There’s lots of advice about mortgages out there. Much of this advice centers on how to get a mortgage, but what if you already have one (like two-thirds of Americans do)?

Fewer people talk about how to handle your mortgage once you’ve signed on the dotted line.

Most of us pay the mortgage payment set by the bank without thinking twice about it. We also tend to hold onto mortgages for the full term because they’re “good debt.”

We may not know everything about mortgages, but we know enough…or do we?

What if I told you that one of the long-held beliefs about mortgages actually isn’t true?

With tax season upon us, I’d like to take this opportunity to bust a mortgage myth that I hear thrown around a lot.

Mortgage myth: You should keep your mortgage for as long as you can because you get a tax break.

Reality: Keeping a mortgage for the tax break is not a smart money move and costs you more money.

While you do receive a tax break when you pay mortgage interest, it’s a bad reason to hold onto your mortgage. Let’s look at this deeper.

This is probably a good place to remind you that I’m not a tax professional, and this post is provided purely for informational purposes. See my disclaimer for more details. See a tax professional for information specific to your situation.

Tax credits vs. deductions

There are two types of tax breaks—credits and deductions.

A tax credit reduces your tax liability dollar for dollar. For example, if you qualify for a $1,000 credit, you would owe $1,000 less on your taxes.

A tax deduction reduces your taxable income. If you qualify for a $1,000 deduction, the amount you save on taxes would depend on your tax rate. Someone in the 15% bracket would owe $150 less, while someone in the 25% bracket would owe $250 less.

Clearly if you’re looking for a tax break, tax credits are the way to go.

The math behind the mortgage tax break

I’ve got a great deal for you: If you pay me $100, I’ll get you out of paying $25 to someone else!

Clearly, I’ll have people beating down the door to take me up on this offer, right?

That’s exactly the deal people sign up for when they decide to hold their mortgages for the tax benefits.

The mortgage tax break is a deduction, rather than a credit, which is the major reason that the logic of holding onto a mortgage for tax purposes breaks down.

Let’s say you have a $200,000 mortgage on a 30-year term, and you pay about $10,000 in interest each year. Let’s also say you’re married, and your household income is $100,000.

This income puts you in the 25% tax bracket for the 2017 tax year (assuming you file jointly).

The $10,000 in mortgage interest that you paid during 2017 is deductible from your taxable income, putting your taxable income at $90,000. That’s $10,000 less that you have to pay taxes on. Yay!

Wait a minute…

via GIPHY

Congratulations! You just paid the bank $10,000 in interest to avoid paying the government $2,500 in taxes. No bueno.

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Another big consequence of keeping your mortgage

On top of that great deal you’re making with the bank and the IRS, keeping your mortgage for the full term costs you more in interest.

If you pay a $200,000 mortgage over 30 years, you’ll spend an additional $134,000 in interest. The same mortgage paid over 15 years will cost you $62,000 in interest—less than half.

If you can pay that mortgage off even sooner (we’re aiming for 5 years), you’ll save even more!

Have I convinced you to step over to the dark side and ditch your mortgage yet? If so, these tips will help you pay it off faster. These are some of the same tips we used to pay off $47,000 in debt last year alone.

1. Figure out why you want to pay off your mortgage. Don’t do it just because I said you should. You have to want to do it. What’s your motivation?

2. Know the details of your mortgage. Include the servicer, interest rate, and minimum payment.

3. Create a budget, if you don’t have one. This will show you where your money is going and how much extra you can put on your mortgage each month.

4. Find ways to cut your expenses. Get rid of services you don’t use. Use coupons. Shop items on sale.

5. Find ways to increase your income. Pick up side jobs. Sell stuff you no longer need.

6. Make payments twice a month. This will reduce the amount of interest that accrues on your mortgage and save you money.

7. Celebrate your progress. Break your mortgage into smaller chunks and celebrate each time you hit a milestone. For example, you could celebrate every $50,000 you pay off. This will keep you motivated to keep going.

Final words

Obviously, there’s nothing wrong with having a mortgage and taking advantage of the tax benefits that come along with that while you’re paying on it. We have a mortgage, too, and we took advantage of the deduction for our taxes this year.

If you happen to have money sitting around that you can use to pay that mortgage off, though, do it now!

If you’re like me and will need a little more time to pay it off, that’s cool, too. You can take advantage of the tax deduction in the interim.

I just don’t want you operating under the misconception that you’re making a smart money decision holding onto your mortgage for the tax benefit. That deal never works out in your favor.

Do you have a mortgage? How long do you plan to take to pay it off?

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