Posted on: December 17, 2020

In the United States, mortgages are the most common type of personal debt. Depending on the type of mortgage, you’ll generally finance at least 80% of the home price.

However, the total cost of the mortgage is more than the actual price tag. It will also include the interest you’ll be paying on the loan. That said, would it make sense to pay off your mortgage?

In this episode, Mr. TTP himself, Brent Daniels tackled the pros and cons of paying your mortgage. If you can’t decide if paying your mortgage is a good idea, this episode should make the decision-making process easy for you!

Key Takeaways

  • Why it makes sense to pay off your mortgage
  • What happens during economic shifts
  • How you can minimize your stress dramatically
  • Why the government wants you to be in mortgage debt
  • What happens if you pay off your mortgage debt
  • The amazing benefits of paying off your mortgage


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Episode Transcription

Should I pay off my mortgage early? Write down the pros and the cons of paying off your mortgage. Number one, and you own your house. You own your house free and clear. Now let’s be honest. If you have a mortgage on your property, you are absolutely that is financial slavery to the bank. Part of your income every single year goes towards that interest payment. Interest, not the equity of your house. It goes to the bank, making more money off of you working every day. You work from what? January to March, to April, to whatever, depending on how big your mortgage is, just for the banks interest payment? Think about it. And the first part of your loan, it is all interest. The first 20 years, have you ever looked at an amortization schedule of your mortgage? It’s bananas how much interest you are paying in the front part of that and how little of your principal you’re actually paying off. How little the equity that you’re getting is.
It’s just a huge stress reliever to know that you no longer are a financial slave to the bank in the form of a mortgage. Mortgage literally means to die. Biggest con of all of them of paying off your mortgage is opportunity costs. I have talked to so many financial advisors, so many people about whether or not to pay off my mortgage and the people that are like, go invest, buy assets, have those assets pay you passive cashflow, be smart about it. Use that money. Once you put the money into your house, it’s dead money because your house is a liability. No matter if you own it free and clear or if you don’t.
But if you take that money, if you take those hundreds of thousands of dollars, you use to pay off your mortgage and put it into investments than other people are paying or your debts or you own those free and clear and they’re paying you or you put it into a company or a business or an investment and you’re making so much more money than you would by saving on when you pay off your mortgage. Yeah, you’re not paying your whatever three and a half, four and a half, 5% interest rate that you have on that mortgage, which is great. But can you get more than that in the markets? Can you get more than that and other opportunities? The big con is opportunity costs. Does that make sense? I think it does.
Pro and number two is what happens in bad times? What happens when the income, when your income gets dramatically slashed? What happens when you have a lot of debt out there and you don’t have the ability to pay it off? It is beautiful times, it’s wonderful times, it’s money making times right now, but what happens during the shifts? Because it does shift. We got a big one in 2008. We got a huge one in 2008. Me personally, I lost five properties. I foreclosed on five properties from that time period, because I thought that the sunny days would never end. There’d be sunshine and rainbows and the birds will be chirping forever. And I’d always be making awesome amounts of money and it didn’t happen. And because of that, my renters couldn’t pay the rent so I couldn’t afford to pay the mortgage on those. I couldn’t afford to pay it on my own house. It was a miserable time. There was a lot of stress involved there.
A huge pro number two is that you reduce your stress. How about going to bed knowing that you don’t have to pay a mortgage? What if you pay off all your debts and the only thing that you’re paying for is utilities, entertainment, food, travel, kids? Wow. What a life that is. That’s so much less stressful than having to deal with paying debt and paying interest to the bank because the bank is just taking that interest and they’re just lending it out to more and more and more people. Why do you think banks have the biggest buildings and they have a ATM on every street corner and they have some of the best pieces of real estate on the planet? Because they make a lot of money on people’s mortgages. It’s an absolute fact.
If you look at your mortgage right now, and if you look at how much you will actually pay the bank on your current mortgage, you’re going to pay double what you borrowed from them over the lifetime of the loan. But Brent, that’s only 30 years. That’s 30 years. That’s only a little bit every month. Yeah, you’re right. But if you have the opportunity to pay that all off, think about how much you’re going to save.
