About a year and a half ago, we paid off our mortgage. The issue of whether you should pay off your mortgage early or invest has always been a hot topic in financial circles, but I can tell you this much:
We haven’t regretted our decision to pay off our mortgage. Not even once.
Of course, just because we’ve paid off our mortgage doesn’t mean that we’re living for free. We still face a number of expenses, including property taxes, routine maintenance, homeowners insurance, etc. So just how much do these things really cost?
Let’s start with property taxes. Property taxes vary widely based on location, but around here they average about 1% of a home’s assessed value per year. Unfortunately, the only real way to combat this bill – aside from moving to a less expensive home – is to appeal your assessment. The good news is that this can be done. In fact, I’ve successfully appealed our assessment on more than one occasion.
Next up, insurance. Once again, rates vary based on a number of factors. While you could technically drop your homeowners policy once your mortgage is paid off, you’d be a fool to do so. You can, however, save on homeowners insurance by shopping around, increasing your deductible, etc. In our case, homeowners insurance runs roughly 0.2% of the value of our home per year.
Another big issue is maintenance. I’m talking here about things like painting, pest control, replacing your carpet and appliances, etc. The general rule of thumb is that you should budget roughly 1-2% of the value of your home per year for ongoing maintenance. Some years will be less, and others will be more – possibly much more.
In the six years we’ve lived in our house, the biggest maintenance issue we’ve dealt with has been replacing our water heater. Looking ahead, however, I’m expecting to have to replace the roof sometime in the next ten or so years.
There are, of course, other expenses that I haven’t factored in here such as lawn maintenance – either paying someone to cut your grass, or buying and maintaining a mower and associated equipment so you can do it yourself – utilities, HOA fees, etc. These things vary so widely based on your circumstances, however, that it’s hard to come up with a general rule of thumb.
Combining just the property taxes, homeowners insurance, and general home maintenance, we arrive at a rough estimate of 2.2%-3.2% of our home’s value per year. Given that our house is worth somewhere in the neighborhood of $325k, that means we’re facing roughly $7k-$10k in annual housing costs even in the absence of a mortgage payment, and that’s without considering utilities or lawn care.
I mainly bring this up to combat the overly-simplistic view that once you pay off your mortgage, you’ll be essentially living for free. The reality is that even without a mortgage payment, you’re still likely to face significant housing-related expenses.
On land that you believe you own, you pay a yearly rent.
Although you have no voice in choosing, how the money’s spent.
Oh yeah, and you can’t claim your rent fees on your taxes if you don’t own property or have a mortgage.
We paid off our house. Sure we still pay property taxes, utilities homeowners insurance and we claim the property taxes at the end of the year. Here’s the thing about property taxes, they usually go up every year, infact you get a bigger deduction from property taxes than from your mortgage interest the longer you have a mortgage. But i can rent out rooms in a home i own and create extra income vs. Being a renter subject to a lease or management dictating what i can or cannot do. It’s all about the freedom…no more financial worries either. More of my paycheck is mine. Also, the worry of being laid off, fired, illness or injury does
Not worry me about how i will have to come up with the rent as renters do. I have a friend who thinks his life is fine renting a apartment, but life happens. Anyway, he is paying someones mortgage and his rent for a two bedroom apartment without yard, or garage is higher than my mortgage payment was. we bought our house in 1998 and inflation is here to stay, so buying is better than renting. And paying off your house enables you to live a grander lifestyle. Not paycheck to paycheck.
Me and my wife spent the last three and a half years building our own home. 2071 sqft in a gated community. We will have no mortgage when we move in a few months. We will never have to worry about owing the bank any many for the rest of our life for a mortgage. Debt is the enemy of wealth and for all those who think they are losing out on interest by paying it off early, are wrong! Peace of mind ia far more valuable then any imaginary tax deduction that one might get by staying in debt!
I paid my first Maryland mortgage payment in 2002. I have paid since then with one late payment (bcs of staff) but yesterday while reading I found the State of Maryland has seized the property and plans to keep my last payment of $11,8– and will retain until all payment is made.
Problem all paying has already been made. What should I do?
We downsized, cut our sq ft in half, and this time bought our one-story “toe tag” home. We paid cash, remodeled all cash, and are ready for life’s vicissitudes as we age. This is the smallest, but prettiest home we’ve owned yet, and we owned a 1998 new construction view home. All cash helps us sleep at night. We can pursue dreams we could not w/ a mortgage hanging over our heads. We did the roof and other “have to” before we gutted this place. We go to bed debt free and are loving it. This is the best decision we’ve made. One-Story homes in So Ca are going to get popular, as the baby boomers get a clue.
