Extra Cash – Invest or Pay Down Mortgage?

” Have extra cash?  Should you invest it or use it to pay down your mortgage?  When you pre-pay part of your mortgage, you end up paying less in interest.  But as a result you also lose part of your mortgage-interest tax break.

Your true savings, then can be expressed as the difference between your mortgage rate and the rate at which you take your deduction (a function of your total marginal tax rate).  If that net percentage figure is less than the amount you could make investing the cash, you’re better off investing it.”

 

A friendly message from

David McDonald

Century 21

February 16, 2015 by · Leave a Comment

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