BelalM

I haven't thought about that calculation much since I got into this field.

My simplistic analysis used to be that if your mortgage interest rate is higher than the best alternative investment, then pay down your mortgage. That's still basically right, but now I'd add in two things 1) a "for the same level of risk" qualification, since some investments might yield more but also be riskier, and 2) it's also true that you'd have to consider the benefit of the mortgage deduction.

So if you have cash for paying down your mortgage, you'd want to do it if there are no other attractive uses for cash that yield more than [Mortgage interest rate]*(1-[marginal tax rate]) and less or equally risky than sticking with your mortgage.



Edited 1 time(s). Last edit at Saturday, July 23, 2011 at 05:28PM by bchadwick.