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Regular Contributor
axxy
Posts: 139
Registered: ‎10-11-2007
0

If I have the money to pay off my mortgage, should I pay 100% or 95%?

If I only pay 95% I will still have an active mortgage.  Does having an active mortgage help your score?

 

I'm 6 or 7 years into a 30 year mortgage, with scores in the 700's, and trying to decide how to invest my money.  It seems unlikely I could find a better interest rate than not paying interest on my mortgage.  But if I pay it down 95%, it will have about the same effect, but might make a big difference to my scores vs paying 100%.

 

The money is from selling stocks.  I sold them because I was concerned that the "sequester" might cause the market to start going down.  I was probably wrong about that, but even so, I think I might get better long term results by saving money on interest than by hoping for gains on stocks.  I did get lucky by holding a large amount of facebook stock from the low 20's till the low 30's, and then selling just when it reached its peak and started going back down.  But what are the odds I would get lucky again?  If I buy it back on the way down, it might keep going down.

 

New Contributor
acleynes
Posts: 66
Registered: ‎10-30-2011
0

Re: If I have the money to pay off my mortgage, should I pay 100% or 95%?

I would just pay off my mortgage 100%.  The mortgage account stays on your account for 10 years there after.  With your mortgage paid off in full, that will leave you with a substantial amount of extra money per month that you can invest elsewhere.

 

You are now in the position to buy another home, and rent out your existing home.  You would qualify for a larger home loan with a better rate since you already paid off your home loan too.

 

So you could rent out your existing house, and let it make money for you this time around.  And as you are paying off your second mortgage, you are building equity on that too.

 

 


Starting Score: TU 749 02/02/2014
Current Score: TU 749 02/02/2014
Goal Score: 850


Established Contributor
Pilotdude
Posts: 955
Registered: ‎02-02-2013
0

Re: If I have the money to pay off my mortgage, should I pay 100% or 95%?

Absolutely pay off your house if you can.

 

It stays on your report for 10 years AND its a paid off asset. 

 

Maybe if it were a commercial or investment property and not your primary residence it would be different but heck yea, if you can pay off the house, do it.


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