Brian Preston: Disadvantages of Paying Off Your Mortgage Early

As a lot of you know, I love living mortgage-free. The freedom and options our family has now are incredible.

But … just because I love my paid-off house, doesn’t mean I think everyone should rush off and do that right away. (Especially if you have one of those lovely 2-3% interest rate mortgages!)

There are other important financial actions to consider first. (Specifically -- Coast FIRE!)

To help us discuss those other money moves, Brian Preston joined me in 2021 to discuss this topic.

Brian is a fee-only financial planner, the founder of Abound Wealth Management and host of The Money Guy Show ( @moneyguyshow ), an award-winning podcast and YouTube channel.

Brian has been broadcasting for over 15 years and has been featured in major media outlets like The New York Times, US News and Forbes.

Do you think paying off your mortgage early is worth it?

#PaidOffHouse #MortgageFree #MortgageFreeCommunity #familyfinance #personalfinance

[Scott-becq]

That is one of the reason to pay it off. The bank can't take it if you own it. Lose your job and you could lose your home. Also with it paid off you can build a even bigger buffer for a down turn.

[philipbutler]

This is exactly the reasons as to why you want to pay off debts period.

[JosephDickson]

2008. My lender didn't care I had been on time and over paid my mortgage. They kept re-bundling my loan. All they care about is themselves.

[dirostudios]

Dude, if you pay the 1st 15 years, you just paid mostly interest. The next 15 years of payments is when you increase your equity. You will always need a place to live. I would have paid my house off, but my ex wife wanted to live for the day.
Now I pay ever increasing rent of $2, 275 a month for a 1 bedroom apartment vs paying my 2k ft house payment of $1, 500. Hang in there and pay off your mortgage. Wisdom of a 72 year old dude, 2x married divorced. 😎

[imbrandon]

I’m 28… I’ve owned my home for 5 years.. I literally signed on the dotted line like a MONTH OR TWO before covid crashed interest rates and exploded prices… I’m sitting on around $200, 000.00 of market value increase still to this day, I was playing with my amortization payoff calendar the other night… my payment is already low with a 2.3% rate on a 30 year… well if I pay an extra $1, 500.00 a month on top of the $1, 300.00 payment… I will have my fucking house paid OFF in 7 years… which is now my plan! I make $130ish thousand dollars a year, so this is pretty doable for me I got lucky having an old coworker talk me into buying a house when I was 23 imagine having a paid off home at 35 when all my peers are just thinking about buying their first home and starting that 30 year journey. Incredible

[lunallena]

Pay it off for peace of mind after you line up reserves.

[mmorin]

If you’re losing your job and the housing market has dropped out ..odds are your investments have tanked as well. I think I would rather have 1 less major bill to pay if all this happened. Already enough stress to deal with at that time.

[michaelnapoleoni]

When you pay down your mortgage you reduce risk. You also reduce the amount of interest you’ll pay, which can be a lot with a higher interest loan. Not paying down the house and instead investing increases risk 2x, because now you have a mortgage to pay and your money is at risk being in the market.

[Lissa]

Good thing we live in America and you can find work just about anywhere. May not be the job you want but you can find one that will get you by.

[TheDmonet]

One thing many people don't know and everyone should...if you pay down you mortgage and have equity, you can recast it, resetting the term and lowering your payment. AlI paid down more than half my mortgage, then recast it. I continued paying the original payment, but I now have the option to scale it back in tougher months.

[marcodm]

No. Pay it aggressively until you can. Find another job. Keep paying it. Once its done, you can relax. Always save emergency fund every paycheck, whatever amount you can.

[Robinhood]

I would think paying off your mortgage is a safety net for exactly what happened to his dad. Losing your job without a mortgage places you in far better position to take on a new job at less income.

[info]

Do NOT take out home equity loans on your HOME . Your house should never be used as a piggy bank.

[ErwinSchrodinger]

But that's why you should have 3-6 months of saving... just in case.

[spcysos]

That’s what an emergency fund is for, your dad’s exact situation, find another job within 3-6 months and keep on going!

[rahulbosebose]

If you dont pay off the mortgage... chances are you will spend that money on buying stuff or even if you are conservative.. you will invest it in market... if market goes down.. those things will loose value faster than your home equity.. so even more reason to pay off early.

[imbrandon]

You don’t save anything anymore owning a home unless you own a business as well, then you can write everything off

[paulwilson]

Where I thought he was going... You're 8 years into your plan to pay off your mortgage in 10 years, but you made the mistake of throwing all your money to the mortgage and didn't save any in an emergency fund. You lose your job, and you still have a monthly mortgage payment that you can't pay cause didn't save for such an occasion. In this case, it doesn't matter that you paid most of your house off... the bank still owns it, and if you can't make your regular monthly payments you risk losing it.

[militaryhomes]

This is pretty much why I've been saving my money vs paying off my mortgage. I've been putting my money in a high yield savings account that has a higher percentage than my mortgage.
It's nice that I have all that liquid if something happens vs it being tied up in my house. The down side is I have to pay taxes on the profit I make.

[jago]

Wow for short video what the answer was to it I don't really know I'm just going to jibber jabber