2006-10-17 03:53:59 · 6 answers · asked by David F 1 in Business & Finance ➔ Personal Finance
Here is what you would want to do. And I am guessing you have at least $1,000 for an emergency right now.
Step 1: Make sure you don't have any other debt that you should pay off. Ex. Credit Cards, Loans, Cars anything like that. If you do put that money on it and pay off your debt. If you don't go to Step 2
Step 2: Have a 3 to 6 month emergency fund incase something happens you don't have to borrow the money back. The worse thing that could happen is you pay your house off but don't have an emergency fund and you have to re-brow the money on your house.
Step 3: Max out your retirement for this year. If you have a Roth max it out with this money or any other retirement account you have (401k etc) You should be putting 15% of your gross income into retirement anyway after all debt is paid off.
Step 3b: If you have kids max out their college account for this year in a tax-exempt account. If you don't have kids skip this step.
Step 4: Pay off the house! DO NOT TAKE OUT A LOAN ON YOUR HOUSE TO INVEST WITH!! You are putting your house at risk. If you get a loan on your house at 6% and you invest in the stock market and get the average 12% return you net 6% but that does not take into account the risk you are putting on your house. If you lose your job and can't pay the mortgage then you could lose your house. That is not worth a 6% return. After inflation you might net 3% so you just lost your house for a 3% return on your money. That’s a bad move.
Step 5: Become very rich!!!!
I hope this helps.
2006-10-17 04:55:48 · answer #1 · answered by remanagermark 3 · 0⤊ 0⤋
It depends on what sort of mortgage it is. Sometimes there are penalty clauses for paying it off sooner than scheduled which is something you need to check. Also, sometimes if you are going for more credit in the future, then it can help with your credit rating if you have a mortgage. You may also find it easier to get another, bigger mortgage if you decide to move if you already have a small one.
On the other hand, if you are not planning to move any time soon and have no need for more credit and you can afford any penalty clause if there is one as well, it would be great to be free of the mortgage millstone.
If you have an endowment, I would keep that on until the end of the term as you wouldn't get anything like the final payout if you cashed it in now.
2006-10-17 04:11:51 · answer #2 · answered by Anonymous · 0⤊ 0⤋
It depends on your mortgage rate and if you have any loans or credit cards outstanding at a higher rate. Obviously you pay off the higher rate ones first. Some people are actually mortgaging to invest because some investments pay better than the rate they are paying on the mortgage.
2006-10-17 04:32:12 · answer #3 · answered by Mike10613 6 · 0⤊ 0⤋
Pay it off and get another, buy a small flat and rent it, use your wage to match the rent income to pay the new mortgage.
Invest, Invest, Invest.
2006-10-17 04:03:58 · answer #4 · answered by speedball182 3 · 0⤊ 0⤋
pay it all off when you have the chance to pay it all off....if oyu do this then when you are through paying it off all the other money is for you....it won't have to go anywhere...
2006-10-18 02:40:21 · answer #5 · answered by Fiddlegirl 1 · 0⤊ 0⤋
it is so nice to live without mortgage payment, but talk with your tax adviser if this will be beneficial for you.
2006-10-17 05:57:17 · answer #6 · answered by bianca 4 · 0⤊ 0⤋