Should I pay off my mortgage?
Hi Terry,
I have followed you for years — ever since you spoke at our Merck event in Cancun, Mexico in 2002 or so. I have taken all of your advice since then. My question is – should I pay off my home mortgage? I owe $299K. I have a 10:1 arm at 2.8% and I’m 3 years into this. I could come pretty close to paying it off this year if desired. Thoughts?
thank you!
Terry Says: Thanks for your question, and for the info you gave — but that’s really not enough info to give you a good answer. A lot depends on your age and stage in life — how far you are from retirement, what other assets you have, whether you would still have liquidity if you use your cash to pay off the mortgage. Also, I don’t know how much equity you have in your home, and whether you are “underwater” on this loan.
As a general rule, I advise people to have their mortgage paid off before retirement. But you have a very good rate — and if you are ten years away from retirement I would just keep paying on this loan. If rates rise suddenly, you can always prepay the loan. In the meantime, again depending n your stage in life, you might want to contribute more (at least to get the full match) to your tax-deferred retirement plan. And thanks for following me all these years!