Mortgage payoff vs Investment

[ashleyjohnson]

Bond will make dividend distribution at end of the year or it could be monthly depend on funds. If you are holding that in taxable account you it will consider your investment income and you will be taxed on it

[DesBhakt]

Payoff entire mortgage amount when your itemized deduction about same as standard deduction.

Now that Standard deduction has doubled, isn't it more suitable to pay off/start paying off/allocate more money towards principal/ mortgage now for a lot of people?

For Bay Area, maybe not.. but it's getting close especially for people who have bought during the 2009-2012 period.

[crazyforger]

At 4.37%.....its better to pay it off.
Guaranteed to beat inflation and boost wellbeing :)

[DesBhakt]

I'm at 3.625, 30 yr fixed.

[DesBhakt]

Now that Standard deduction has doubled, isn't it more suitable to pay off/start paying off/allocate more money towards principal/ mortgage now for a lot of people?

For Bay Area, maybe not.. but it's getting close especially for people who have bought during the 2009-2012 period.

or Maybe not?

Fed hikes interest rates, signals strong support for another increase in December

[QUOTE]The Federal Reserve raised interest rates for the third time this year and signaled it will raise the cost of borrowing again in December

[sark]

Now that the standard deduction has been doubled, it is high time they eliminate this mortgage interest deduction (or at least eliminate it in AMT calculations) as it is not improving home ownership for low income folks one bit.

[techynt]

I'm at 3.625, 30 yr fixed.

thats a good rate. Question is can we generate returns to match that rate with low risk and after taxes.

I would say, add 2% for risk premium that leads to 5.6% we need to generate after tax.

taking tax rate of 25%, approximately we will have to earn around 7% in returns from our investment, totally doable. But is it worth it, why not invest in ourselves-bond , totally tax free, Better than US treasury?

In other words I may choose to payoff mortgage, unless I have sure shot low risk investments to generate 10%.

[GutsyGibbon]

I'm at 3.625, 30 yr fixed.

That is a good rate.
IMO, the age at which you signup for these 30yr loans matter. If you are 40 and you are signing up for a 30 year loan, you may need to plan on downsizing if you are going to retire earlier than 70. I refinanced at 2.75%, 15 year term, when I turned 40. Over the period of the loan I would be paying very little in interest, most of the monthly payment is principal. This way, if I cannot find a job at 55 (forced to retire), I do not have to worry about housing. When I refinanced from a 4.5% 30 year loan, to a 15 year term, I did another small down payment to make sure the monthly payment remained the same.

thats a good rate. Question is can we generate returns to match that rate with low risk and after taxes.

For chickens like me, there are many credit unions, and online banks like Ally, and CapitalOne360 giving 3% returns on 60 month CDs. Given that the rates seem to be edging higher, it may be good idea to get into CDs that allow one time bump in CD rates. With the stock market at all time high, I am putting all new investments into such CDs. Risk is low but taxes are unavoidable. Also, the composite rate for I bonds is now 2.52% I am hoping the fixed rate gets a bump after Oct31st.

[realgoogler]

Now that the standard deduction has been doubled, it is high time they eliminate this mortgage interest deduction (or at least eliminate it in AMT calculations) as it is not improving home ownership for low income folks one bit.

With doubling of std deduction and removal state tax deduction, there is not much benefit of Mortgage interest deduction.
In Bay area, Renting become cheaper than buying.

I got 3.375% 30 yr fixed and intend to keep it , waiting for higher interest environment.

[DesBhakt]

Net benefit for me is still positive by a few thousand after interest+property tax when compared to Std deduction. So, I guess... it makes sense to keep it :) for the moment. SALT is also capped to 10K I believe this year.