COLORADO SPRINGS – With the Tax Cuts and Jobs Act in affect many Americans are now questioning if they should try and pay off their mortgages faster.
Carl Carlson, CEO of Carlson Financial, said, “One of the reasons not to in the past has been because you get the deduction in your itemized deductions for mortgage interests.”
Despite the tax reform, some people will still benefit from this.
“If you are that person that has a lot of other itemized deductions so if your state income taxes are high, your property taxes are high, you give a lot to a charity.”
However, the new tax reform also means some homeowners won’t be able to itemize “because they’re just giving them $24,000 in standard deductions so now that mortgage interest may not be as important.”
So the question now is whether or not you should pay off your mortgage ahead of time if the itemization isn’t really going to help you? Carlson said it really depends on the rate of your mortgage interest.
“Usually from a financial perspective you’re better off keeping that mortgage and that payment period doesn’t really matter.”
He said the longer you can keep your mortgage the better as long as it’s a low fixed rate. Just remember that you still have to be disciplined in saving money to ensure you don’t fall behind.
Carlson said in the past about 30 million people would receive that mortgage deduction. It’s now down to about 14 million.
Carlson Financial is a sponsor of Financial Focus.