It's always interesting and instructive to see what money matters are on our readers minds. We've promised to chase down answers for you, and we'll continue to do so. We'll also pull in investment expertise from The Motley Fool. We may even ask some of you to join us via Skype.

Many of you have opened up about your own financial regrets and successes, and we appreciate your candor. So, let's keep the dialog going. Here's a video response to one of the topics raised:


Should I Pay Off My Mortgage Faster?







Ed asks: I am 57 years old with a couple more years to work before I retire. I currently have an equity mortgage on my home with $30,000. The house payment is less than $100 a month. I pay $1,100 a month toward the loan. Here is my question. Should I be paying minimal on my mortgage and putting the rest in my 401(k) and hopefully make money on that money, or would you pay the house off by continuing to pay the accelerated payment to get it paid off as quickly as possible? What is my smartest move? I think I know, but want to hear a professional's point of view.

Regina replies: Sounds like you are in an enviable position -- hats off to you. If you're on the tail end of your loan and the interest rate tax deductions are not a big factor, you could pay off the house if it would give you peace of mind. The downside is if you needed to get out of the house for any reason, you would have all your money tied up in the property, and we know the current real estate market is rough. Financially, if you can pay the more modest mortgage and contribute to a 401(k), that seems like a smart move. You could also do both -- put $500 extra toward the mortgage and $500 in the 401(k). There's no right or wrong answer on this one if you are otherwise debt-free.

Colleen (a commenter) asks:
How can you logically answer that question without knowing what interest rate he is paying on that loan? It could be 9% for all you know.


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63 Comments

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a_willim

Seniors are flocking to this program for many good reasons - allows them to pay off mortgage and receive income for life without having to make monthly mortgage payments .


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June 07 2013 at 7:17 AM Report abuse rate up rate down Reply
skcplc

We have 10 years left to pay off 30 year mortgage.We still owe over 40 thousand. We can pay this off now if not over the next 10 years left on our 30 year mortgage we will be paying $800,00 a month which adds up to $96.000.000 for 10 years. We still are at 8 percent when we purchased our house

December 15 2011 at 4:32 PM Report abuse rate up rate down Reply
Derrick Family

Being the same age with less than 2-years left on my principle mortgage...personally my choice has been to accelerate paying off debt. I say this because of the uncertain times in which we live. I have worked hard to control debt and contribute regularly to my ROTH, IRA and 401K with my goal of being debt free and retire early. The only derelict agencies in my responsible planning is my government, the greedy banks, and a corrupt Wall Street. NOW I know how a salmon feels when they swim upstream to spawn!

July 18 2011 at 1:50 PM Report abuse rate up rate down Reply
Helen

Where can you get 3.5% in a CD? Have you looked at rates today? But clearly, the longer you continue to pay the mortgage, the more interest you will be paying in the long run. This is obviously what the banks want you to do. It's for THEIR profit, not yours.

July 13 2011 at 12:34 PM Report abuse rate up rate down Reply
cmerr6240

Pay off you mortgage is a ridiculous idea. If you are earning 3.5 % like I am in a CD and your interest rate on the home is close to 4% the diffrence is not that significant to pull a load from the principle to pay off the motgage. Remeber you will still have a payment of Taxes and insurance so you would always have a payment . Go Borrow form the equity in the house and that will cost you 5 to 6 %. . If the interest is say well over the rate your getting on the bank CD then by all means pay it off. I say hang on to the dough you have cause every payment you make to the house more than half of that payment for me is going to pay off the principle. That is peace of mind for me at this date in time.

July 13 2011 at 11:40 AM Report abuse rate up rate down Reply
1 reply to cmerr6240's comment
Bruce

Where can you get a cd with a 3.5% rate?

