Should You Pay Off Your Mortgage Early or Use Leverage to Build Equity?

Dave Ramsey’s approach to debt is well known throughout personal finance circles: avoid credit card debt, live within your means, and work toward paying off your mortgage as quickly as possible. Matt Cheney, a Compass Real Estate advisor serving Washington DC, Northern Virginia, and Maryland, agrees with much of that philosophy, particularly the parts about avoiding overextension and steering clear of revolving debt. Where Matt Cheney sees things differently is on the subject of mortgages themselves, and whether paying one off ahead of schedule is often the smartest move for every homeowner, depending on their financial situation, goals, and current market conditions.

What Dave Ramsey Says About Paying Off a Mortgage

Ramsey’s guidance generally centers on becoming debt free, including mortgage debt, as a foundation for financial security. That approach appeals to many homeowners who want the peace of mind that comes with owning a home outright. It is a philosophy built around eliminating risk and simplifying monthly obligations, and for some households, that priority makes sense.

Why Matt Cheney Sees Leverage Differently

Matt Cheney often points to his own parents’ experience buying a home in the 1980s as an example of how leverage, meaning the use of mortgage financing rather than avoiding it, can work in a homeowner’s favor over time. His parents purchased their house with a mortgage rate of 12.5 percent, a rate that would be considered exceptionally high by today’s standards. Rather than waiting on the sidelines for lower rates, they moved forward with the purchase.

Over the years that followed, they were able to refinance into lower rates as conditions changed, while building equity in the home the entire time. Matt Cheney contrasts that outcome with what might have happened had they waited: years without home equity, and the possibility of being priced out entirely if home values continued climbing while they saved.

Today’s Rate Environment and What It Means for Buyers

As of August 27, 2026, the average 30-year fixed mortgage rate stood at 6.66 percent, according to Freddie Mac’s Primary Mortgage Market Survey. That is well below the 12.5 percent rate Matt Cheney’s parents faced in the 1980s, though higher than the rates many buyers grew accustomed to in the years before 2022.

Matt Cheney’s point is not that today’s rates are ideal. Rather than waiting indefinitely for a rate environment that may or may not arrive, buyers who are otherwise financially ready can weigh the option of purchasing now and revisiting refinancing later if rates decline. No specific future rate movement is guaranteed, and any refinancing decision should be based on a buyer’s full financial picture at that time.

Weighing Mortgage Payoff Against Building Equity Through Leverage

Today’s rate environment plays a role in how buyers weigh mortgage strategy.

There is no single right answer for every homeowner. Paying off a mortgage early can reduce total interest paid over the life of the loan and can lower a household’s fixed monthly obligations, which appeals to buyers who prioritize simplicity and reduced financial risk. Maintaining a mortgage rather than aggressively paying it down can allow some buyers to purchase sooner, preserve cash for other goals, and potentially build equity through market appreciation over time, though results vary by property, purchase price, timing, and broader market conditions.

This is general real estate discussion, not personalized financial advice. Whether it makes more sense for a specific homeowner to pay down a mortgage early or maintain leverage depends on that household’s income, savings, risk tolerance, interest rate, and long-term goals. No specific equity growth or financial outcome is guaranteed, and buyers weighing this decision should speak with a financial advisor, CPA, or lender who can review their complete financial picture.

Frequently Asked Questions About Mortgage Payoff and Leverage

Is it better to pay off a mortgage early or keep the leverage?

It depends on the homeowner’s financial goals, risk tolerance, and interest rate. Some buyers prioritize being debt free, while others prefer to keep cash available and let leverage work over time. A financial advisor can help weigh the options for a specific situation.

How does today’s mortgage rate compare to past decades?

According to Freddie Mac, the 30-year fixed rate averaged 6.66 percent as of August 27, 2026. That is a fraction of the 12.5 percent rate common in the early 1980s, though higher than the rates seen for much of the 2010s and early 2020s.

Does carrying a mortgage guarantee equity growth?

No. Equity growth depends on market conditions, the specific property, and how long a homeowner stays in the home. No specific outcome is guaranteed.

Should a buyer wait for rates to drop before purchasing?

That depends on individual circumstances. Some buyers choose to purchase when they are financially ready and consider refinancing later if rates decline, while others prefer to wait. Future rate movement cannot be guaranteed, and a lender or financial advisor can help evaluate the options.

Matt Cheney encourages buyers and sellers across the DC, Northern Virginia, and Maryland market to reach out directly with questions about financing strategy, current rates, or how leverage might apply to their specific situation. Visit mattsold.com to explore current listings and market insights, or contact Matt directly for a current market analysis.

Watch Matt Cheney’s original take on this topic in the video that inspired this post.