This is an age old question.
The good of paying it off
THE MONEY! Now your income can be yours to invest. I'm a big fan of paying off your primary residence so you can have financial freedom.
Some would argue that you can still outperform the mortgage rates on the market or in other investments, such as Tenants in Common or commercial income producing real estate.
Depends on the situation and your temperament.
I know that this is old but I would pay off my mortgage, because you never know when there will be unexpected expenses. I operate that way and it saves alot of mental tension.
1. If you pay off the mortgage it will allow you to utilize more of your monthly income of other investments, personal items, fun, etc...However,
2. It will reduce the purchasing power that the cash in the bank offers.
In current economic times you will need to weigh a number of factors prior to making this decision, some of which may include: job stability, is the home the mortgage is attached to in a state of decline or holding value/appreciating, is the rate of return by paying off the mortgage equal or better than you might receive investing money elsewhere, etc.
Sorry there is not a black and white answer here.
The options are as follows. But you need to work out all the numbers see what makes sense to you.
1. If you are retiring soon and don't have a lot of pension/income. You pay off.
2. If you have low balance left but many years to go, pay more each month,
3. If you need tax write off and have lots of equity, you take a line-of-equity(mostly no fees ) and use the money to buy a rental. Some homes are 45% off from what people paid for and are considered dirt cheap. You purchase same as 100% cash to get even a better price. The deductions are so lucrative that most income goes to your pocket. In the bay area the long term appreciation is there.
The options in other investment are few:
1. CD +3-4%
2. Stocks -15 to 25%
3. Mutual Funds -12 to 15%
Right now, I work with mostly investors who are jumping back on the RE investment. Contact me if you have questions. Sam Shueh
Century 21 Champion
If you have enough money to pay off your mortgage, that is something you certainly can do. It would probably be a great relief to not have to pay that monthly bill, but, before you pay it off, think carefully about how you good invest that money in a way that could bring you more wealth. By this I don't mean getting a new car, or buying things for yourself, but rather a real investment, maybe in equities, maybe in private equity groups, maybe income property. Something that will make your money grow.
Speak to a financial or estate planner first, and make a plan about where you want to be in 5 years, in 10 years, when you retire. If you can pay off your mortgage, those monies may also be a key to your future. In the end you may decide that paying off your mortgage is the smartest thing to do, but first explore what is possible, and make a plan that will carry you into a wealthier future. As bad as the economy is, there is still opportunity out there.
I will advise you to pay off your mortgage if,
1. you have other investment(stock, retirement account..) and income,
2. You will never need to get a loan against this home,
3. you are healthy or have a good medical insurance.
I am a believer in having your home clear and free from any encumbrances(loan)! The interest you pay over the years for that money (mortgage) is larger than the tax return. And that freedom add a few years to your life!!
Prudential California realty
We had a ton of equity in our properties with open untapped credit lines...and the banks recently have closed all of the lines....despite great credit! Lenders are gettming more conservative.
You may need liquidity.