My husband and I live in an older cabin type home on 5 acres with lots and lots of trees; way too much maintenance for 2 retired people with a special needs person living with us….Our house is paid for and we would like to know about a possible trade situation for a house on level ground and less acreage….Can something like that be possible, without adding a lot of extra fees to the transaction?
If you are still writing these articles, we would like to hear your opinion… Thank you, Sharon A.
Hi all, well i’m low income for one, and i rent the house i’m in, now My friend has died and left this house to me. I only get 880.00 amonth. battling cancer and a daibetic. I want to know when I get house since they paid it off when they were living. With the taxes remain the same? or go up depending on houses that sell in the area? I hope it stays the same since it was paid in full from them. Please help thank you. p.s. at the time they paid only 63,000 for it, now houses are going for 130,000 I hope it stays the same, since it was paid in full. thanks for listening Jackie.
It’s infallible. That in nearly all of these testimonials, people languish with costs, variable or fixed, associated with home living…maintenance, lawn, pest, prop taxes, etc. Of course you’ re going to have those costs, so why bother agonizing over their existence if your house is or is not paid off? It’s an empty equivocation of faulty logic I see so many homeowners moan and groan over. Just because you paid your mortgage and own free and clear does not mean you can stop cutting your grass, paying prop insurance, water heater fixes, minor or major fixes, etc. Relax! It’s as if people are scared of success and are waiting for the other part of the sky to fall since one half is cleard of clouds? You all should be doing back-flips like the Peking Circus up and down your street when you own your house free and clear. Face it. You now have your monthly house payment as a fixed expense into your financial DNA, otherwise, you would still be an endentured serf to your bank, right? So that monthly payment you’ve endured for 15 or 30 years can go to…well…the water heater, grass, a roof, a remodel, new appliances, college savings, charity, and a multifarious list of ‘choices’ you can make. At the risk of sounding like Tony Robbins, et. al., you’re on this site because of your tireless efforts to a principled and dedicated march in time to financial flexibility. Enjoy yourselves for God’s sake.
theres no peace of mind owning a home, all you get is the county harassing you about property taxes. just hope you do not go through a very very serious health issue which delays your property taxes payments. the county could care less, and actually outright refuses to work with you…all they want is their freakin money and they dont even have to tell you just exactly what they are spending it on, makes me sick
THE ONLY WAY TO WIN IN THE HOME-BUYING GAME IS TO PAY CASH FOR YOUR HOUSE FROM THE START. NEXT, IS TO PAY THE MORTGAGE OFF ASAP WITH IN 3-5 YRS.
OTHER THAN THAT YOU WILL PAY DOUBLE THE PRICE OF THE HOUSE BY FINANCING FOR 10 OR MORE YEARS. THEREFORE, YES! PAY FOR THE HOSUE- PAY IT OFF AS SOON AS YOU CAN IF YOU ARE ABLE TO DO SO.
Just paid off my mortgage this week, almost 15 years to the date I bought it. Would have paid it much faster, except I listened to the wrong people who told me that investing in the market would be a better idea and also that I would lose the yearly tax deduction.
First off, I ended up losing a lot of money in the market and yes, people will tell you that the market is a long-term deal, but don’t believe it. You are giving your money away for little in return. As as far as the tax deduction… yes, you get some interest back, but not all. And if you are closer to paying off your principal, you get almost no break there.
My wife and I started saving money like crazy in the mid 2000’s, when they were laying people off at both our jobs and the economy was taking a tumble. We decided to pay extra to the principal each month and put the rest on a savings account.
This week, I went to check on my mortgage balance and discovered I only owed 27,000 give or take. What made me pay it off is that when requesting a payoff quote, the bank gave me a quote of 27,100 one day and 27,200 in a space of two weeks. So, I said “F” the bank. CD interests are giving you about 1 percent, if you are lucky and these bankers are making almost $100 bucks in a space of days off me? No way!!!!
If you have the means, do yourself a favor! PAY IT OFF! The feeling you get after paying it off is like getting your first POA (if you are a guy) or first kiss if you are a gal! Cheers!
Now, my debate is whether or not to drop my insurance altogether and just go with FEMA in the event of a hurricane (yes, I live in Florida). And if you think that makes me irresponsible, I would say 90 percent of the elderly where I live have dropped their insurance altogether.
