Should I renew my CD or pay off mortgage?

**alaskaguy** · 05-03-2010, 06:55 PM

Originally Posted by CyPride

I would advise you to stay liquid.

You can stay liquid AND pay off the mortgage. There are ever so many offers from credit card companies with teaser low rates for the first six months. A couple of new credit cards could give you $50,000 just alone. In addition, you can shop around and get a line of credit against your dwelling. All of this is assuming you have a good FICO score.

Nobody makes money from paying a negative interest spread. Pay off the mortgage and arrange for some cheap credit lines just in case. You'll be way ahead of the game this way.

**68clone** · 05-03-2010, 07:00 PM

If you have enough saved for emergency purposes, then I would pay off the mortgage. We used to try to have 6 months in reserve funds in case of any emergency needs.

It may not be the best decision, based on tax deductions to pay the mortgage, but I sure slept better with no debt.

**Ficklone02** · 05-03-2010, 07:05 PM

I guess all things considered equal here is the general sequence I think works best: (especially if young)

1. Pay off unsecured debt.
2. Build up small in-case **** happens fund.
3. Buy some property....pay the minimum payment.
4. Build up a nice nest egg by investing in the markets.
5. Start paying down secured debt once investments are riding well on there own.

And, of course no matter what take the free money if offered a 401k match.

**mustangcy** · 05-03-2010, 07:47 PM

Being debt free at 45?! Man, I can only dream. I'm 32 and I'll be LUCKY to be debt free at 50.

One thing...and I'm serious.

You need to make sure you are giving generously to ISU athletics. I barely give and I feel bad about it. Once my wife goes back to work and I can afford it a little more I will start really giving to ISU. I would think being debt free and being able to cut a nice 4 or 5 figure check to ISU would be a thrill.

**CycloneCJ** · 05-03-2010, 07:52 PM

Originally Posted by aeroclone

Without knowing the details of your situation I would say pay the mortgage. I'm guessing that if you have enough money sitting around in a CD, that you don't have much left on the mortgage. If you don't have much left on the mortgage, your payment is mostly principal so it probably isn't doing much for your tax deductions, even if you itemize. With that, the low interest rate on the CD versus the mortgage makes it a better idea to pay it off.

That said, if you do still have a lot remaining on the mortgage and are paying a lot of intest which can be written off on your taxes, that raises a different question: why do you have so much money sitting around in a CD at ~2%? If that is the case, I would keep the mortgage, cash out the CD instead of renewing, and go find a different investent opportunity. There are plenty of very safe, conservative investment options you can find that will do better than 2%.

+1

**MeanDean** · 05-03-2010, 07:57 PM

Pay off the mortgage. Why would you settle for 1.85 % when by paying of the mortgage you're making 5+ percent?

What I don't think anyone mentioned (I didn't read the whole posting) is that, yes, you are getting a tax deduction on the interest from the loan, but you are also PAYING taxes on that crappy interest rate so you're actually clearing LESS than 1.85 percent on your investment.

**cdekovic** · 05-03-2010, 08:29 PM

If you put the CD into your mortgage and happen to need some cash for a big car repair or a new hot water heater or something it's a little hard to get that cash back. If you have additional cash to fall back on then you might consider paying some down on the mortgage. If you don't need the cash from the CD, then invest it with a longer term investment like a mutual fund.

**Flag Guy** · 05-03-2010, 08:35 PM

Originally Posted by cdekovic

If you put the CD into your mortgage and happen to need some cash for a big car repair or a new hot water heater or something it's a little hard to get that cash back. If you have additional cash to fall back on then you might consider paying some down on the mortgage. If you don't need the cash from the CD, then invest it with a longer term investment like a mutual fund.

Never mind that a 5 year CD isn't the most liquid of assests either...

Grant you more liquid than if you paid off a house loan, but if you need the money *that* bad, there is always a 2nd mortgage or what not