Most weeks, I get asked if paying extra on your mortgage is something I recommend. While I do my best not to provide a one-sized approach to financial questions like this, I have a personal leaning on how to answer this. However, like most things, the answer depends on a few factors.
The first question I would ask of someone asking me this is, WHAT IS YOUR RATE? For any of you that were able to capture the amazingly low rates of high 2’s and low 3’s that were available between 2020 – 2022, there is likely less benefit for you to pay down your mortgage as opposed to someone buying now who is likely between the high 5’s to low 7’s in rate.
Another question would be, DO YOU HAVE ANY OTHER DEBTS YOU SHOULD PAY OFF FIRST? Certainly, if you are saddled with any credit card debt, there is likely significant value in reducing or eliminating that debt, as rates on credit cards tend to be in the teens! But even if you have car or boat loans, those too likely can be paid off first, depending on the rate.
One of the last questions I would ask would be WHAT INVESTMENT OPTIONS DO YOU HAVE FOR THIS MONEY IF YOU DIDN’T PAY DOWN YOUR MORTGAGE? At least recently, with the rapid increase of short-term rates from the Federal Reserve, the conversation can be had with parking your money in a CD at 5%. Others, I would argue that you can buy stocks on sale considering how much some of them have come down in price from their peak. I could make a similar argument for investing in another property (in-state or out-of-state) as those, too, are off their recent highs.
Ultimately, both are investments whether you pay off your mortgage or invest your cash in other ways. For my money, though, I like the idea of leaving my mortgage as it is and consider other alternative investments.