Paying off Mortgage vs Investing
There are 6 considerations I make when deciding if someone should pay off their mortgage.
Those 6 considerations are:
- Mortgage Interest Tax-Deductions
- Mortgage Interest Rate
- Where are you paying your mortgage off from?
- Time Value of Money
- Inflation Rate
- Non-Financial Considerations
1. Mortgage Interest Tax-Deductions (lost)
2. Mortgage Interest Rate (after-tax)
3. Where are you considering paying your mortgage off from? (IRA or bank)
Think about this real-world scenario
*Please always make sure to consult with your tax and financial advisor prior to making a decision. If you don’t itemize deductions then you might not have an after-tax interest rate that is lower than your current. itemizing deductions means you have more deductions than the standard deduction. So this would weigh into the determination. Each tax and financial situation is different, as well as non-financial situations. Tax rates discussed are for 2022 and may change in the future.
Matt Ward is a financial advisor and the president of New Century Investments, an independent investment advisory firm serving business owners, pre-retirees, and retirees in the Dallas-Fort Worth area and beyond. Matt is passionate about integrating investing, planning, and tax management into a holistic approach. Matt’s breadth of knowledge and experience in both taxes and investment management sets him apart, giving him the ability to design, advise on, and manage business strategies, tax efficiency, and retirement planning. He is known for his care and attention to detail and works hard to develop personal relationships with each of his clients so they can benefit from his customized service and guidance. He loves walking with his clients through their financial journey, supporting them and celebrating with them as they reach their goals.
Matt graduated from Texas Tech University with a bachelor’s degree and is a certified financial planner™ and chartered retirement planning counselor℠ professional. When he’s not working, you can find Matt hiking, playing the guitar, and spending time with his family. To learn more about Matt, connect with him today!