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|Author: ||Mojo Jerkin|
|Subject: ||RE: NRR - Paying off House|
It isn't entirely a simple math calculation -- you have to think of diversification and risk.
So, say you are paying 5% interest and your savings get 1%. On math alone, yeah, you are better off paying it off.
But, the house is an non-diversified investment, that can either go up or down in value. By paying it off, you are tying more of your net worth to a single investment. That may make sense, but is no doubt riskier than investing your net worth in something more diversified. And, you also lose a bit of a tax write off on the interest as you pay it down.
Why pay off a house you don't want to live in? Why own something you don't want? Sell and get into where you want to be, and then think about if paying your mortgage down make sense given factors like your net worth, comfort level with the future value of the house, etc.
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