My husband wants to wipe out our $250K mortgage — even after we locked in a 2.5% refinance rate. How do I convince him that’s a bad move?

The average 30-year fixed mortgage rate in the U.S. was 7.32% as of late October. High borrowing costs continue to frustrate homebuyers, but plenty of homeowners are in a very different position. About half of all outstanding mortgages carry rates below 4.00%, and some borrowers who refinanced during COVID are sitting on ultra-low rates that make borrowing nearly free.

That kind of mortgage can be a huge win for your budget, since you are not paying much interest on a large loan. But it can also make the decision to become debt-free more complicated. Many people dislike carrying debt, yet with a very low rate, paying off a mortgage early can come with a major opportunity cost.

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Consider Jeremy and Becca, a married couple who own a home together. They still owe $250,000, and their mortgage rate is 2.5% because they refinanced during COVID. They have 25 years left on the original loan, and Jeremy wants to eliminate the balance early so they can be debt-free.

Becca thinks that idea is reckless given how low their rate is, and the disagreement has become a sticking point in their relationship. So what should she do: talk him out of it or back his plan?

The numbers argue against early payoff

On the math alone, Becca has the stronger case. Paying off a 2.5% mortgage early is usually not the best financial choice.

“At 2.5%, it almost never makes sense to pay it off early,” David Talley, CFP, founder of Talley Wealth, told Moneywise. “My own mortgage is around 2.5%. If you can reasonably earn more with the money invested than the debt costs you, keep the money growing and let it cover the interest. That’s interest rate arbitrage, and it’s what wealthy people do all the time.”

Talley said that, in general, if a mortgage rate is below about 5%, “you probably shouldn’t pay off the house,” and if it is below 3%, “you almost certainly shouldn’t.”

Michael Schramm, CFA, founder of Emotional Finance, also ran the numbers to show why speeding up repayment on such a low-rate loan could be a costly mistake. His example assumes a $250,000 30-year mortgage and an extra $500 a month paid from the beginning.

“Suppose you have a $250,000 mortgage at 2.5% and an extra $500 a month to put toward it,” he told Moneywise. “You’d pay the house off almost 13 years early and save about $47,600 in interest.”

That may sound appealing, Schramm said, but the same $500 could instead be invested in an S&P 500 index fund.

“The index has returned roughly 10% a year since 1928, although those returns aren’t guaranteed, so let’s assume a more conservative 7%,” he said. “If you instead invest the money at that rate, you’d come out roughly $248,000 ahead after 30 years. And that even assumes you’d invest your full mortgage payment once the house was paid off.”

In other words, Becca can reasonably tell Jeremy that focusing on early payoff could leave them nearly a quarter-million dollars worse off. From a financial standpoint, that is hard to justify.

Money also carries emotional weight

Still, personal finance is not only about spreadsheet logic.

“Money is as emotional as it is mathematical,” Schramm said. “Many people feel the weight of debt, especially if they grew up under scarcity or live with intense financial anxiety. If you care about the emotional relief of living in a home without debt, then by all means ignore the financial return and make that decision.”

Before Becca simply gives in, Schramm suggests Jeremy should work through what the mortgage means to him emotionally so he can feel more comfortable making the choice that makes the most mathematical sense. That could include reflecting on the feelings tied to the debt, journaling, and possibly speaking with a financial therapist.

Talley also said Becca should try to understand his perspective and look for other ways to meet the underlying goal.

“I’d start by agreeing on what paying it off is supposed to buy,” Talley said. “It’s usually security, and that’s a good thing to want. Being debt-free is an important goal. It just isn’t the goal.”

He offered the example of two people in front of you: one with millions in debt and no assets, and another with no debt and no assets.

“The first one has a whole lot more flexibility and options in life,” he said. “I’m exaggerating on purpose, because a paid-off house still has equity in it, but the idea rings true. If you pay off the house and then lose your job, yes, you don’t have a mortgage payment, but you’d probably feel a lot more secure with $250,000 in the bank.”

If Becca makes that case and Jeremy still insists on paying down the mortgage faster, the couple may want to compromise on a monthly amount devoted to early repayment after first handling other priorities, such as fully funding retirement accounts, building an emergency fund, and paying off any higher-interest debt.