Google Answers Logo
View Question
Q: Investing vs. paying off principal on mortgage ( No Answer,   4 Comments )
Subject: Investing vs. paying off principal on mortgage
Category: Business and Money > Finance
Asked by: jdabbas-ga
List Price: $30.00
Posted: 19 Oct 2006 10:28 PDT
Expires: 20 Oct 2006 13:07 PDT
Question ID: 775059
Am I better off investing my money into a 4.5% yield account, or
paying principal on my 7% (fixed for 7 years) interest only 30 year
mortgage, thereby reducing the interest payments? This is the first
year of the loan (interest only) and plan on selling in 5 - 10 years.
Please assume no change in property value.
There is no answer at this time.

Subject: Re: Investing vs. paying off principal on mortgage
From: probonopublico-ga on 19 Oct 2006 11:52 PDT
Pay off your loan.

It's no contest.
Subject: Re: Investing vs. paying off principal on mortgage
From: jack_of_few_trades-ga on 19 Oct 2006 13:31 PDT
Mortgages and student loans are usually the debt that I recommend
people keep (while usually investing in tax advantaged retirement

But in your case, 
1) I don't think the investment would be tax advantaged
2) The interest you'd receive on the investment is very low
3) Your martgage rate will likely go up to a less than desireable %
before you sell the house

So I'm with Probo on this one, pay down the mortgage.
Subject: Re: Investing vs. paying off principal on mortgage
From: neilzero-ga on 20 Oct 2006 11:01 PDT
The money you may pay on the mortgage is not very liquid = You have to
sell the house or refinance to take the money back. Typically there is
a cost of several thousand dollars when you refinance. If you have all
the liquid assets you are likely to need the next ten years, then pay
on the principle (assuming there is no penilty for paying on the
I'm assuming that the 4.5% investment is as safe as the investment in
the house, and you can withdraw your money with little or no penity.
More likely, chances are significant that you will need a sizable
chunk of cash in the coming ten years. If so, the 4.5% investment is
the way to go. It is  generally best to not have all your eggs in one
basket = diversify in several types of investment.   Neil
Subject: Re: Investing vs. paying off principal on mortgage
From: jdabbas-ga on 20 Oct 2006 13:06 PDT
Thank you for all your comments. All very good points to consider.

Important Disclaimer: Answers and comments provided on Google Answers are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, or other professional advice. Google does not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service or service provider mentioned or any opinion expressed in answers or comments. Please read carefully the Google Answers Terms of Service.

If you feel that you have found inappropriate content, please let us know by emailing us at with the question ID listed above. Thank you.
Search Google Answers for
Google Answers  

Google Home - Answers FAQ - Terms of Service - Privacy Policy