Nghia – I disagree and as you get older you will want a roof over your head. The money saved, in turn the time, can be applied to looking for better opportunities just where you are. I am not arguing rent vs buy is not a good option. In certain states and part of the country it certainly is, but I disagree to go where the job is. Go where makes you happy.
Here is my story. What I see important is with my monthly housing expenses cut in half, I will have 50% more time to focus on my future plans.. On the other hand if I pay off the apartment, I wouldn’t have the extra capital to invest in the short run as my last venture is FINALLY doing well. having said that, my decision is to pay it off. Stay away from the stock market unless it’s your profession. At that you have to be disciplined and it’s risky. I lost my shirt back in 2001 and started saving and invested in 2 apartments up north and feeling good about it. (1 rented) But then I was lucky to break even on that in 2010 after so many years.. Basically it turned out to be a savings account except the experiences I picked up. I caught a break with that capital and jumped on a high-rise deal in florida that is up 60% in 2 years..
After all this hoopla, 2/3 business failures and the market/real-estate uncertainty, for the first time, I am planning on paying this unit off in no more than 12 months. Its just a drag specially in it’s early years.
I was searching for tax implications on the full payoff and found this thread interesting. Any comments on that will be appreciated.
my 2c… I am 37.. oh let me throw a wrench for the sake of discussion, I stopped my 401k contribution ~18 months ago after 10 years. It has been the right decision so far.
I agree with you Nightvid Cole. We will lose a lot of opportunities for a good job because of the house. There are thousands of chances you can find a nice job throughout the country. If you have a house, you will look for a job around you only. How many chances you can have a good job?
Some people have to drive hours to work because of the house. What a terrible life! It won’t happen to you if you rent.
Housing is NOT an investment for future generations. Do you want your kids have better lives than yours? Why do you want them to live in your house? (unless your house is in a best place of the world).
Staying in one place for generations is an old style of living.
There is no such thing as job security in the USA anymore. You might need to move at any time. Why buy a house?
And this is just another reason people should realize housing is actually an investment for future generations that will either decline or increase in value, it is the estate model. It’s not some commodity that should be bought haphazardly unless you intend to pass it down to future generations or sell it it’s a moneypit.
I paid mine off, and my living expenses have gone down TREMENDOUSLY. I can live on much less because I am no longer sending a big check to my frigging mortgage company each month. As rents go up each year, I don’t have to worry about it either. As for the A/C breaking, well, that’s called emergency money. In my case, I save $200 a month for house maintenance in a savings account.
That’s a good topic. We should pay off the mortgage as soon as we can. However, after pay off, the cost of living is just a little bit lower than a rent. So, the question is: should we buy a house?
The cost of maintenance is not stable. If you have to change the roof or a/c system, it can cost you more than $10,000 easily.
I could/should have paid off my mortgage back in 2005 but I opted to put that money in stocks and ended up losing a lot of it by 2009.So I am now very aggressively paying it off.Be very careful with the stock market.ABSOLUTELY no guarantees.I only wish I had put all that money in my mortgage instead.BEWARE!!!
I’m somewhat perplexed… Have any of you pondered that you actually never own your home, even after you pay it off? I’ve read comments where people say, “it’s paid off and can’t be taken away from you,” but that isn’t correct. You can lose your home if you don’t pay those taxes, so you NEVER own your home. Ever. Taxation is theft, and a means by which you are deprived of ever truly owning anything. Do research on allodial title and ask why it isnt used anymore.
I have heard many people say – if you have a low rate on your mortgage, why not invest your money in something that is making more? This is a very easy one word answer – amortization. Even if your rate is at 3%, you pay a majority of the interest up front:). Not to mention, investments today struggle to reach anything worth mentioning. And for anyone who thinks they will miss the tax break, quick – give me $100, now I will give you back $10 – does that make you feel better?:) Congrats to all who have paid off their house!
I can’t believe people would say it is better Not to pay off your mortgage early, rubbish! If you have the means, do it and if you are over 40, definitely get rid of it, it’s just another debt you don’t need. I see no advantages to keeping one if you can clear it. And i’d also rather live in a smaller house all paid for than a large house, half owned by a bank!
I can’t wait to be in your position. I just paid off the 2nd mortgage (of an 80/20).
I hate when people bring up the tax deduction you lose.
So, you pay the banks $10K in interest so the govt will give you $2500 back at the end of the year. You are still losing $7500/yr.
If anyone wants to pay me $10,000, I’ll GLADLY pay them back $2500 next year. Any takers??
