Financial Advise Question... pay off house or invest?

I learn a lot from the beeb so thought I'd throw out a question I currently am having trouble getting an answer on... Should I pay off my house in 3 years or invest that extra $3000/month?

On the one hand I like paying off the house as I'll save thousands in interest payments, however I dont plan on living in this house longer than 3 years. On the other hand am I better off investing that $3000/month somewhere earning, say, 5% in a mutual fund? I'm not an investor (clearly) so hence this post.

Paying off the house is more attractive to me as I'll see immediate benefits and be able to track my progress, but is that the best use of my money short-term?

 

*Advice

 

In financial terms it all depends on your mortgage rate vs return rate of investment. If you can get a higher rate of return with what you invest than what your effective mortgage rate is then invest, if not the pay off your mortgage.

 

Hookers & blow.

SRSLY, though. Only you can answer this question. If you're very risk-averse, pay off the house. If you can stomach some ups & downs, invest.

As long as QExxx is going on, the market will continue its irrational climb. But the instant that money machine gets its plug pulled look the #&$% out below.

Or then there's bitcoins...

 

^ What he said ^

 

Pay off the house, then invest the money you were paying on the house.

I'm going from a 30 year loan to a 15 and dropping a couple of interest points. The payment is about $100 per month higher but I will literally save enough money in interest to BUY MY HOUSE AGAIN.

 

Well my mortgage APR is 5.85%, monthly payment is roughly $1000 (principal, interest, taxes). Only about $200 currently going to principal if I paid the minimum. If I invested I don't think I'd go anything high risk, something like an index fund most likely.

EDIT: Thanks for responses above...

 

Depends. In my case invest.

4.25% fixed mortgage tax deductible loan versus ultra safe 5.25% double tax free bond funds. Just using the bond fund as no-brainer non-risky example. As an added benefit you gain more financial flexibility and less personal risk since you would have a liquid account to draw on if things take an unexpected bad turn.

 

this is what i was gonna type out. except with the addition of one thing:

keep in mind that with only $200 of $1000 going to principle, you're getting a big mortgage tax deduction on your yearly taxes that will help offset property tax and other monies owed. if you pay off your house, you no longer have this deduction.

so not only does your investment % return have to cover a larger % than the mortgage rate, but it will also have to account for an increase in taxes owed without the deduction. i'm sure there's an equation for that somewhere, but seeing as how this is not the type of finance i'm in, i'm sorry i don't have that for you.

 

Consider that the markets are at an all-time high. Can they keep going up for three years without a correction? It would make me a little nervous.

 

5.85%? pay off the house.

 

Yep. A bond fund won't cover inflation.

But you could day trade. Over the last 3 or so weeks I netted 10% on Tesla.

 

Day trading ain't for the light hearted or beginners.

 

Multiple times this year, it's been up that much in a single day.

 

That's a pretty high rate.

 

THe idea of no mortgage is a pretty appealing concept. I'm debt averse, I'd go that way but I'm sure someone with a firmer grasp on financials would say i'm wrong.

 

I definitely don't have the know-how for day trading, or the balls! If I'm up $20 on the slot machines I cash out.

 

You did not seriously just suggest the guy day trade, did you??!!??

OP... don't.

At 5.85%, try & refi first off, and if you can't, then pay it off.

 

Then you're in almost exactly the same boat I'm in as our numbers are very similar. Pay that thing off.

 

Whoops... just checked and it's 4.6%. Certainly not the lowest, but I bought the house with an 80/20 and was unwater for awhile. Recently got the 20% paid off and was able to refi down to the 4.6 (from 6.75). Could possibly lower again, but since I don't want to be in this house in 3 years I figured I'd let it ride and attack aggressively (or take another route with that money)