By Andrew Rosen via Iris.xyz
Inspiration for my blogs comes from many sources. Sometimes I get inspired to write on a topic from a client meeting. Other times, my inspiration comes from something I read or from a conversation in the workplace. Further still, sometimes inspiration comes from a text message discussion with a bunch of buddies who love to debate. (So, thank you O-man, Fertig, H, & Dbav. I hate to give them any credit, because it will go to their already inflated egos. But hey, what can you do?)
The other day through text, Fertig threw this softball question out there. Should he overpay his mortgage or invest those dollars elsewhere? At a roughly 4% interest rate, it is a very good and logical question. It’s one clients often ask, too. In most cases, it’s situational upon each individual’s financial plan. However, I thought it would be fun to write a two part article debating both sides of this question. (I’ll end part two with what I am currently doing, so keep reading!)
To begin, I’ll start with NOT overpaying your mortgage. For this debate, it also makes sense to stick with some standard assumptions. Let’s assume a 30yr mortgage at a 5% or under interest rate; this represents the majority of individuals with mortgages these days.
10 reasons NOT to overpay your mortgage:
1. You can invest those dollars elsewhere (like in the stock market). In doing so, you’ll earn a better rate of return on your money than your current mortgage interest rate. There are no guarantees on your return, but if you believe in the long term trend, your investments should outperform your mortgage interest rate.
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