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Can anyone educate me on paying my mortagage off early. I am in a process of applying for a mortage, from the way things are going I can pay it off within 2 or 3 years. whats are the benefits of me paying the mortgage off early??? what impact will it have on my credit report and score???
KOKY
Other than being out of debt. It would look great if you were ever going to get a rental property. I'd assume your score would go up but as far as how much, i dont know.
Fico scores on having a mixed credit file, Installments/revolving. Installments however are scored differently than revolving and only account for 10% of Fico scoring.
Benefits: As long as there's no pentalty, you pay less interest over the life of the loan (If you're paying it off that early, you sound like you're going for a 10 or 15 year possibly?) You feel better when it's paid and have the freedom of no monthly mortgage payment.
Score impacts: If you pay it off early, it will end up spending less time on your credit report, since it will fall off 10 years after being closed/paid-in-full. I actually have some loans that are set to fall off in two years, they are perfectly good, clean, old accounts and will remove their good history from my file, it's just how it is. (I'm fine though, I have 47 accounts reporting anyways! - No worries, most are closed, old accounts, gotta love student loans.)
Also, with mortgage accounts, consider the interest rate vs some of the other accounts you have to pay, I would pay down higher rate loans faster compared to the mortgage. For me, sticking to minimum on student loans is my best option if I still had my mortgage payment due to the very low interest rate on SL. It's lower than most mortgages people are getting. If you don't have other accounts you have to pay could you instead invest the money and get a higher return on your investment compared to how much you pay in interest.
If you just want the freedom of not having that payment sticking around, then by all means, pay it off. I would recommend you have savings, first and foremost, before dumping all your earnings into the mortgage, however.
DUPLICATED!
Whats the benefit of paying off your entire mortgage in a few years?
You should run an amortization schedule and see how much you'll save in interest. See if its worth it to you to save the (likely) thousands of dollars you wouldn't pay. I am not sure the credit score is the right focus there, might be missing the forest for the trees.