primary residence 30 yr loan
2007-01-30 13:22:33 · 9 answers · asked by Jack 1 in Business & Finance ➔ Personal Finance
it depends upon your cash flow situation and your longer term plans.
how long you plan to stay in the house, the interest rate on the loan, your tax rate and your savings/safe investment rate for the money you would otherwise be putting into the mortgage payment.
do the math...
DL
2007-01-30 13:30:22 · answer #1 · answered by Anonymous · 0⤊ 0⤋
One of the great myths of financial thinking in the last 40 years has been the idea that you are somehow profiting by writing off (deducting) mortgage interest. Only in the last few years has this myth approached reality when the APR for most mortgage loans dropped below 6%.
Another answerer gave a better and more detailed answer concerning how to do the math here. But he did give what I consider the worst possible advice on one issue. He suggested rolling your credit card debt into a 2nd Mortgage. Never ever do this.
In the event that disaster strikes and you can't pay the credit card company, well that's a tough spot to be in. But if you can't pay the bank back, they will take the collateral you put up -- your house!
2007-01-30 14:37:05 · answer #2 · answered by Anonymous · 0⤊ 0⤋
There are many different views on this question. I, personally, believe your home should always be paid off first. If tax deductions are a problem, you could always get a home equity loan that will be available for any major purchases and that would be deductible. I'm not certain what your financial circumstances are, but I always believe a good financial planner is a good person to consult.
There are many people available to watch and learn from. Suze Orman's show is very informative and her books are wonderful. Also, Pat Robertson from the 700 Club is great. My understanding is that his father was a senator from Virginia and head of the Banking Commission, and he does quite well with his own investments and seems to keep his finger on the pulse of the market. I'm not certain about books, but I do know he has a wonderful DVD on finances.
My sons are in the film industry in CA and, needless to say, are exposed to extremely wealthy people, and no matter how much smarter the big money people think it is to keep a mortgage on your house, his C.P.A. advises all his clients to pay their home off. It all boils down to the "sleep factor". How much money can you owe and still sleep. That is something only you can judge. I will definitely pray for God to give you wisdom.
2007-01-30 14:50:48 · answer #3 · answered by Jackie S 1 · 0⤊ 0⤋
Having done mortgages for 18 years, I think the key analysis to your question should be based on what other debt you have. For example, let's presume you have a 6% interest rate on your mortgage. Presuming you do not get hit by the Alternative Minimum Tax, your net tax benefit probably brings your annual cost on the mortgage interest rate to about 4% or so. If any of your credit cards are at 4% or higher you would serve yourself better financially by paying off those first for a variety of reasons:
a) Credit card interest for individuals is not tax deductible
b) There is good debt and bad debt: mortgages are good debt and credit cards are bad debt (pretty simple)
And if your rates on the credit cards are REALLY high, then maybe you should consider wrapping them into a new 2nd mortgage or HELOC so you can get the tax deduction and also lower your overall cost of borrowing.
Now, if you have no credit card debt, that opens up a completely different analysis. You need to look at your annual ROI (return on investment) on the money in the bank that you would be using to prepay your mortgage. You may end up costing yourself money by prepaying your mortgage.
2007-01-30 13:47:00 · answer #4 · answered by Mortgage Mac 1 · 0⤊ 0⤋
Obviously paying it off.
The Mortgage tax deduction is a DEDUCTION, not a credit. You get back maybe 10-15 cents on the dollar, and that's only what you pay ABOVE your standard deduction (for me, being married, thats anything over $10,000)
You'll never make MORE by taking the deduction.
2007-01-30 14:48:12 · answer #5 · answered by Anonymous · 1⤊ 0⤋
Depends on what you want. If your goal is to build wealth, it's a no brainer. Invest the extra money in the stock market and get 12% as opposed to paying off your morgage early to save 6%. Plus the tax deduction. However, from an emotional standpoint there is a lot to be said for having a paid for home. Both are good ideas. Do what is right for you.
2007-01-30 16:57:35 · answer #6 · answered by Big R 6 · 0⤊ 1⤋
It depends on how much interest you are paying on the mortgage. If the money used to pay off the mortgage is earning more interest than the interest rate of the morgage then it might not be beneficial. The mortgage tax deduction will have to be factored in to see if really makes sense.
2007-01-30 13:30:40 · answer #7 · answered by stlouiscurt 6 · 0⤊ 0⤋
That depends on your filing status and what the standard deduction would be. Also consider that your preventing the governement from waisting $15 to $40 dollars on every hundred that you pay in interest.
2007-01-30 13:32:36 · answer #8 · answered by pretender59321 6 · 0⤊ 0⤋
If you have the means to pay off the mortgage.. pay it off...
The tax break isn't such a big deal. For example, why would you pay Countrywide $10,000 in interest to keep from paying the government $2500 for the taxes you would incur on this income if you could keep it.
2007-01-30 16:34:45 · answer #9 · answered by Jen G 5 · 0⤊ 0⤋
if you have a high income ; the interest is a tax deduction . paying it a little faster will help your budget when you are retired with possibly less income. other people who consider risktakers yank out the equity and invest into more real estate. see a CPA for best advise
2007-01-30 13:30:42 · answer #10 · answered by pahump1@verizon.net 4 · 0⤊ 0⤋