Should I Pay Off My Mortgage?

The point at which debt interest rate exceeds after tax investment return is the point at which good debt turns to bad debt. While after tax investment return depends upon risk assumed and overall tax rate, a reasonable assumption for this might be 6%. Mortgage rates are currently below the 6% threshold. Adding in the mortgage interest expense reduction tax benefit reduces the effective interest rate further below the point at which good debt becomes bad debt. As long as you can achieve returns greater than the effective mortgage interest rate, hold onto your mortgage and put this money into your investment account.

 

Disclosure:

The information presented here is the opinion of the author and may quickly become outdated and is subject to change without notice. All material presented in this article are compiled from sources believed to be reliable, however accuracy cannot be guaranteed. No person should make an investment decision in reliance on the information presented here.

The information presented here is distributed for education purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or participate in any particular trading strategy.

Performance data showing past performance results is no guarantee of future returns.

Performance data showing past performance results is no guarantee of future returns.

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