I have a 30 year mortgage on a house we bought last year. The interest rate is 4.5% and we will not be itemizing on our tax returns going forward assuming the standard deduction stays at $24K. I will be 74 before it's paid off so my goal is to pay it off before I retire which I certainly hope is well before I turn 74.
It seems I can go one of two ways here: I can make extra mortgage payments and pay it down that way or I can invest the funds that I would otherwise use to make the extra mortgage payments and put it in a stocked based mutual fund with the thought of selling the mutual fund down the road to pay off the mortgage.
Since we will no longer be itemizing the cost of the loan is truly 4.5% so paying down the mortgage is similar to a 6.1% return in the stock market assuming a combined federal capital gain rate and state tax rate of 26%.
So would you do?
It seems I can go one of two ways here: I can make extra mortgage payments and pay it down that way or I can invest the funds that I would otherwise use to make the extra mortgage payments and put it in a stocked based mutual fund with the thought of selling the mutual fund down the road to pay off the mortgage.
Since we will no longer be itemizing the cost of the loan is truly 4.5% so paying down the mortgage is similar to a 6.1% return in the stock market assuming a combined federal capital gain rate and state tax rate of 26%.
So would you do?