Most financial advice tells you to pay off your mortgage as quickly as possible. Make 13 payments instead of 12. Send extra principal each month. Celebrate when you burn that mortgage document.
That advice is costing you money.
If you're sitting on a mortgage with a 3-4% interest rate…which describes most homeowners who bought or refinanced in recent years…paying it off early is one of the worst financial decisions you can make. Not because debt is inherently good, but because you're giving up liquidity and opportunity to save a small amount of interest.
Here's the reality: mortgage debt is the smartest debt you can carry. It's simple interest, not compound interest like credit cards. You get tax deductions on the interest payments. The payment is fixed for 30 years, meaning inflation actually reduces its real cost over time. And most importantly, the interest rates are historically low.
Money Matters
I learned this lesson the hard way. After a major investment win around 2019, my first instinct was to pay off our mortgage completely. Done. No more house payment. Great feeling, right?
Wrong. Within months, investment opportunities started appearing that I couldn't participate in because all my cash was tied up in house equity. I had to make a choice: miss out on deals that could generate 10-15% returns, or do something that felt crazy…take out a new mortgage on a house I'd just paid off.
We chose the mortgage. That decision has generated more wealth than any other financial move we've made.
Action Steps
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