I still like the mortgage interest deduction, so would not pay off my mortgage. It's one of the few deductions I have, which in my tax bracket counts for alot.

 

Paid off our home sometime ago. Texas's Homestead law gives urban and rural homeowners some excellent protection from creditors as long as it's not the Fed's.

 

I paid mine off sometime back so I could put the monthly payment money into investments. At least the home is still worth something. The investments on the other hand.....

 

At the end of 2007 I was seriously considering selling enough stock to pay off our mortgage. We're on the back side of a 15 year, 4.75% loan. Since we're paying more principal than interest every month there's not enough interest expense to itemize.

I didn't want to take the capital gains hit in the 2007 tax year and decided to wait until 2008, pay it off, and apply the money from the payments into a money market over the course of the year to pay the taxes.

But I drug my feet on the decision a bit too long and the market...well you know. I wish now I'd gone ahead and paid it off and if I had a mulligan I would.

 

Do not sell (at a loss, in particular) just to pay off your mortgage.
If you are renting at positive cash flow, and the market could come back on the rented house, why not just wait?
That's what I would tell you if you were my client.
(free advice)

 

I do not have a mortgage on that house. I don't see the market recovering to the equivalent of the offer I had, or hell, even for what I paid for it, for many, many years. Also, my renter is my Office Manager who's getting a significant pay cut, and hence, probably can't afford to rent anymore anyway. So, unless I find another renter, back to negative cash flow on that.

 

I suppose if I could, I would.

 

We did!

 

Your situation is a little different. I read all the posts, and I'll agree that there is a good feeling and security in these times about having paid off the mortgages on both our houses - one of which is for sale in TN - before we retired. I just paid the last one off when our mortgage interest and other itemized write-offs began to near equal our joint standard deduction. If I was in your boat, I'd have to think twice though. The main reason is that I think we are going to go through an inflationary period, and if I had job confidence and my pay might/would scale up with inflation then I would consider letting inflated, cheaper dollars pay off my house. However, I never liked getting back 28 cents on the dollar.

 

With 2 years to go, I paid off our mortgage with a new equity loan (at a lower interest rate) and immediately took out some extra for a cash cushion (which is sitting in a 6.47% savings account), and the rest of the equity loan is there if we need it. Following our financial advisor's advice, we opened the line of credit now while we could, just in case we need it later and it may be harder to get.

Otherwise, I've decided on the 'pay it off' strategy, though it doesn't mean that I won't have a (mostly) untapped equity line always there in case I need it.

JonasM