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re: Paying off a mortgage early vs Putting money into an IRA
Posted on 1/3/13 at 9:31 am to Hammond Tiger Fan
Posted on 1/3/13 at 9:31 am to Hammond Tiger Fan
quote:
ETA: I just ran the numbers on bankrate.com and it's estimated that our 30 year mortgage can be shortened by 12 years if I did this and we'll save approximately $75,000 in interest payments over the term of the loan.
What would the value of the 401K be at retirement if you suspended contributions for 12 years? I'm just shooting from the hip here but if you get an average annual 7-10% return in the 401K and are paying current rates for your mortgage 3.5-4% you may be better off paying the mortgage down more quickly but not quite as aggressively as you planned. Theres some tax benefits of the 401K, the mortgage interest deductions and whatnot to consider too.
This post was edited on 1/3/13 at 9:32 am
2
Posted on 1/3/13 at 9:36 am to wiltznucs
quote:
What would the value of the 401K be at retirement if you suspended contributions for 12 years? I'm just shooting from the hip here but if you get an average annual 7-10% return in the 401K and are paying current rates for your mortgage 3.5-4% you may be better off paying the mortgage down more quickly but not quite as aggressively as you planned. Theres some tax benefits of the 401K, the mortgage interest deductions and whatnot to consider too.
Well, we would be suspending payments to our ROTH IRAs. We've been sending extra money there when we have it. But I've been thinking about would it be smarting to send that extra money over to pay the mortgage early. We will still be contributing to our 401ks.
After the house is paid off, we can then likely max out our 401ks and ROTH IRAs. Our kids would've graduated and be on their own by that time.
This post was edited on 1/3/13 at 9:38 am
Posted on 1/3/13 at 10:06 am to wiltznucs
quote:
Theres some tax benefits of the 401K, the mortgage interest deductions and whatnot to consider too.
Very high on your list when running the numbers. How many years are you in to your loan? Your ages?
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