Should I pay off my mortgage quicker or should I save?

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In conclusion of my first house next week. My husband and I are both 30th I checked I mortgage caculator and found out if we have a payment of $ 3,500.00 to one year in addition to our regular payments then we, the 10 year loan to be paid earlier. Is this a good thing to do with our money or should we put them in a kind of stocks in retirement.
In conclusion of my first house next week. My husband and I are both 30th I checked I mortgage caculator and found out if we have a payment of $ 3,500.00 to one year in addition to our regular payments then we, the 10 year loan to be paid earlier. Is this a good thing to do with our money or should we put them in a kind of stocks in retirement.

15 Comments
  1. Reply
    james l
    April 29, 2011 at 9:13 pm

    Pay off your mortgage first.

  2. Reply
    bizzbagg
    April 29, 2011 at 9:52 pm

    stocks or mutual funds unless you are already putting at least 15% away at your works 401k plan. i would put more away in the 401K plan, because it comes out of your pay check before taxes does. you rate of return will be higher this way then what you would be saving by paying down the mortgage. i hope this helped.

  3. Reply
    PepsiLime
    April 29, 2011 at 10:11 pm

    Basically it all boils down to what is your mortgage interest rate versus what rate of return can you get for investing in stocks. If your mortgage interest rate is lower than the rate of return that you can get from stocks, then go with stocks, if it’s the other way around, then go with paying off the mortgage quicker.

  4. Reply
    piet lul
    April 29, 2011 at 10:20 pm

    it depends on your interest rate, if the rate is very low, don’t do it, if the rate is high, by all means

  5. Reply
    badgerfan
    April 29, 2011 at 10:31 pm

    Do both! With building a solid financial future, make sure you guys build a very solid foundation first (savings, CD’s, money markets, cash bearing life insurance (very powerful yet grossly under-utilized tool)) before you really get going on the walls and the roof. Take advantage of the 401K’s and IRA’s offered through your employers. No matter what happens, always remember to pay yourselves first!

    With the debt(s), itemize the debts and decide to either attack the highest debt or the debt with the highest interest rate first. Then, progressively kill off each debt by applying the accumulation of the monthly principle payment amounts from one debt to another.

    Example: House debt 2000/month, 7% interest rate
    Credit Card 200/month, 18%
    Possible strategy: Pay 300/month to kill the credit card (never do the min. even when the min. changes). Credit Card over. Pay 2300 (2000+300 from Credit Card) to kill the house. House done.

  6. Reply
    BAL
    April 29, 2011 at 10:42 pm

    Personally, I have been on both sides of that question.

    I have found that I can get a deduction for mortgage interest (at 6%) which is deductible at my highest marginal rate (about 35%) but some of my high-yieldiong stocks give me 8-10% returns and are taxed at a maximum rate of 15%. Plus I have capital gain potential in the stocks and the capital gain potential in the house is still there and more leveraged.

    If you can direct the additional money into a retirement account, you could conceivably do even better.

    If you have credit card debt, paying that off will get you a return of 15-20% with no risk.

    Another plus for most people is that investments can be sold and used for expenses of living and so on if need be. Home equity can only be tapped if you get a loan, which you can’t get if you are out of a job.

    So, now I invest my extra cash and don’t think repaying the mortgage is such a great idea.

  7. Reply
    Dr. Deth
    April 29, 2011 at 11:05 pm

    pay an extra 300 a month instead and you’ll probably pay it off even quicker – I’m only about 15 yrs from desired retirement age and only 18 months into a 30 yr loan and want to be mortgage free by retirement if at all possible, so I pay a little extra every month and will increase that extra over time – go for it

  8. Reply
    jeff410
    April 29, 2011 at 11:35 pm

    If your mortgage is going to last beyond your retirement age, pay it down. Otherwise if your expected return on investments is more than what you save by paying down your mortgage, including tax savings from interest deductions, then invest.

  9. Reply
    tonalc1
    April 30, 2011 at 12:27 am

    It’s always best to pay off loans quicker. Do another calculation to see just how much extra interest you would be paying if the loan lasts longer.

  10. Reply
    k monster
    April 30, 2011 at 1:09 am

    I’ve heard to figure the interest you’d make on the money you’d save if you don’t pay off your loan quickly and compare that to the amount that you’d save in interest if you payed the loan off quickly. Essentually compare the interest rates and go withthe higher one. No point in saving money if you end up paying more money than you saved in interest.

  11. Reply
    cope_acetic@yahoo.com
    April 30, 2011 at 1:57 am

    It depends on the other investment.
    A high-risk, high-yield stock would probably be better in the long run, but you’ll save a lot in interest if you pay off the loan.

    If you’re investing for 20+ years, go for the stocks. If you plan to pay the mortgage in 15 or less, pay that.

  12. Reply
    greybeads
    April 30, 2011 at 2:39 am

    this depends on how much real estate is appreciating in your area.

    A normal investment return is 7-8% per year.

    A typical appreciation in real estate is 3-4% per year.

  13. Reply
    VaTreasures
    April 30, 2011 at 3:04 am

    There was a study(sorry not sure of the reference) that determined that people were better off putting money in a tax deferred account, than paying off their mortgage early.

    You definitely do not want to be in a position at 50 where you are house rich, but have little retirement savings. If you are making the contributions to get the company match for a 401k and both doing ROTH IRAs(or maxing your 401K if not eligible). Then your retirement savings should be on track and an extra house payment may not be a bad idea.

  14. Reply
    bdancer222
    April 30, 2011 at 3:13 am

    While paying off the mortgage early would be a good thing, you should also put money into retirement.

    You can still pay your mortgage off faster by paying as little as $ 10 extra every month earmarked for principal. You don’t have to have a big lump sum payment

  15. Reply
    Jen G
    April 30, 2011 at 3:19 am

    If you have any other debt focus on paying that off first. Then save up 3-6 months of expenses and invest in your retirement and kids college funds.

    Once those things are in place, then focus on paying off the mortgage early.

    God luck!

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