At what APR does it make sense to pay off mortgage early?

IMO, APR is one of the less important factors when deciding whether to pay off a mortgage early.

And you leave it that?

Yeah, closing in on second home now and locked in at 4.25. My first was 3.5%. That .75% makes a difference. I have a total of $10k in debt between credit cards and student loans. I recently paid off my car so these will be knocked out in a few months. Beginning in December, I'll be saving $2,500 a month easy and I thought about what to do with it.

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This. Financial security is worth way more than you pay for it. Living in a paid off home should be the goal of every homeowner.

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This. Having my cash in an easily accessible investment is worth way more to me than having my money tied up in my mortgage at a tax deductible 3.25%.

Short, rule of thumb answer for me: the interest rate that exceeds the average annual return that I can earn from my investments. At that point, I'm better off using my money to retire the debt than investing it. My mortgage rate is 3%, so that better not happen until there's a busty nurse asking me if I'm ready for my sponge bath at "the home".

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Afro

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I get and agree with what you're saying. However, rushing to pay off the mortgage and "locking" money into your home seems like a contradiction to your desire to remain liquid.

Now, if you've built up your nest egg to a suitable level and then begin attacking principal, I'm right there with you.

Wow. I'm 0-1 with a K

Yes, that's true. And on the flip side, I'd also have to consider the tax benefits of the interest deduction.
But yes, the higher the interest rate, the tighter the spread would probably be... and I'd be more likely to pay it off early.

I would not criticize your view on the matter though. The numbers aside, debt affects all of us differently. Six or seven figure debt, that would allow me to pursue profitable business ventures, wouldn't bother me in the least. But when BofA charged me a couple of bucks in interest, when *I* mistakenly typed a balance payment in wrong, I was on the phone like it was going to break me. They removed the interest charge for me - probably to shut me up and get me off the phone. But it was just the idea that I was paying interest, that wasn't in my favor, that really bothered me.