Reply to What Should I do? Aggressively payoff Home Mortgage or Invest the Money in a Mutual Fund??

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Reply to "What Should I do? Aggressively payoff Home Mortgage or Invest the Money in a Mutual Fund??"

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[quote=Anonymous][quote=Anonymous]Mortgage rate is 3%.  Taking into consideration the itemized deduction of the interest, it is lower than.  So if the market made any more than the 3% I am ahead of the game.  But for some reason I feel like Dave would say to pay it off still even though it doesn't seem to make financial sense.  In fact it would hurt me even more if it is paid off because then my AMT is even higher in terms of dollar amount.  [/quote]

The sneaking feeling you're getting that Dave Ramsey is wrong on this one is correct. If you have an excellent interest rate, do not pay down your mortgage. Ramsey is far too conservative about debt, as are a lot of DCUM posters.

(I also don't agree with the rule of thumb identified above; even if the interest rate is somewhat higher than your expected rate of return in the market, there are multiple reasons it could still make sense not to pay down the mortgage. Some obvious ones being: (1) there are large tax advantages to having a home loan; (2) if inflation goes up, the significance of your debt goes down, whereas some investment options are relatively inflation-proof; (3) if you need to access the money quickly, its usually easier to get it out of the market than out of a home; and (4) DC real estate is so expensive that you could easily end up with far too much of your net worth in real estate).[/quote]

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