Pay off mortage early?
Jobsite asked:
I have a 15 year fixed rate mortage at 7.5% that I have about 4 years left on. My balance is $23,000 and over this time I will have paid $3,700 in interest. Should I pay it off? Seems to me that leaving the $23,000 in the bank even at a minimal return at 3.5% I would still be ahead doing so. And then there is the fact that my mortage interest is deductible (I have few deductions left). This mortage is on a vacation home and our main house was paid off several years ago. Just does not seem to be any real advantage to paying off the loan – agree? We have no other debt. Thanks
In regars to stan c. I am 11yrs/15yrs = 90% thru the mortgage. And I also have paid 90% of the total interest that would be paid over the full duration of the mortgage. When I itemize for taxes I do get to claim the real estate taxes but also mortgage interest which aides in my decision to not pay off the loan as others have already stated. Plus I can take my cash and buy some stocks at basement prices right now!
Cory
I have a 15 year fixed rate mortage at 7.5% that I have about 4 years left on. My balance is $23,000 and over this time I will have paid $3,700 in interest. Should I pay it off? Seems to me that leaving the $23,000 in the bank even at a minimal return at 3.5% I would still be ahead doing so. And then there is the fact that my mortage interest is deductible (I have few deductions left). This mortage is on a vacation home and our main house was paid off several years ago. Just does not seem to be any real advantage to paying off the loan – agree? We have no other debt. Thanks
In regars to stan c. I am 11yrs/15yrs = 90% thru the mortgage. And I also have paid 90% of the total interest that would be paid over the full duration of the mortgage. When I itemize for taxes I do get to claim the real estate taxes but also mortgage interest which aides in my decision to not pay off the loan as others have already stated. Plus I can take my cash and buy some stocks at basement prices right now!
Cory
December 25th, 2009 at 1:22 pm
Mildred
yes with the times being the way the are is also nice to have a nice chunk of money in case it gets any worse!!! i.e. job loss!!!!
December 26th, 2009 at 2:48 am
Holly
Am I missing something here, your are paying intrest at 7.5% and you investment will return 3.5%?
Then pay off the mortage!
December 27th, 2009 at 3:42 am
Tonya
I agree, plus have some money in the bank will be handy for emergencies.
December 29th, 2009 at 4:23 am
Lydia
I agree. There is no benefit to paying the mortgage off. However, there is always a benefit to maintaining liquidity. In the event that an unforeseen emergency or an unforeseen opportunity should arise, you will have the availability to respond with this cash if you wish to do so.
Whenever you do pay off the mortgage, the lender will or should provide you with a Mortgage Discharge along with your other payoff documents. Be sure to record this document at the Registry of Deeds. It is always a time consuming and inconvenient problem to track these down years later when you wish to sell or transfer the property, especially if your lender has gone through a merger or two.
December 30th, 2009 at 5:48 am
Ruth
Great answers but I have to disagree. Since you’re half way thru the mortgage, you already paid about 70% in interest. You get your break from the real estate tax, not the interest. If you have any doubts, just ask a CPA or a tax lawyer.