I'm 47 and have 210,000 should I pay off my house at 186,000 or invest it?
Answer:
I am a mortgage broker at Country Wide - have been in the business for about 2 years.
You probably allready know this, but the longer you continue to pay a mortgage, the more money you are paying in the long run.
If you have a balance of $186,000, by the time you finish paying the mortgage, you'll have probably spent about $250,000 (assuming that you have a 30 year and are paying a 7% interest rate).
If I were in your position, I would definately pay the house off with the cash you have and invest, SOME of the remainder.
This way, you get the piece of mind knowing you OWN a piece of America.
If you ever need cash in the future, you can allways take out a home equity loan for whatever you might need from the house's equity.
Definately smarter to pay it off.
Pay off your house definitely.
Invest it. You will make out so much better in the long run!
paying off the house is good, wont have that bill, wont have the mortgage collecting more interest. also you don't have that showing up as a debt on your credit rating.
I'd pay off the house.
pay off half the house loan, buy a jeep, invest the rest.
pay off ur house... no more interest
Depends on the level of risk you are willing to assume. Maybe pay down the house to increase the equity you have. A home is one of the safest investments available. Invest the rest in a business or buy some vacation rental property.
Pay off your house and invest the rest!
If you have a job, keep mortgage if at low rate. diversify
Pay off your house, then give the rest to me :-)
the name of the game is when u purchase, its to own,,,,pay off ur house, let it be called "yours", it is the best investment yet,,,u buy things to "own",,,so own what u can now,,,,ul need it later, trust me..scorpion
I would pay off my house. Of course, investing it would be fun, but to pay off your house would be better because it's the responsible thing to do and in the long run you'll have no bills and you'll still have money left. So, definately pay off the house!
Pay off yr home, then when the value of yr home rises u can pull out some cash there.
If you can make more investing it than you would save on interest if you paid it off(keeping in mind any tax write-off benefits), invest. Otherwise pay off the house and make the payments to yourself into an account, including the interest you would have paid on the loan. You can invest those savings as you accrue them.
Do you have any other debt? If so, pay off all your debt besides the house. Keep the mortgage on the house unless it is a high interest rate. If you pay off the house you won't have a tax write off for your property. Find an excellent financial adviser and invest in conservative things. Your financial adviser can invest in things other than the stock market that are much safer in the long run. You are headed in the right direction, keep saving!
Any investing skills or even hunches ? If you have a loan, decent interest rate, can you out run it investing ? I think I could ! so do both, pay your mortgage down ahead of time, at least 13 payments a year, one total principal, and make some investments
No, the answer is absolutely no. invest it. when you lock in your morgage, you already lock in inflation rate.
if you can find the investment that can return 12%, your money would be double in 7 years and couple months.
Rule of 72, if you can get the return 12%, 7.2 is number of year your money doulble. If you could make your money reurn 12%/year
in 15-16 year, you have 840,000 cold hash cash in the bank. and your morgage payment should be pai it off by then. With the house free and clear and 840K in the bank, you can retire in dignity.
You should start a emergency fund ($1000.), pay off all of your dept starting with your smallest and working up to you largest amounts (house) applying each smaller payment that you use to make monthly to the next biggest bill. If you can pay off all of your small debts in one lump some, do that and then work on your savings and investments. Be sure that you have an emergency fund in place first though for just-in-cases!! You will see a large return on the investments this way because you do not have the other smaller bills eating away at your income.
None of us can answer this question because we don't know your goals, your liabilities other than the house and your investment acumen.
Your home should appreciate at the rate of inflation and depreciate to the extent rates rise. The mortgage on your home is a form of leverage, in essense a margin loan. It magnifies the volatility of your returns, even though people don't get a monthly statement on the changes in value of your home.
If you pay your home off, then you have selected to radically push your portfolio heavily into real estate, more than it is. If you do not, then you maintain the risk of the high level of financial leverage as well as the cash flow loss from the interest.
On the other hand, if rates rise, even CD rates could be higher than your mortgage rate if you have a low rate mortgage. Rates are over six percent on many corporate bonds right now, let alone potential gains from very careful investing in the stock market. CD rates of 5.25 are readily available for 3 month cds if you buy them on the secondary market.
This still ignores your subjective goals such as emotional well being, financial flexibility, planned and unplanned purchases.
We really cannot answer this because we don't know you well enough and that is probably best for all.
Buy another house. The more property you own, the richer you will be when you retire. Try and find places that will give you positive cashflow. Make it a goal to buy one of these properties a year.
