Building Your Wealth Bridge

Should I Make Additional Payments On My Mortgage

McCabe & Associates, Inc.

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0:00 | 21:56

In the latest episode of the “Building Your Wealth Bridge” podcast, George C. McCabe, CPA, Financial Advisor, delivers a solo discussion focused on one of the most common and often debated financial questions facing homeowners today: 

Should you pay off your mortgage early or invest those extra funds elsewhere?

Drawing from real client conversations, personal experience, and practical case studies, George walks through the key considerations that can go into this decision, emphasizing that this topic can be “more of an art than a science.” He highlights how variables like market performance, interest rates, taxes, and personal cash flow all can play a role in determining the right strategy.

Throughout the episode, George breaks down several important concepts and planning strategies, including:

• Interest Rate Comparison & Market Uncertainty: How today’s higher mortgage rates may impact the decision to either pay down debt or invest, and why predicting long-term market returns is never guaranteed.

• The Role of Taxes in Investment Returns: Why it can be critical to consider after-tax returns, especially in taxable accounts when comparing potential investment gains to your mortgage interest rate.

• How Mortgage Interest Actually Works: A look at amortization and why a large portion of interest is paid in the early years of a loan, giving insight into how and when extra payments can be most effective.

• Down Payments vs. Later Lump Sum Payments: A comparison showing that putting more money down upfront vs. making a large payment later can yield similar total interest outcomes due to how additional payments can reduce principal.

• Strategic Additional Payment Approaches: A breakdown of multiple strategies including lump sums, consistent monthly contributions, and hybrid approaches, and how each impacts total interest paid over the life of the loan.

• Timing can matters: Why making additional payments earlier in the loan term can significantly reduce total interest, helping “beat the bank” by cutting down the amount of interest paid upfront.

• Liquidity & Opportunity Cost Considerations: The trade-offs of tying up cash in home equity versus maintaining flexibility through investments, and how personal financial goals and comfort levels should guide the decision.

George ultimately emphasizes that there’s no one-size-fits-all answer. Instead, the “sweet spot” for many individuals may lie in a balanced approach combining some upfront payments with ongoing contributions while maintaining healthy cash flow and flexibility.

As always, please send our team any questions or topics you’d like us to cover in the future.

Securities offered through Cetera Wealth Services, LLC, member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity.