My mortage has $66,000 remaining. I have $38,000 to blow. Pay the mortgage or invest in something else?

Question

I have no debt (other than the mortgage). I pay my bills in full every month.

Answer 1

Pay any other debt first, then the mortgage last.

What else is there to invest in? Look at the charts of the last 5.5 years.. Would you trust the Bush stock market with $38,000? No way, sister. Pay off your debt.

Answer 2

No more mortgage payments! Sounds like the ultimate in financial freedom, but it may not be the wisest move for everyone, say Bankrate financial experts Dr. Don and the Dollar Diva.
When does it make sense to pay off a home mortgage?
Paying off a mortgage is a good idea when you have a lot of money, a stable income stream, and a nice portfolio of securities working for you.

But before you think about paying off your mortgage, make sure you have all of your financial ducks in place. It's a lot easier to give money to your lender when you're flush than it is to get it back when you're needy.

Here's the position you want to be in:

You have no other debt.
You're making maximum contributions to your tax-deferred retirement plans.
You have enough cash in the bank to cover emergencies, such as an extended period of unemployment or major repairs on your home.
You have a comfortable portfolio of stocks and bonds working for you.
Remember, you don't have to pay off the whole mortgage at one time. You can gradually reduce the principal by increasing your monthly payments. You should be able to prepay without a penalty, but it's always a good idea to check with your lender just to be sure. The Diva thinks everyone should strive to have their home paid off by retirement. So, if you have all your financial ducks in a row, go for it.

You may decide to keep the money liquid instead. Remeber that should you change your mind down the road, there is usually fees associated in refinancing and pulling your equity out again. T

Answer 3

That depends on what your interest rate is. If you have a low interest rate on your mortgage you will be better off putting you money in an IRA or mutual fund. If you have a high interest rate you will be better off paying of the mortgage. You should also take into account your current retirement savings. If you do not have much in your retirement savings you should invest at least part of it no matter what. You may also want to look at put some or all of it in an interest barring savings account. You should always have an emergence fund of 3 to 6 months of your salary in case something happens.

One more thought. Take a look at the product linked below. They should cost $10000-$15000 installed. By having one of these installed on your house you could decrees or eliminate your electric bill which would mean more money every month. You could then take that extra money and invest or pay off your mortgage sooner.

Answer 4

It depends on your mortgage rate.

If you have a fixed rate and it's low under 5% invest 5 to 7% it wouldn't matter do what make the most happy, over 7% pay off the mortgage. Not fixed pay down you mortgage. But first make sure you have 6 month of wages saved up.

Good luck

Answer 5

It would depend on a variety of factors.

Is this your personal home? If so, you will substantially reduce your mortgage interest tax deduction, which could result in paying higher taxes over the next couple of years.

What rate are you paying on your mortgage? If the rate is a low 5%, you could easily invest in municipal bonds to earn tax free income at or better that rate. This could lead to creating a stream of passive income that could assist you in funding things further down the road. You could also invest in CDs with no risk of loss for more than 5%.

Do you have a specific investment in mind? Would investing in it generate a stream of regular income, or only on appreciation? What are the risks of loss?

Is there a prepayment penalty?

Do you have enough liquid cash to avoid borrowing from other sources for day-to-day activities? Do you have sufficient available credit for emergencies?

Answer 6

I would refinance for a lower interest rate. Make a "huge" down payment and lower the number of years on my mortgage if you have a 30 year mortgage get a 15yr so the house is paid off in full quicker.

Answer 7

Only tax_black and Joe W. seem to have a clear grasp of your situation, both the information you present AND the things you aren't yet thinking about (or mentioning).

Your question cannot be answered with any degree of certainty without qualifying and quantifying certain numbers. I mean, anybody can throw out numbers and generalities- but is that what you want?

Consider adding some information like your age,net worth,annual salary, and what else the money might be used for - because it would be irresponsible to give you a quick,easy answer UNLESS the answer was known to be provably correct.

Answer 8

Invest 1/3 in retirement, 1/3 savings in a high yield CD and use the rest to lower the house debt.

You'll be in good shape all around

Answer 9

The reason you have this money is because you are smart not to pay a lot of interest on other loans.You should make one large mortgage payment of 10,000 dollars and in a couple of months you will see amount of interest due will become less and this will encourage you to do it again in a few months.

Answer 10

Invest part of that 38k in some good stocks or mutual funds. Maybe some cd's or an IRA for the rest. 38k won't pay off the note, nor will it take the payment down. Something bad happens and if you can't make the payments you will be screwed by the noteholder.