I'm often asked, "Should I pay off my mortgage." My answer is always different.Why? There are a number of variables that go into making such an important decision.
A good exercise is to ask yourself questions, such as the following to assist you in the weighing out the pro's and con's.
- Is my interest rate 4% or lower?
- Do I have any other debt besides my mortgage?
- How much have you saved for retirement?
Keep in mind every situation is different, much care should be made in arriving at a decision to pay your mortgage off or not. This is not a specific recommendation, but should be viewed as an exercise to consider your circumstances.
Lets take the first question:
Is my interest rate 4% or lower?
What is this mortgage really costing you? Chances are your borrowing money for your mortgage at a ridiculously cheap rate. Consider also: If you are deducting interest on your tax return, you are effectively paying even less to borrow this money because of the tax deduction.
Think like a banker. Banks are very conservative about letting go of their cash. They make money on the spread between what they loan out, minus what they pay you on deposits. If you are getting a tax deduction on your mortgage interest and you can make more money on your investments (your spread,) putting your investments to work could be more prudent than paying off your mortgage.
Lets talk about some ways you can position your investments so you can be objective like a bank with regard to risk.
Weigh your options, be careful not to make financial decisions based on emotion.
Regards,
Brandon Archibald, The Ivy League Advisory Group, LLC --- Author
P.S. If you are weighing your options and are looking for a second opinion, schedule 9 minutes here at no cost or obligation to discuss the potential pro's and con's of paying off your mortgage.
P.P.S. Visit our website here to download a free copy of my report on 'Underutilized Income Shelters"
P.P.P.S. Simplify your financial life. See how we are successfully assisting others streamline their life.
All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Opinions expressed herein are solely those of “The Ivy League Advisory Group, LLC”, and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions.
