortgage is paid off.
• [00:09:28] Why keeping a mortgage for a tax deduction may not make sense.
• [00:10:29] Understanding how payments shift between interest and principal over a mortgage’s lifetime.
• [00:11:27] Why paying off a mortgage near the end of its term offers different interest savings.
• [00:12:22] Should your mortgage always be paid off before retirement?
• [00:13:35] Considering retirement cash flow, housing goals, and the possibility of a second home.
• [00:14:37] Why paying off your mortgage should not replace necessary retirement savings.
• [00:15:10] Running the numbers while recognizing the personal value of peace of mind.
• [00:16:29] Closing thoughts: knowing yourself and balancing a head-versus-heart decision.

3 Things To Remember

1. Paying off your mortgage is both a financial and an emotional decision. Run the numbers, then consider how being mortgage-free fits your priorities.
2. Protect your liquidity. Putting all your available cash into your home can leave you borrowing again when an unexpected expense arises.
3. Consider your mortgage within your full retirement plan. Paying it off early should not undermine the savings you need to support your future spending.

Memorable moments:

(00:07:58) “You just paid off your two or three percent mortgage to get 8% interest right back.”

(00:15:10) “The numbers are there to guide you. They’re not here to make a final decision for you.”

(00:16:29) “So knowing yourself and knowing what you’re likely to do and how you’re likely to benefit psychologically and financially from paying off or not paying off is something to be aware of, something to talk with your advisor about.”

Useful Links

Connect with Brett Herron: bherron@hfmadvisors.com | https://www.linkedin.com/in/brett-herron

Connect with Andrew Barnhardt: abarnhardt@hfmadvisors.com | https://www.linkedin.com/in/andrew-barnhardt-cfp

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HFM Investment Advisors, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. All investments involve risk and are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as a recommendation appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.