would it be better to pay off your entire mortgage or invest in a retirement account (403b)?
2006-07-22 14:51:29 · 7 answers · asked by stevenpdk2000 1 in Business & Finance ➔ Investing
Probably the mortgage, for the following reason:
Once the entire (as you said) mortgage is paid off, whatever income stream you were using to pay the mortgage is now available for WHATEVER purpose you see fit. This gives you more options.
You could, for example, if you are worried about your retirement savings, allocate more of your income--which will now be tax-deferred--to the 403(b). You will be able to afford this, because you now have more income freed up.
Although the mortgage interest was probably deductible from your income for income tax purposes, how much you get back depends on your marginal tax bracket. I don't know what that is, but it really doesn't matter, because one does not get rich giving away dollars and getting back at most 35 cents. Be on the collecting side of interest, and not on the paying side!
Another possibility, and quite a good one, is to pay off the mortgage, and use the income stream you would have been using to pay the mortgage to pay off your next debt. When it is paid off, you have an even bigger freed-up income stream to play with. Just keep doing this until all debts paid.
If you had put the money into a 403(b), your options are limited. They are limited to the investment options provided by the plan administrators. Suppose that it ended up in a stock or bond fund, which then plunged in value due to market conditions. You would then have LOST your windfall. By paying off the mortgate, it is SECURE (it's yours, and not just a paper profit), and it is turned into an income stream, so that you don't have to worry about the possibility of losing it all at once in a bad investment.
2006-07-22 15:40:00 · answer #1 · answered by Atash 2 · 1⤊ 0⤋
It depends on what your monthly payments are, what your monthly discretionary fund amount is, what your interest rates are, what your credit score is, who the company you would invest a 403B is (ask the people from Enron this question), and how much you would lose on tax exemptions from paying a mortgage. I recommend you consult a CPA before you make a HUGE decision like that, you don't have to go with what they recommend, but at least you will know your options better.
2006-07-22 22:54:23 · answer #2 · answered by Christopher B 6 · 0⤊ 0⤋
Depends how much longer you have to pay on your mortgage and the interest rate...based on that information, if you would make more money monthly investing than paying off your mortgage/making the payment you should take that option.
If you carry a high balance on your mortgage, consider at least paying it down to take the PMI off the loan...which would lessen your mortgage payment.
2006-07-22 21:58:59 · answer #3 · answered by BritLdy 5 · 0⤊ 0⤋
Large sum is relative, but if that sum could have you living mortgage free, it would be real easy to start puting away money after that.
As long as you won't be blowing the money after the mortgage is paid off on garbage....then i say pay off the mortgage...
2006-07-22 22:45:24 · answer #4 · answered by Nick C 3 · 0⤊ 0⤋
mortgage...i gotta live good while im alive and kickin...not gettin ready to kick da bucket
2006-07-22 21:54:34 · answer #5 · answered by troubleclefnyc 1 · 0⤊ 0⤋
Save up more money...then u can do both.
2006-07-22 21:54:59 · answer #6 · answered by Layla 3 · 0⤊ 0⤋
Neither.
2006-07-23 02:52:01 · answer #7 · answered by SweetBrunette 5 · 0⤊ 0⤋