George is right. OWNING a home is the American Dream. Too many people confuse owning with leasing. If you have to pay someone to continue living there, then you don’t own it. You’re just a renter with benefits.
Achieved the American dream. Owning your home!
Americans are having to much taken away these days.
Were loosing our jobs, homes, families and right to prosper. Bless all of you that have been fortunate enough to free yourselfs of your morgage.One less thing to worry about and one less thing that can be taken away from you.
God Bless America!
I have a paid off house and money in the bank. I must admit I could have not done it without an inheritance I received from my parents. I have a lot of disposable income now, which I don’t blow, and the issues of maintenance and repair don’t even enter my mind, they are just a part of home ownership, when I go to bed and know that I am secure and financially comfortable for as long as I live. A far cry from the days of not being able to sleep because of bills.I absolutely don’t worry about where I put excess money. To me that’s crazy! Substituting a worry for a worry.Making a happy thing (having money) into a worry about where to put it!
Good article. My mortgage will be paid in full in about 5 months. I had been puzzling over whether to just save the mortgage or bump up my 401k for the next 8 years. I have an emergency savings that I plan to augment with the money for 6 months then increase my 401k for the remaining time. Hoping this is a good decision. As for the maintenance, utilities, taxes etc. well I’ve been paying those separately from my mortgage all along. I have a new 40yr.roof (5 yrs. ago), a new boiler (4 years ago)so any real major costs aren’t expected.
This was a concern of mine about how to allocate the money and where, as a number of my co-workers have paid off mortgages / inherited homes and used the “bonus” cash flow for living it up and are now concerned about their lack of savings. I am currently living on a simplified budget after bumping up my 401k to 20% a few years ago. I kind of figured it’s been years since I have had this money ( mortgage) available to me, so why not keep it unavailable, but useful for the future.
There’s one big problem for me in thinking through whether to pay off my mortgage: I am about to retire, and live in Florida. My house is now worth 2/3 what I paid for it (if that), which is about what I owe on the mortgage. Prices are still falling. There was an article today about whether it is still a good idea to pay off the mortgage, as the house may continue to go down in value. What if it plunges another 30% after I pay it off? I was hoping to sell it in another 5 years and scale down, but then I could lose the money I would have in the house, and just come out even if I scale down rather than saving. I know we can’t predict the future, but I really do want to pay off the mortgage if I can and then live on a really tight budget (but sleep better at night).
Any thoughts?
Jonathan has a point; however, be careful NOT to assume an annual return of 7% to 8% when comparing return results. Warren Buffet has said that investors can expect more like 4% this CENTURY. It doesn’t matter what says, but the future looks rather risky now that our debt has reached $15,000,000,000,000.00 and counting! I hope I didn’t leave any 0’s out. 🙁
The outcome has to be prolonged recession of about a decade, which I was reading the other day from an economist, and/or mega inflation. Many people see the high/mega inflation fate as a positive result when it comes to paying fixed mortgage. It is dangerous to think that people will have enough money left over to cover their mortgage payments after they buy food and cover their bare minimum survival expenses after inflation devours their paychecks. How do I know? I lived 24 years in Brazil. Over 800% inflation in 1988. I cashed out the money I saved for 4 years. I filled up a plastic bag with currency. The money was only enough to buy a dictionary. There was nothing left.
In response to Annie who said “I cannot see the downside in paying off your house except that you don’t get that tax deduction.”
The downside is the opportunity cost. If your mortgage interest rate is low enough, and if you have the discipline (an admittedly big if) to invest the money you’re saving by not pre-paying the mortgage, then you may come out ahead over the long term. I found a wonderful mortgage calculator that can help you decide between prepaying your mortgage vs. investing the difference. I like the fact that the calculator uses very conservative estimates of investment return.
http://www.mortgage-calc.com/mortgage/prepay_v_invest.html
However, I agree that for most people it’s better to prepay the mortgage, but my point is that it’s not necessarily better for everyone.
My mortgage is gone as of 09/26/2011.
True, I still pay utilities, property taxes and home owners’ insurance like everyone else. Living expenses will never go away or I would pay them off too. But that’s not a debt; a mortgage is a debt. To handle the property taxes, I take a little bit out of each paycheck and put in a savings account. I get a little bit of interest now to manage my own escrow. Also, with the mortgage gone, my savings are on steroids because I am saving my mortgage money. I receive my paycheck every two weeks and run to the bank and put what used to be my mortgage money into a CD. It’s been a dream, nothing less!