July 17 2011 at 9:19 PM Report abuse rate up rate down Reply
sf1000000

I say pay it OFF. I am looking to down size and pay all cash. WHY? Because the investment market stinks. If you put the money in savings there is no breaks, if you go into the stock market well hang on to your pants, unless you know what you are doing.
I have income propertry too. As the loans are paid down I expect to pay them off and be done with the banks and their greed and fraud. I have a good banker in SF CA, but frankly, they are only looking out for their bottom line and NOT mine. They wanted me to sell and put all the money back in the trust I set up so they could manage it..ah, NO.
Pay off the loan. IF you needed the money you could always go and get a equity loan on the house..or sell but the peace of mind is PRICELESS.

July 13 2011 at 10:27 AM Report abuse rate up rate down Reply
Helen

By the way, my savings is in a money market account. I refuse to lose another penny on Wall Street. I've lost money in every single fund I've ever invested in. No more! However, the interest is now less than 1%. This is outrageous! There is a lot of talk and concern for people who are in debt. But those of us who have saved are totally getting screwed!

July 13 2011 at 10:00 AM Report abuse +1 rate up rate down Reply
1 reply to Helen's comment
Derrick Family

Helen....I agree. Greedy banks (with their elaborate executive payrolls) are soon going to have to deal with folks like you and me that will ultimately find a break-out bank with ethics and fairness with whom to be more responsible with our money....then LOOK OUT! Big banks will become a thing of the past (like so many other dinosaurs). I applaud your discipline and follow most of your suggestions (except I still invest in Mutual Funds and stocks)....still carving a meager earning on average.

July 18 2011 at 2:06 PM Report abuse rate up rate down Reply
Helen

Paying off my mortgage early was the smartest thing I did. The money that used to go for mortgage payments was added to my savings account. That's when I was able to seriously boost my savings in preparation for retirement. I'm now retired with absolutely NO debt, and a savings account. I have friends who cannot afford to retire because they're still paying their mortgages. Financial advisors never tell you this side. They work for Wall Street. Keep that in mind.

July 13 2011 at 9:51 AM Report abuse +1 rate up rate down Reply
tsimpson2333

The gov't should cut the deficit and forget about raising taxes for another three years. Give the deficit reduction a chance to see if this works, if not the next step is to raise taxes. STOP playing these games by the democrats!!!

July 13 2011 at 8:45 AM Report abuse +1 rate up rate down Reply
1 reply to tsimpson2333's comment
joyaright

Are you dumb enough to think we will all be ok in 3 years pull your head out of bushes butt and smell the coffee.

July 15 2011 at 4:35 AM Report abuse rate up rate down Reply
1 reply to joyaright's comment
Derrick Family

Yet another Bush-blamer....tsimpson2333 is not the only one with their head in their keister. Otherwise, raising taxes is just plain WRONG!!! Clinton balanced the budget by decreasing taxes...NOT increasing them. The fluid dynamics of our monetary system is far more efficient if the money is in the hands of the EARNERS....and not the TAKERS (always has; always will be). Your government sends almost half of every dollar collected OUTSIDE your country where it does no good for you or me! Now, include the almost 3 million illegals who also send their cash-earnings outside your country and is there any wonder America is in a debt crisis??? I venture to say, it's not coffee that's being smelled by some posters....

July 18 2011 at 2:00 PM Report abuse rate up rate down
Steve

I cant believe people say to put the extra money into the mortgage monthly--very wrong and I will tell you why. Even if your house isnt losing value and has equity, you get paid NOTHING for the extra money you give to the mortgage for however long it is there! Even if you put that same money in a modest 1% CD or mutual fund, at least you would get something for it. When you have enough in the CD or mutual fund to payoff the mortgage, do so and you gain the entire interest amount for yourself versus having given the money for free (for however long), to the mortgage holder! The larger the mortgage and the more years you have left on it, the bigger the savings for you. Whatever you do, dont pay your mortgage early unless you like giving your money to "the man" interest free! Save that money, earn interest on it, then payoff the mortgage early all at once.

July 13 2011 at 7:50 AM Report abuse -3 rate up rate down Reply
5 replies to Steve's comment