Pay down mortgage or invest??PLEASE HELP!!!!PLEASE?

Question

Soon I will be coming into $44k after taxes. What is the best thing to do with this money? If I pay down the mortgage, how exactly do I do that? If i put all the money towards the mortgage, I will still owe approx. $20k. Or should I invest it in c.d.'s or money makets? I don't know much about either and reading up on them over the internet is like chinese math to me. Should I pay down the mortgage and invest? I really don't know what to do.

Answer 1

Being able to answer that question really requires much more information than you are giving.  What are the other opportunity costs?  What is your income? Expenses? Do you have other debts?  Car loans? Credit Cards?  Every piece of your financial picture has a effect on your financial decisions.  Once you give the 44k to the mortgage company, it is their money and you no longer have access to use it for anything else.  

I would advise looking at opening a Mortgage Savings Account.  You can place your $44k where it will offset the principal balance of your mortgage, save you the mortgage interest and help you pay it off quickly, yet you still have access to the money in case of emergency.  They also have software that allows you to see how each financial decision you make will affect your finances over your lifetime.  Pretty cool stuff.

Google "Mortgage Savngs Account" to learn more.  www.maxhouse.com is another good source of information

Answer 2

It would depend how long that you have been paying it off.  If you got most of the interest paid of and started paying on Principal.  Invest it  If you are still paying a lot of interest,  apply half to the Principal and invest the rest.

Answer 3

i would say refinanace with the 44k for a lower interest rate and then you will have a mortgage of 20k over the next few years (giving you more money per month to play with) or just throw the 44k straight at it. The money you save in interest will exceed any money you earn from a money market account. Also you should be able to pay off that remaining 20k in 5 years (its about the same amount of a car note) and when your not paying your mortgage any more you can through what you were putting towards your house into a savings/cd/money market.



O ya your debt free minus the house right? otherwise pay off your debts and then put it on your house. If you have 10k in the bank earning 3% interest and 10k in credit card debt at 18% interest, then your losing 15% a month to interest.

Answer 4

If you are going to invest, go to a company such as Smith Barney or similar and ask for the low-yielding returns.  Usually that means less risk... Paying off the mortgage is ALWAYS good advice because it automatically adds equity...

Answer 5

I would say the mortgage. Property prices will eventually rise again; people always need a place to live.

Answer 6

As the old saying goes, a bird in the hand is worth 2 in the bush.  You know that if you put money on your mortgage, you will get an instant rebate in the form of less interest paid on your mortgage.  When you do pay your mortgage, renegotiate the mortgage loan so you can pay it off faster, with the cash you are saving on interest. On the other hand you will be taking a chance on investing, which of course you could lose out.  The money you make(if any) on the investment will be taxable.

Answer 7

Before I answer, I have a few questions:

1.  Do you have an emergency fund of 3-6 months income? If not, you should use part of the money to establish such a fund.

2. Do you have any outstanding debt? Credit card, Auto Loan, etc?  If so, pay it off. That is that much more interest that you will not be paying.

3. You will never regret paying down your mortgage.  All you have to do is to send extra money with your normal payment.  There should be a line for "Extra payment to Principal" and you just write in how much extra you want to pay.  What ever the interest rate is on your mortgage is the "return" on your "investment".  That is, by paying off your house sooner, you will not be paying interest on the mortgage. and that is the same as making that percentage of return on you investment.

4. Once your mortgage is completely paid then you can use the money that you are no longer paying towards the mortgage to investments that are suitable for you  Suitability depends on both your age and the time horizon before you wish to use the money.

Answer 8

paying down you mortgage is the best thing to do.  but make sure there is no penalty for doing this.  you still have a good amount to invest in other venues.  At this time C.d.'s are best.

or maybe a money market you can take your money out if you need it .