Paying your mortgage earlier than usual might sound good, but doing so might be a regrettable choice in the end. But why it would be a regrettable choice? Is there a downside that is not known to the public that they must know
Why Paying Your Mortgage Much Earlier Than Scheduled Could Turn Out To Be a Bad Idea
Although many real estate experts are stating that paying your mortgage fees and loan earlier is better than paying it at its due date, there is a huge downside to that wherein only a few people know about it. According to CNBC, there is one millionaire who just regretted his decision to pay off his mortgages earlier than usual.
The act of paying off the mortgage or the debt itself earlier than usual is not a bad thing itself. However, the psychological obsession of paying it earlier than usual that it becomes a destructive force in one's life is the bad thing. That is the exact thing that happened to a specific millionaire who developed a negative obsession of paying most (or all) of his debts earlier than possible, even if the said act started to disrupt his daily life negatively.
The issue started in 2003, wherein the said millionaire (by that time), purchased a 1000 square-foot real estate property for the amount of $580,000. That purchase came with a 30-year fixed-rate mortgage, with a fixed rate of 4.25%. Over the years, he negatively obsessed with paying the said mortgage earlier than usual and managed to pay off the said mortgage in 2015, which is 18 years too early.
Although he managed to pay off his house, the reality soon started to hit him and his wife that they have almost run their financial capacity dry and empty. That became a major problem for the couple, finding ways to improve their financial status to normal levels.
The said millionaire experienced the downside of the psychological effects of paying one's debt earlier than usual, as he experienced the complete loss of motivation. That lost motivation meant that he lost the motivation to take calculated risks and instead to rash, irresponsible decisions that severely affected his wealth in the long run.
The lesson learned that the said millionaire got during that experience is that paying debts earlier than usual is fine, but you must plan two or three steps ahead when paying your debts. Sudden and unplanned payments can heavily disrupt one's financial status.
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Other Negative Effect of Paying Your Mortgages Earlier Than Expected in an Unplanned Action
According to Value Penguin, sudden and unplanned payments of any kind can heavily disrupt and damage one's financial plans and savings. Do take note that getting enough money to replace the money used to pay the mortgage earlier can be a very difficult one.
Therefore, it is essential that before paying your mortgage earlier than usual, one should lots of extra cash on hand before doing so to avoid getting into financial trouble that resulted from that early payment.
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