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]This is kind of an interesting question from the perspective of economic class. Like most people, I will never be worth $2 million and don't have any living relatives worth that much (our parents are dead anyway).  I owe over $100k on my low interest mortgage and probably WOULD pay it off if I magically came into a huge windfall.

My reasoning is this: In my tiny experience, life has a way of chewing away at any money that might accumulate. An unexpected layoff, child's medical emergency, parental dementia, broken cars. At some point down the road, I know that the money will be all gone and the best move I can make for my mood is to remove that mortgage debt hanging over my head.

It's not rational but I know I'm not as clever as most of the folks on DCUM.[/quote]
But, if you pay off the mortgage, then you don't have the cash cushion to address those unexpected situations.

Let's you get laid off, and your monthly expenses is $8K, including your PITI.  You could live off $100K for a year.

Let's say your mortgage is $1000/mo, and you pay that off.   Then  you get laid off.  You might not have to pay $1000 per month, but now you don't have that $100K to cover your other monthly expenses.  You could take out a home equity loan, but more than likely, the rate would be higher, not to mention the fees to open the loan.

If you don't get laid off, you could invest the $100K into a safe money market account or something similar with low risk, just in case you think you might get laid off.[/quote]

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