With no bills the only thing your left paying is water, sewer, trash, electric, gas and homeowners insurance. Unfortunately the only thing you can likely compare rates on is the trash companies and the home insurance providers.
Well, you don’t have any new bills because you paid off your mortgage. When you had your mortgage payments, you still had to pay property taxes, insurance, but they are typically included in the monthly mortgage payment. And you still had to worry about maintenance and upkeep. The difference now is that your biggest financial responsibility (well, at least for most of us) is gone, and you can taste the true feeling of being a real homeowner and not slaving away for a mortgage company/bank. Paying off my mortgage will most likely open new doors for me. I am working VERY hard to have mine paid off by March. We shall see. Not having a mortgage will allow me to invest a lot more in my future.
After you pay off your mortgage, set aside monthly in a savings account an amount equivalent to the mortgage payment. This can serve as your repair and maintenance account.
Your home is too expensive, I bought my house for only $80k, but it will take a while to pay it off, but with my roommate ill get there in half the time. If the property taxes are too high then people can move to Delaware which has one of the lowest property taxes. I pay 0.4% property tax.
I think people don’t need insurance, even if your home burns down you will still have the land which is where most of the value is, and the chances of your home burning down is the same as winning the lotto.
@Debbie M – Your example didn’t include the opportunity cost for your money tied in the house nor the risk and potential return of that money tied in the house. If you were in a rental, you would have more money invested, perhaps in mutual funds that invest in stocks and bonds. Now that money is invested in a piece of real estate. It’s more risky than stocks and bonds because it’s not diversified and not liquid. Whether your house will do better than mutual funds that invest in stocks and bonds is the question.
Good article.
After paying off the mortgage you’ll still have other bills offcourse, but mortgage is a big part of monthly bills. Once it’s payed off, you actually own something that’s worth a lot of money (the price of your house)and your monthly costs will be devited by half. at least that will be case in my situation. Just a couple more years.. 😀
We own two homes and could pay them off with cash today but we earn much more investing the cash so it would make ZERO sense to pay off the mortgages. We are able to retain the deductions, as well, which allow us to fund charitable accounts and gain further deductions.
I paid off my small condo in Florida in 2005 and I have never regretted the decision. It is so comforting to know that no bank will ever take my home; as long as I pay my yearly real estate taxes ($300) and monthly maintenance of $214, my home is safe from foreclosure. In a pinch, I could actually live on unemployment, which I think in Florida is maxed out at $275 a week.
Peace of mind is worth more than any “thing” I could think of.
When you decide it’s time to reroof your home, be aware that if you add solar to your home when your you reroof, the cost of the roof and the solar products are both eligible for solar tax credits. In my state, you would receive 30% back from the federal government and 10% back from the state, plus you are not taxed, saving an additional 7% (my state tax). In other words you save 47% (our state) to install a new roof with solar. This savings may more than likely pay for the roof and your meter should start running backwards. If you plan on staying in your home, the solar system should pay for itself in 5-10 years. There are many incentive plans out there. For instance, financing with no payments due until the tax credit gets rebated so you have a little flexibility with time in working out the best repayment plan. Do your research.
I get the idea, but your numbers don’t apply to everyone.
If you live in Florida or Louisiana for example it would not be uncommon to pay in excess of $2000 per year for homeowners insurance, and it often runs well over 1% of the value of your home.
We also paid off our mortgage. A year ago this month, actually. While we never regret it, there are indeed other costs. Our property tax is low, about .5%, but we are fighting our assessment right now. We’ve been in the house 5 years, so the new appraisal came in much higher than realistically possible. I know, the gov’t is trying to squeeze every penny out of us, but really, our house has not gone up that much when our county has seen an average decline of 1-2% every year for the last 5 years.
Our house was new 5 years ago, so thankfully we haven’t had many expensive repairs yet. But one day, the roof will need replacing, the a/c, etc. But it’s so lovely not owing any money. That’s the real plus side. We’re debt free and aren’t paying some big bank interest. I loathe paying interest.
I’m in a in-between-step – I was set to pay off my mortgage early (2014 or so) but the rising escrow was killing me (the resetting on the way down after the sharp spike in assessment happen to work out worst timing, which is frustrating because before the mortgage purchased, it was the best timing) and at 6%, with no way to re-fi without closing costs eating up whatever might have been gained by a lower APR. However, I had a HELOC at prime (currently 3.25%), so figured I had 2.75% margin before I’d regret any decision to convert the loan. Technically, my monthly minimum is now $50, but I’ve kept the same payment schedule as I had before (but with a more reasonable “escrow” [which I get the monthly interest]) and with the difference in APR, full pay off should be in about a year from today.
