Should I prepay my mortgage?

As a Certified Financial Planner™ and Mortgage Professional I often get asked whether or not it makes sense to pay-off your mortgage.  As with any financial decision there are always trade-offs.  Often times money that could be used to pay down or pay off a mortgage can also be used to invest for other accumulation goals (i.e. retirement, emergency savings, college).  I came across this post by one of my favorite online financial experts and thought I would share.

The column focuses on comparing returns versus the cost of borrowing which is an important part of the equation.  The other piece I would emphasize in risk tolerance with regard to finances.  The nice thing about paying down or pay-off a mortgage is it offers a guaranteed return.  With other investments, including US government debt, there are varying degrees of risk.  Aside from the comparison of returns its important that individuals make an honest assessment of their ability to accept that risk.

Hope this helps!