Should I pay off my mortgage?

Question

I am on disability and can afford to pay off my mortgage in wich I
pay $750 per month interest. I have no other income but, do own a second home. (New York)


Thank you

Answer 1

If you are on a fixed income, it is in your best interest to pay off your mortgage. The house is like any other investment and if you do the math, paying off the mortgage is an obvious benefit versus paying that interest payment each month (which can then be directed towards other investments). This question is an ongoing debate but in your situation I say pay it off.

Answer 2

If you live in the US, you can deduct your mortgage interest from your yearly income tax. You should be balancing this off over other benefits to paying off your mortgage.

Do keep in mind that you will have more disposable income on a monthly basis with your mortgage eliminated. There is also an emotional freedom to being mortgage free! This could be valuable enough to you that paying off your mortgage makes sense.

The question is: will your disability payment be reduced if you no longer have the monthly requirement to pay your mortgage? (Government disability payments are often geared to your expenses.) Will you end up paying a lot more in income taxes if you pay off your mortgage? That could also affect your decision. Talking to a good tax planner would really help you evaluate this decision in light of your overall situation.

Answer 3

You should pay it off that way your not paying all the interest. If you decide to sell or need to at some pt get a home equity loan... it will be nice that you own the home outright. The only thing to consider is any tax benefits you get for paying a mortgage payment (interest) or something like that.

Answer 4

Well, because you are on disability you will not be able to get the tax credit. Unless you are married. But you never want to money against the interest you want to pay the principle of your loan which eventually lowers the interest at the end of the loan. Now, with the second home what do you plan on doing with it?

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Answer 5

If you are on disability you are not in need of tax deductions. I say payoff the mortgage and give yourself the extra breathing room each month. You can't take it with you...may as well live comfortably now.

I write a blog on the subject of credit management, mortgages, real estate trends, etc. Check it out for more information that may be helpful.

Answer 6

With the current slump in housing sales, the slow rise in pricing,and a surge in the stock market I would leave my money in mutual funds or wherever you have your money now. I'm currently in the same position and until Jan of 2007 I'm leaving my money in my mutual funds, I will reassess my position at that time.