I have started to pay off my house is that a good move or a bad one?
2006-11-06 12:53:33 · 10 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Some people have told you to pay off the house; others have told you to invest your money in investments that have a higher rate of return than the interest rate you're paying on the mortgage. There is one important factor to consider that no one has mentioned: any investment that yields a higher return than the interest rate on your mortgage is probably going to involve some risk. Even if you invest in government bonds, the value can go down if interest rates go up. Even if you invest in a money market fund or CD, there is "reinvestment risk"--the possibility that the return will be lower in a year than it is now.
If you pay off your mortgage, however, you will get a guaranteed risk-free return equal to the interest rate on your mortgage. If your mortgage is 6%, a guaranteed risk-free return of 6% is better than anything you can find in the stock or bond market or any other investment, for that matter. So in the end, I have to agree with the people who say you should pay off your mortgage. It's probably the best risk-adjusted investment you can make.
2006-11-06 13:22:10 · answer #1 · answered by matthew s 2 · 0⤊ 0⤋
Totally insufficient information to give a valid response . .
How much is the interest rate ? How much more would you get in a investment account with the $$.
It is about the math, you must know the difference between what you would be getting in an investment and the % rate you would be saving on the mortgage.
If you can get a greater % return on and investment than the % rate on the mortgage, put the $$ there. If the mortgage % is higher than any of your portfolio returns, then pay on the mortgage.
2006-11-06 13:01:41 · answer #2 · answered by kate 7 · 0⤊ 0⤋
It's good! The only downfall of paying off the house is that you cannot claim the interest on taxes. But really though, if you have no house payment every month, you will have lots of extra cash.
Also, when you go to sell, it's more money that you will get from the sale.
I think it's a good thing.
2006-11-06 12:56:00 · answer #3 · answered by kay S 4 · 2⤊ 0⤋
Look at you house as if it were your big personal piggy bank. The equity is not doing anything for you at this time. If you could find an investment opportunity to invest your equity to make money for you then why not. Let you house work for you not you work for your house.
2006-11-06 12:57:26 · answer #4 · answered by Speedy 8 2 · 0⤊ 0⤋
Unless you have some unique situation, it's usually wiser to put that extra money into some other sort of investment that will give you a greater rate of return.
2006-11-06 13:02:00 · answer #5 · answered by Brooke22365 4 · 0⤊ 0⤋
its always a great thing to do if you are residing in the house....once you build enough equity you may consider borrowing against it for an investment property or other type of investment
2006-11-06 12:56:31 · answer #6 · answered by askaway 6 · 1⤊ 0⤋
Depends on if you could make more money with the cash on hand or with interest saved.
2006-11-06 12:57:33 · answer #7 · answered by Anonymous · 0⤊ 0⤋
good. a paid off house is a good thing.
2006-11-06 12:57:09 · answer #8 · answered by dt 5 · 1⤊ 0⤋
Probably a good one.
2006-11-06 13:00:44 · answer #9 · answered by Anonymous · 0⤊ 0⤋
depends if you get a penalty from the bank? find out
2006-11-06 12:55:44 · answer #10 · answered by Jayde 1 · 1⤊ 0⤋