By Dr Dave Schalow, PhD, CLU, ChFC, CFA, CFP

Financial Success | November 1, 2026

Students in my financial planning classes often asked whether they should pay off their home mortgage. It is a reasonable question, and a simple yes or no leaves out too much.

I like to organize the discussion around three issues: the actual tax benefit, other uses for the money, and the value of peace of mind.

1. UNDERSTAND THE TAX BENEFIT YOU ACTUALLY RECEIVE

A deduction doesn't make an expense free. If you pay $10 in interest and receive a hypothetical $3 reduction in taxes, you are still out $7. The illustration isn't a statement about your tax rate; it shows why keeping an expense solely for a deduction can be misleading.

Mortgage interest isn't automatically deductible for everyone. IRS Publication 936 describes requirements that include itemizing deductions and having qualifying debt secured by a qualified home. Limits and other conditions can apply.

Ask a qualified tax professional what benefit you actually receive. Don't assume that every dollar of interest reduces your tax bill.

Source: IRS Publication 936, Home Mortgage Interest Deduction — https://www.irs.gov/publications/p936

2. COMPARE THE ALTERNATIVES AND THE RISKS

Money used to reduce a mortgage balance isn't available for another purpose. Consider emergency reserves, other debts, retirement savings, and foreseeable expenses before committing a large sum.

Compare the interest you could avoid with the potential return from an alternative use. Be careful with that comparison: an uncertain investment return isn't equivalent to interest you would no longer owe. Include relevant taxes, costs, and your ability to tolerate losses.

Also consider access to the money. Home equity isn't the same as cash in an account, and borrowing against it later may involve costs and approval.

Review your loan terms. Some mortgages have prepayment penalties; the Consumer Financial Protection Bureau recommends checking with the lender before making a large early payoff. Confirm how any extra payment will be applied.

Source: CFPB, What is a prepayment penalty? — https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/

3. INCLUDE PEACE OF MIND

For some people, owning a home without a mortgage is an important personal goal. A lower required monthly payment may provide flexibility, particularly as work and retirement plans change.

That preference deserves a place in the decision alongside the numbers. Paying off the loan doesn't eliminate property taxes, insurance, maintenance, or other costs of owning the home.

MAKE A DECISION THAT FITS THE WHOLE PLAN

This discussion also applies to a modest extra monthly payment, not only a full payoff. Compare reasonable options, protect needed cash, and understand the loan and tax details.

​The best answer is the one that fits your broader finances and priorities, with the tradeoffs clearly understood.