Number two, the government wants you to be in mortgage debt. They do. The government wants you to be in debt and to be paying interest to the banks because the banks pretty much fund everything. They bailed out the banks. If the banks went under, then we’d have a serious, serious economic problem. They want us to be working towards paying the banks. Now with that, there is an advantage with having a mortgage and with the government wanting you to have debt and that is you get to write off the interest that you pay on your mortgage on your taxes. Now I am certainly not a CPA. Talk to your accountant about that, but I think you’ll feel that’s pretty common knowledge if you just do a Google search. You get to lower your tax base based on how much interest you pay. Now, if you’re not paying any interest on a mortgage, then you don’t get that advantage. That is a con for number two.
Number three is summed up very easily right here in Proverbs 22:7. The rich rule over the poor and the borrower is a slave to the lender. It’s right there. It’s black and white. It’s so simple. Think about how free you’re going to feel when you don’t have the burden of debt. When you’re not putting your money into interest, you have a lifetime to spend, especially if you’re a young person, especially if you are wholesaling real estate, especially if you’re a real estate investor that’s getting those big, huge, amazing deals and you’re getting big just piles of money because you’re just providing so much value and so much service in the marketplace that you are able to like pay off your mortgage early because you have so much saved up. It’s incredible. Think about that feeling. Think about that emotion that you’re going to feel once you pay that off.
Con on number three is the money is not liquid anymore. Once you put it into your house, once you pay off your debt, that money, that chunk of money that you had saved and pulled and put together and piled up and really, maybe it was an inheritance, but maybe it was from just going out every day and providing incredible value. But all of that money is no longer liquid. It is now in your house and it’s tough to pull that money out in case of emergencies. A big chunk of your money or a big percentage of your money is now totally locked into your house.
We know that the average millionaire pays off their mortgage in 10 years. 10 years. And I believe that because absolutely every single one of my business mentors, whether it be real estate, finance or just an entrepreneur mentor all have their houses paid off. You know what I mean? I’m thinking, man, I’ve made a great amount of money, wholesaling properties, being so proactive out there and keeping a lot of the money for me and my family. Do I buy a Lamborghini Countach? Which let’s be honest is the best of all the Lamborghinis. I don’t want to hear about it. And all these new, fancy Lamborghinis. If you’re born in the eighties, you know about the Countach. Do you get something like that? Do you buy something badass like that? Or do you just do the boring thing and pay off your mortgage and not have a mortgage payment?
Well, I have decided to absolutely do it. On the back of your mortgage statement, at least on the back of mine, it has the payoff request number. It’s at 1-877-PAYOFF which is okay. I’m going to call that number. I’m going to get the payoff amount. I’m going to, you have to send it in. And then I assume they just take the funds and send you the deed, which is absolutely incredible. And from that day, from this day forth, or from the day that that goes through forward, I’m not going to be paying on my house. I’m going to own my house free and clear. The bank’s not going own my.
Let’s be honest, if you have a mortgage on your house, the bank owns your house. If you stop paying the bank, the bank takes your house. That’s not your house. That’s the bank’s house. Well, it’s about to be my house, baby, because I’ve worked hard. I’ve been proactive. I have called so many people. I’ve talked to so many people that get to this point where I am able to pay off my mortgage, have a healthy saving, have healthy investments and just get absolutely debt free as much as I can. I encourage all of you guys, all of you guys, if you guys are out there and you’ve made that beautiful, beautiful choice to wholesale properties, then you are going to experience this opportunity because you’re going to provide so much value in the marketplace that you’re going to get so much money back to you.
You personally, you and your family, to have the ability to pay off your mortgage, to pay off all debts, to go forward in life and only have to worry about the little bills that you have. It’s incredible. It’s like going back to high school or maybe junior high or elementary school where didn’t even know what bills were. I can’t wait for it. It’s like a weight being lifted off and I’m so excited about it. I encourage you to pay off your mortgage. I know my mentors would encourage you to pay off your mortgage. Do whatever you can to be debt free. Live that stress free life. Always talk to people on a regular basis, that’s how you get here. That’s how you get to the point where you can pay multiple hundreds of thousands of dollars off on your mortgage and be able to be debt free. I hope it helps. I hope it gives you a kind of a clarity on what at least I would do with the funds and my mental place. Till next time, love you. See you.

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