Should you pay off your mortgage early, or should you invest instead? This is a big question and a significant financial decision. First off, let me say:

I hate debt. The feeling of owing money is unpleasant, dirty. I’ve been there.

Graduating college, I was saddled with $60,000 in loans, which was suffocating. Fifteen years later, I vividly remember the day I paid off the last of those loans. I still keep the congratulatory letter from Sallie Mae for clearing the debt. Finally free.

Yet, I willingly took on mortgage debt. My current house cost me $176,000, and I had enough cash to pay for it outright. I briefly considered it, but ultimately opted for a mortgage. I continued to invest my money, mostly in S&P 500 index funds. Let’s see how this experiment is going.

If you borrowed a mortgage at much higher rates (5% or higher), you should absolutely consider refinancing your mortgage. You could save tens of thousands of dollars. If you’re considering refinancing, you can quickly get rate quotes from multiple lenders here.

This Isn’t for Everyone

Before implementing this strategy, keep in mind:

Know how to invest correctly. The philosophy is to put your money into a low-cost, high-quality index fund and then forget about it. Don’t try to time the market. Don’t be fooled by silly short-term trading strategies or screamers on financial TV shows waving charts. For a second opinion, see the advice of billionaire Warren Buffett (the most successful investor of all time).
This strategy isn’t for you if you’re into conspicuous consumption. The money you would use to pay off your mortgage cannot go towards vacations, buying a new car, or other foolish displays. It can only go towards investing.
Ensure your mortgage rate is low. If you have good credit and are paying over 5% interest, you should refinance. Now. Take advantage of the current low-interest-rate environment by having banks compete for your business on comparison sites like LendingTree. This will save you a significant amount of money in the long run!
Paying Off Your Mortgage Early May Give You Peace of Mind, But It Comes at a Cost

I will never argue with those who say debt carries risk because it does. If you stop making mortgage payments, the bank will send the local sheriff to kick you out of your home.

However, I always believe being overly conservative carries risks too. If you have a long horizon, and your savings are in bank accounts or CDs, then you might be losing a lot of money. I don’t like that one bit. If your mortgage interest rate is 5% or higher, you should strongly consider refinancing when rates are lower.