2007-07-18 11:31:22 · 3 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
It depends on how much other interest paying accounts you have. I wouldn't pay off my low interest mortgage if I had a high interest credit card loan, but if you are about to be debt free that would be wonderful!
2007-07-18 11:51:15 · answer #1 · answered by Nelson_DeVon 7 · 0⤊ 0⤋
Getting out of debt is ALWAYS smart. As Ronald E B stated, taking money form a retirement account to do so is almost always a bad idea. Someone will probably tell you not to pay of the mortgage for tax reasons. The ONLY tax deduction that requires a mortgage is the mortgage interest. If you pay $1000 in interest, and are in the 24% tax bracket, you save $250 in taxes. In other words, you give the bank $1000, to avoid giving the IRS $250. I would rather have the $750.
2007-07-18 19:55:14 · answer #2 · answered by STEVEN F 7 · 1⤊ 0⤋
It wouldn't be wise to take money from an IRA or 401k to pay off the mortgage. If you suddenly inherited some money and were faced with the choice of paying off the mortgage or investing it elsewhere, you would need to look at the interest you are paying on the mortgage, and the rate of return you could expect on the investment and the tax consequences of both.
It is nice not to have a mortgage payment. You get to take the standard deduction on your tax return which may be almost as much as your itemized deductions with mortgage interest. The money that you had paid to the mortgage company can now go towards increased retirement savings, etc.
2007-07-18 19:32:04 · answer #3 · answered by skipper 7 · 0⤊ 0⤋