For example, supposed you owe $55,000 on your home and have $190,000 in savings—not including your 401(k) and /or IRA funds. It’s a common question, especially among people 35 and younger. I recently retired (12/2010) and have access to a (457) Deferred Compensation account. When you pay off your mortgage, you'll no longer be able to deduct the interest from your taxes. Pay Off Mortgage First Or Invest?Get life-changing financial advice anytime, anywhere. IRAs and 401ks are for retirement after all, and Uncle Sam does his best to … On a $200,000 house, you could possibly save more than $15,000 in interest charges. And to get to the point, it’s not a great financial move because those under the age of 59 ½ are likely to incur a 10% penalty for making a straight withdrawal. What to expect when discharging your mortgage. By paying an extra $400 a month, you would save about $62,000 in interest over the remainder of the mortgage, and your loan will be paid off about six years earlier. Financial theory recommends that if your after-tax return on investments is greater than your after-tax cost of debt then you should invest. I pay $500 extra a month to pay it off early instead of investing, I pay it off in 13 years shaving 17 years off the loan and $115,038 in interest. Since a cash-out refinance uses your home as collateral, you’re at additional risk of losing your home if you find yourself unable to make monthly payments. This process is called discharging a mortgage. But for us, doing it this way made sense. Further, if you’ve lost a job or seen your compensation reduced, this is even harder to do. If you qualify for a good interest rate and choose the right option for your needs, using your HELOC to pay off a mortgage can be a savvy financial decision. I invest the monthly payment of 989+500 a month for 17 years and I end up with $796,898 minus a few thousand a year for taxes since I lose my mortgage interest deduction, say a good $50k over 17 years leaving me with $746,898 invested after 30 years. Paying down a mortgage is easy to figure in terms of how much money it saves you. But, is using your pension to pay off your mortgage a good idea, or could it be a huge mistake? The long answer: The right move depends on a … Should I pay off debt or invest? You can end up paying less. Should you pay off your student loans using your 401(k) balance? The market has been a gamble for over a decade, and unless you are very good and or lucky, it has been hard to get real returns. How many people pay off the mortgage with their pension? A mortgage is a long-term loan, used to pay for a home. Taking $100,000 or $200,000 or more and paying off your mortgage is an investment decision. Be sure to have a plan in place in case you are fired or desire to leave employment. We're not making much money in … A reader nearing retirement wrote in to ask if he should dip into his IRA to pay off a mortgage. Pros of Using a HELOC to Pay Off Your Mortgage. This card offers two miles for every dollar you spend, so in the end, that left us with $2,000 in flexible travel credit we could use to pay for hotels, cruises, airfare and other travel expenses. Unlike the stock market, paying off your mortgage early offers a guaranteed return. If you’re not … If someone you care for is falling behind on their mortgage or if you simply want to give them a gift that will last a lifetime, it is possible to pay for their mortgage. In many cases, investing is the better option. Dear Liz: I’m 54 and plan on retiring at 55 with a government pension. 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