By: ohiodale

It depends on the inflation rate. Today it makes sense to pay down the mortgage. If inflation goes up to 6-7% it absolutely makes more sense to pay the minimum payment and invest the extra money. If you plan to sell the house, pay the minimum payment. If you are in your twenties, pay the minimum payment and invest the extra money you would have used to pay off the mortgage. If you are nearing retirement, pay off the mortgage. With interest rates so low most people pay an effective 2.7-3% in interest. John gives good advise but its not for everyone. Everyone talks about paying off a house and than using the extra money for investments. Its better to invest young so the money has longer to grow. Once you hit mid thirties your investments will only double 3 more times or 8 times (2 x 2 x 2). If you invest in your twenties you will get a 16 times bang for our buck. I would rather save for retirement than pay down a 3% interest mortgage. The difference could mean $1 million dollars when you retire.