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Tuesday, August 09, 2005

Is Paying Down Your Mortgage Always the Right Move?

I recently came across a question submitted to "Ask the Expert" at CNN.com that really hit home for me personally. I just bought my first house in March and many people told me I should make extra payments to the mortgage company each year. I took the advice and now I'm not so sure if it was the right decision.

The question was:

My wife and I are both 28 and contribute enough to our 401(k)s to get the full company match. We are putting most of our extra money towards paying down our mortgage. Is that a good use of our money or should we be investing more for retirement?

According to expert Walter Updegrave, the couple should focus more on their retirement account than their mortgage. Why? The biggest reason is their age. "If you're investing this money for a very long period of time, I think it's a good bet that the returns to a mostly stock portfolio will beat the returns of a debt instrument such as a mortgage," he states.

He does mention that paying down the mortgage might be a good idea for those nearing or already in retirement. Their incomes are fixed or are growing at a slower rate.

Well, now I know I should focus more on my retirement than paying down my mortgage. What's the right choice for you?

posted by Anonymous at 12:30 PM - permalink 0 comments

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Is Paying Down Your Mortgage Always the Right Move?

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