Invest vs. Payoff

This form allows you to compare what would happen if you took one of two choices with a big chunk of cash you have -- paying off your mortgage, or investing it instead. This tries to take into account your tax situation and assumes you always itemize (even late into your mortgage when the interest portion of your monthly payment is less -- I am assuming you give to charities, and pay state and local taxes too!!)

To determine if you should invest or prepay your mortgage, you need to compare cost of borrowing with the potential return from investing. If your cost of borrowing is a 6% net after tax interest rate, and you can invest assuming an 8% after-tax rate, it may be better to invest since the money may generate 2% more than you by reducing the debt burden of 6%

I am assuming you give to charities, and pay state and local taxes too!!)

 

Change these fields as desired:
Current monthly payment (principal & interest only)
Current Annual Loan Interest Rate
Current Loan Balance
Loan Interest Deductibility
Expected Long Term Investment Return (%)
Expected Long Term Tax Rate (%) (Federal+State)
Investment Type