Reply to If you were to inherit $2 million, would you pay off the remaining $150k of your very low interest mortgage?

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Reply to "If you were to inherit $2 million, would you pay off the remaining $150k of your very low interest mortgage?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]No, I would not pay off my low interest mortgage.

Our “very low” mortgage is at 2.25%. It doesn’t make any sense to pay that off when I can get 3% in a regular savings account.[/quote]
+1   We have the money in cash to pay off our mortgage right now, but why?  The rate is 2.75%, and our money is sitting in a MMA earning closer to 4%.[/quote]

There are these things called taxes.  Assuming you're at least in the 32% bracket (24% federal and 8% MD) and are among the 90%+ of Americans who don't itemize deductions, you'd actually be earning a higher return by paying off your mortgage than keeping it in a MM at 4%.

Also, you've got it in cash for now, but paying off your mortgage is also a protection against making a bad move in the stock market (e.g., you pile into NVDA because of the hype and it drops 70% during the next correction).  Why play games with the roof over your head for *at most* a few basis points in return??[b][/quote]
The money market is not in the stock market because we want a big cash cushion for retirement soon.   Not a good idea to put that in the stock market when you are our age.

If something were to happen, and we needed a lot of cash, we have it.  If we pay off the house, and need a lot of cash, we'd have to take out a home equity line of credit with a higher interest rate.  Our mortgage is not that big, so it doesn't hurt us financially to have it. But, not having that big cash cushion  if the market crashes could hurt us as we are so close to retirement.[/quote]

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