Should I pay off my mortgage early or use this money to invest some where?

Question

I still have 25 years of mortgage,I also have 3 months of saving , 401K, IRA, Life insurance, living Trust....poeple offen said do not pay extra to your mortgage, use this money to invest, by the time I pay off my loan at 25 years later, I will be better off more money and own home free. Is any body do very sussefully in this way and how you get their.

Answer 1

Paying off your home is a good investment, but usually not the best one. Investing in the stock market usually beats it, and buying another property, if you've got the cash flow, blows it out of the water.

I actually answered this in depth, with numbers, here:

http://www.searchlightcrusade.net/posts/1139361917.shtml

Answer 2

Some questions to ask yourself ...

Is the interest you earn more than the interest you pay? If so, throw it into that.

But usually your mortgage interest is going to be higher. And take into consideration whether or not it's an adjustable. It may go way up at some point.

Ok, now, how bad do you need the interest write off on your taxes? Would it make a big difference if you didn't have it?

Do you have really high interest credit cards that need to be paid off? You may want to consider doing that instead or also.

I more or less believe that while making interest is great, if it's offset by paying more interest on something else I'm losing money even as it's sitting in the bank.

Good luck :)

Answer 3

Hello -

Many of my clients have utilized these principles with great success. You have mentioned that you have a 401(k) and IRA. Did you know that you can utilize your existing mortgage and take out dollar for dollar what you pay in interest 'TAX FREE'?

That is not tax deferred but Tax Free!

There is an excellent book by Douglas Andrews called Missed Fortune 101, it is a great read and details different scenarios so you can judge for yourself if you should consider such.

I've attended Doug's training seminars, and can say it has improved the quality of life of my clients. The program though is only good if you are disciplined on how you structure the programs.

Please let me know if you have any further questions.

Kindest Regards,
Darren Meade

Answer 4

Well, after moving several times, and being a seller and a buyer, and doing taxes, it would be good if you want to pay a chunk of it, then possibly remortgage if the interest rate is lower. But if you pay it all off, then the only deduction you'd have would be for the taxes. I don't know where you live, but in my state we get the home heating credit and tax and interest deduction.

In my opinion, I would use that appreciation value to make more money later. Unless you'd rather pay it off, remodel, then sell for a profit. Land values are really going up these days...expcept for where the serial killer is in Arizona. Wouldn't buy there.

Answer 5

That's easy - pay off the house first.

Remeber, you're paying probably 7% interest on that loan, after tax. If you can find another investment that will guarantee you more than 7% then invest in that, otherwise, pay off the house.

(PS Just taking a guess at 7%, thats the average interest rate here in Australia on a home loan).

Answer 6

Interest from the mortgage gets you a tax deduction, so you're not really losing a ton of money from having a mortgage. Your mortgage rate is also probably a lot lower than your rate of return if you played the stock market, or even put it in mutual funds. Go with investing.

Answer 7

Pay off your mortgage. Whatever your interest rate is...that's the GUARANTEED rate of return on that investment. As Dave Ramsey says, "The paid off mortgage has replaced the BMW as the new status symbol."

Answer 8

Paying off your house IS an investment...

Answer 9

pay off your mortgage...real estate IS an investment