There are three sayings often referred to as Chinese Curses the origins of which are shrouded in controversy.  Looking at the recent mortgage crises as well as the economic meltdown, it is not difficult to imagine the proverbs outlined below to relate to someone we know.

• May You Live in Interesting Times
• May you come to the attention of those in authority (sometimes rendered May the government be aware of you)
• May you find what you are looking for

The recent times have been interesting, full of unpleasant twists to people’s homes and mortgages . However the majority of homeowners still have their homes and are faced with lower values to their homes,  some much lower than what they had initially paid for it. Thus it is not surprising that one may be ambivalent about selling/short-selling and cutting one’s losses. This argument however is intrinsically flawed for the following reasons:

1. If you live in a home, it is worth 1000 times whatever value you put to it. Is a $400 per month rental apartment worth $400 dollars only to the family it provides shelter for on cold winter nights and rainy spring afternoons? Certainly not.

2. There s a limit beyond which a property’s price can not fall. At least there will still be a value for the land which the property sits on.

3. Prices just like many other things in this world go up and down, so why will we choose to sell/foreclose a property when it is at rock-bottom price only to get back onto the property ladder when prices are on the rise, say 5 or 10  years from now?

So regarding the debate about selling a home and going into rentals because of low property values, forget it.

Now back to what we are here to talk about, sometimes I come across this question:

Should I Pay Off My Mortgage Now?

My simple answer and I will go straight to the point is NO!

I have my reasons and please do not get mad yet:

If you will be carrying a credit card debt with a higher APR/APY.

If you will soon want a HELOC.

If you have other loans of higher interest rates.

If you do not have a lot of money in savings and invested for retirement.

If you will be late on other bills because of the payment.

Then indeed No.  Settle these turbulences in your finances first before paying off that low interest mortgage. When all these have been settled, of course you can pay off your mortgage and have more free money to add to your savings. There is even some more discussions about this topic on FrugalDad.com. Check it out.