To Pay or Not to Pay Off Your Mortgage

By:Mindy Fetterman: REALTOR® Magazine Online
Experts urge home owners with mortgage rates of 6 percent or less to sink their money into other investments.

Some home owners might be considering repaying their mortgage early in an attempt to shed the debt they accumulated via cash-out refinancings or home-equity loans at a time when property prices were rapidly appreciating. But that may not always be the best use of their money.

Anthony Webb, economist for Retirement Research Center, says home owners can achieve higher returns through IRAs, 401(k)s, and other tax-deferred accounts. Young home owners would be wise to put their extra cash toward retirement, adds Torrance, Calif.-based financial planner Phillip Cook.

However, those with excessive loan balances might want to pay down their mortgages to a more manageable level. Home owners nearing retirement age — who do not have adequate savings, do not plan to move, and do not need a mortgage deduction because they will soon be in a lower tax bracket — also might be good candidates for prepayment.