I have a condo that I bought for $223,500 about 1-1/2 years ago. I initially had a 30-year loan of about $123,500. Considering the tax benefits for interest deductions versus added costs for interest payments, is it better (from a financial perspective) to continue my monthly mortgage payments OR to buy the condo in full with money from my mutual funds?
2007-01-12 20:52:35 · 5 answers · asked by KGJ 5 in Business & Finance ➔ Renting & Real Estate
Most people that say "morgage payments are tax deductable" really do not know what they are talking about. Of course you get a tax break, but you are correct, you are paying MORE interest than you are saving on your taxes. If you had a 6% mortgage, after the tax break, you are probably paying the eqiv of 4%.
If you can get more than 4% AFTER TAX RETURN from your mutual funds (which you can probably get), then keep the money in the mutual fund. Also, if all you have is $123,500 in mutual funds, that DEFINIATELY keep the money. You might need it for something important
2007-01-13 03:19:01 · answer #1 · answered by NYC_Since_the_90s 6 · 0⤊ 0⤋
It sounds like you're financially OK.
I would keep the mortgage (and mortgage interest deductions) and keep the mutual funds.
If your mutual funds have a higher return than the interest rate on your mortgage, then you're arbitraging. You're effectively borrowing money (the mortgage) at one rate and putting it out to work at a higher rate of return (the mutual funds).
This arbritage plus the tax deductions plus keeping money liquid is more compelling to me than having the condo paid off.
2007-01-12 21:55:25 · answer #2 · answered by greebyc 3 · 1⤊ 0⤋
nicely in the experience that your credit is undesirable 2 issues could take position: a million. pastime price will be SKY severe 2. Declined for the deepest loan So my suggestion will be: First attempt to get the deepest loan. are you able to or your fiance qualify for the deepest loan by using yourselves. placed it in the call of the single with more suitable constructive credit. if that doesnt artwork: in case you're certain that it is amazingly a lot and there is not any longer some thing incorrect with the abode: Have your mom-in-regulation get the abode. She'll nevertheless be paying decrease pastime price than you would once you've spotty credit. per chance she could re-fiance or (promote) it to you down the line sometime. All this advise is presented that the abode is amazingly a lot & you want the abode and plan on being to blame and procuring it.
2016-10-30 23:50:25 · answer #3 · answered by pour 4 · 0⤊ 0⤋
It's better to take out a loan for a mortgage and enjoy the tax benefits and the refinancing benefits in order to make the most of your equity.
If you pay for your home in full, you will be asset happy, but cashflow poor and probably will never have time to enjoy the house you've paid for in full because you'll be working hard to replace your mutual funds etc.
2007-01-12 20:59:45 · answer #4 · answered by Muga Wa Kabbz 5 · 1⤊ 2⤋
Talke out a loan for a mortgage.
2007-01-12 20:59:50 · answer #5 · answered by Anonymous · 1⤊ 3⤋