Home Mortgages
Mortgages
If you plan to purchase a home in the future, I would like to encourage you to pay it off more rapidly than scheduled. When Danielle and I first began to understand God’s financial principles, we felt we were to pay off everything, including the home mortgage. We began to explore how we might accomplish this. Let’s look at some scenarios for paying off a home.
Let’s use the following scenario as an example:
Original Mortgage Term: 30 years
Original Mortgage Amount: 175,000
Annual Interest Rate: 5%
Calculate how much you will have saved over the life of the mortgage by adding:
$100 in the Additional Monthly Payment Box
$200 in the Additional Monthly Payment Box
$300 in the Additional Monthly Payment Box
By adding additional monthly payments to your mortgage you can save thousands of dollars while significantly cutting the amount of time to pay off your home. I would encourage you to make pre-paying (even a small amount) on your mortgage a part of your plan when buying a home.
There are two primary arguments against paying your home off early: (1) why pay off a low-interest home mortgage when you can earn more elsewhere? (2)You are losing a tax shelter because the interest paid on a home mortgage is a tax deduction.
Rather than addressing these arguments directly, we should recognize that our tax system is structured partially to reward indebtedness and penalize savings. We are taxed on interest earned, while interest paid on a home mortgage is treated as a tax deduction. However, in spite of our tax structure, the Bible encourages saving and discourages debt. Our purpose is simply to challenge you to seek Christ with an open heart to learn what He wants you to do.
Danielle and I felt the Lord challenging us to set a goal of trying to pay our home off in five years. We were newly married, our income was pretty low, and several of our friends thought we were crazy. If you added up the numbers, there was no way we could possibly pay off our home in that time. A little over four years later, through God’s amazing provision, we paid off our home and were completely debt free. It was an incredible time of seeing God do His part as we were faithful in our part.