The one item missing from “should pay off your mortgage early or invest” debates is personality and I’m not talking about risk tolerance which is sometimes referenced but what about those of us who are not great with money? My saving grace is I know I am not that great with money and will do things to protect myself from myself. I’ve found it takes a lot more discipline to gather up $100 to send to Vanguard than it does send something extra on the mortgage (who’ll take $0.01 on up). I have the money to pay off the loan anytime I want, but chose this 1/2 step because it is a seismic shift for me going from a monthly build up to one huge payment to every paycheck funneling into different accounts — However because I’ve into a habit, next year I have a pattern that I can then maintain to regularly invest.
Will be in your shoes in about 2 yrs
Part of home ownership is the security of housing costs. Rentals will change price based on the economy and inflation, etc. If inflation is high, the renters costs increase and the homeowners gain value. Upkeep, taxes, etc will increase but not as much as the rent cost.
I own my home for several reasons. I bought at low tide in terms of housing prices and got my $8k tax credit. I can make improvements and modifications on my own terms. I know that my housing costs are stable. Minor increases in tax or insurance won’t hurt me, while my mortgage payment is fixed for the next 11 years unless I pay it off early.
“But how do property taxes + repairs compare to the price of a rental?”
Well, I guess the question is: can you rent a $325k house for $7-$10k a year? I’ll wager that the short answer is: HECK NO!
Would be interesting if Nickel could figure out the going rental rate on an equivalent house, and then calculate how long it’ll take to break even on the initial investment (if he hasn’t already).
The thing with renting is: you are buying someone else’s house for them. Nickel now has $325k in equity, plus is living cheaper per month than an equivalent renter. But he had to shell out interest payments to the bank to get where he is…
Do you ever regret paying off your mortgage SO quickly? How much more liquidity would you have had if you didn’t? Call it a 100K? Would you have felt better with an extra 100K in cash in the bank?
Just something I struggle with on a much smaller scale. For example I will be paying off my auto loan in the next couple days. So year to date I paid off about $8K on the car…I think I would *feel* better with that $8K in my cash reserves…I will stop rambling now lol
But how do property taxes + repairs compare to the price of a rental? Utilities are usually more in a house than an apartment. Homeowner’s insurance is more than renter’s insurance.
My small paid-off house costs me $383 for taxes and insurance with the highest possible deductible. 1-2% more for repairs and upkeep is $135 – $270. So that’s $518 to $653 per month + utilities and lawn care. Plus I’m going to spend even more to remodel the place, just because I want a dishwasher and a clothes dryer and covered parking.
A comparable apartment next door is $762 (for a 2/1 like mine but 100 square feet smaller) or $802 (for a 2/2 that’s 30 square feet larger) + utilities, so owning is probably still a little cheaper. My utilities doubled when I moved there from my last apartment, but my last apartment was only 2/3 as big. I do also have a lot more storage space than in a typical 2/1 apartment plus I do have a clothes washer and I don’t have to worry about being too loud. And I don’t have to worry about new apartment owners suddenly doubling the rent or kicking everyone out to remodel or never doing repairs. Still, it’s disappointing how much cheaper it isn’t.
I may regret buying a house sometimes, but I don’t regret paying off the mortgage.
You lose the tax deduction for the mortgage interest, but that amount gradually decreases every year anyway, so that by the time you pay off, the deduction is next to nothing.
You still get the deduction for property taxes though.
I cannot see the downside in paying off your house except that you don’t get that tax deduction. You would still have to pay those expenses i.e. prop taxes and insurance anyway. The peace of mind from owning your own home is incredible.
This is a good roundup, but the difference, of course, is that paying a mortgage on top of your normal expenses will lead to at least twice the housing expenses and (for most people I imagine) more like 3 to 5 times the housing expenses.
Nice article! Although you still have bills, at least it’s one less, I look forward to that day greatly! And I also estimate about 1-2% for home maintenance.
Regarding some of the home repairs; If you live in the warmer climates, a solar water heater may help out in the long run saving you a big electric or gas bill down the line and last just as long. Now that you’re mortgage free, I hope that you’ll try to ‘improve’ the house too going with radiant barrier and such on that new roof and perhaps even solar, which also makes the roof last longer and cuts back that energy bill. 😀