Just think, if each property gave you $1000 in positive cash flow every month, and you owned 10 of these, that would be 120,000 per year when you retire. Not bad for an additional income outside of social security (which might not exist by then).
pay it off! invest with your would-be mortgage payment.
look at it this way.. If it were ALREADY paid off, would you borrow on your house to invest?
and DO NOT, please, do not, keep a mortgage to get the tax deduction. That's one of the biggest myths in personal finance.
Let's say you pay $4000 in interest this year. Taxes on $4000 even if you're in the 25% bracket is 1000$. 1000 < 4000. Either you pay the bank 4000, or you pay Uncle Sam 1000. I know, I know, it's a real tough decision.
You can get the same deduction, if you want, by giving to charity.
That depends entirely on your disposable income,if you're comfortable with maintaining your current monthly expenditure,I suggest that,(considering the level of your question)you look at investing in an alternative property which you could let.I would not use the full amount,but raise a mortgage on the second property up to 8o% of the purchase price,once it is registered,I would deposit 50% of the raised mortgage back into the account to use when you find alternative investment(third property).The capital growth of property in this country is way above average banking and even average stock market returns.The lack of property available dictates that providing you pay a fair price for property,and get some basic training in maths,you'll find that you'll be better off than in alternative investments.Beware of financial advisors taking control,YOU have to TAKE control.I should know,I have been a financial advisor of 20 years standing.
Be educated before you sign,do not be afraid to ask questions and have the answers IN WRITING,and above all understand and take responsibility for your good fortune.Wayne
Pay off the mortgage. I did that this year @$189K. The cost of everything is going to continue to climb.high. Folks will lose their homes as gas, cost of power, food, etc. climb. You also save a heck of a lot in interest that you would not be paying through the rest of the mortgage life. Also, you will be more comfortable when you retire. I retire next year..paid off house, boat, cars, have college pre-paid for Son, etc, and not looking back. Pay off the mortgage.
Assuming you have good credit, payoff the house by refinancing into a 1 Lien Position Home Equity Line of Credit (HELOC). Pay the balance on the HELOC to $0. Now, you have no mortgage payment. Use the balance of the $210,000 to invest as you see fit. If you vere do need to access the equity in your home, you can just write yourself a HELOC check. This solution gives you the most flexibility. It allows you to pay off the house while still having complete access to all of your funds. As a plug, I am a mortgage broker in CA, so if you live in CA an would like assistance in doing this, please let me know
Pay off the house and invest the remaining money. Your will save money on interest. Then your free to invest the money you would have paid to the mortgage. If you are concerned about the tax benefit of having a mortgage there are other investments that are pre tax such as 401K's
It depends on so many things. How much do you earn, and how long are you going to keep working? If you make a decent income, you are probably benefitting from the tax write-offs on the interest you are paying on your house. What is the interest rate on your current mortgage? In today's market, chances are that you can earn a much higher interest rate on your investments than what you are paying on your mortgage.
I am 6 years older than you, and if I were in your shoes, I would accelerate my mortgage payments by adding to the principal each month. That way, I would still get the benefits of the tax write-offs while I am still working and still having my house paid off by the time I retire. I would invest the money in a number of different places, taking the advice of someone I trust as far as stocks. I would also "ladder" some of the money into CDs, which don't earn as high a yield as many investments right now, but you have ready access to one that matures each year. By laddering, I mean to invest a designated amount in a CD that matures in one year, in two years, in 3 years, in 4 years, and in 5 years. That way you have one becoming mature each year. Then you reinvest the mature one into another 5 year account. I would also fully fund my IRA each year, and look into other forms of investing for retirement.
Savanna is almost right - Ramsey recommends you pay off credit card/personal debt first, but NOT your mortgage! He would advise you to max out your retirement investing, THEN pay off the house. Although you will continue to pay interest on the mortgage, remember, it is deductible on your income taxes, so it isn't NEARLY as bad as credit card debt and personal loans. AND.
Since your mortgage probably has an interest rate lower than10% and the stock market as a whole averages about 10% returns, your money will be better in the stock market, AS LONG AS YOU: 1 - stay away from individual company stocks (stick with broad market mutual funds that try to match the market), and 2 - invest for the long haul (don't try to time the market, even the professionals have a difficult time with this).
Now, if your mortgage rate is ABOVE 10%, you need to either pay it off (nah!) or refinance to a lower rate.
I would use $210K to buy another one or two houses and rent them out. you may double your money in 5 years if you do it right in real estate investment. use leverage, that's how rich get richer.
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