to reflect the new balance. This nets you a lower monthly payment, but your loan term and interest rate also stays the same.
With this option, you could save on interest and pay the loan off faster. There could be consequences for your credit, however, depending on how your lender or servicer reports it to the credit agencies, so be sure to discuss this with your lender upfront.—You’ll eliminate an expense: Getting rid of your mortgage payment is a big deal for your budget. You’ll have more room to pursue other financial goals, including cutting down other forms of debt and saving for retirement.
—You could feel peace of mind: Without a mortgage payment, you might find it much easier to budget, save and spend on what matters most. This can work wonders for your wellbeing. .—You can’t leverage your home as easily: A home is an illiquid asset, meaning you’ll need to either sell it or obtain a home equity loan or line of credit to take advantage of its value. If you know you’ll need quicker access to cash, it might not make sense to put your money into your home prematurely.
Start by considering the opportunity cost. If you repay your mortgage ahead of schedule, you’re putting money into the mortgage when you could have used those funds for other financial priorities. You’ll save on interest, of course, but if you invested the extra payments elsewhere instead of putting them toward your mortgage, you might find you’d have earned a higher return.