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Editor’s Note: This story originally appeared on NewRetirement.
Recently, on the NewRetirement Facebook group, Linda asked about what she should do with a recent inheritance. She asked whether she should pay off her mortgage or invest.
She wrote: “I am 77 and have a mortgage with $150,000 left on it. I have inherited enough money to pay if off. Should I? The mortgage is at 4.35% interest rate. ”
It is a good question. Making the best financial decisions can be like playing a chess game. There are long and short-term consequences to every move. Keep reading to see what members of the group had to say about Linda’s question.
Arguments in Favor of Paying Off the Mortgage
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For many people, paying off the mortgage was a no-brainer for the following reasons.
Peace of mind
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The most popular responses — by far — were those that argued that the peace of mind that comes with being mortgage-free is worth a lot more than the potential for increasing wealth.
Here are some of those arguments:
Mike wrote, “I was in a similar situation and decided to pay off the mortgage. While the ‘math’ might suggest that it is better to invest, there is a huge relief of having NO DEBT. I have no regrets and would make the same decision if I had to do it over again.”
Rosemary delights in being mortgage-free, “I have no mortgage, and love having no debt.”
“I became mortgage-free last May, and I say pay if off,” says Cynthia.
Cheryl says, “Peace of mind has the greatest value. Pay off the mortgage and be grateful you own your roof.”
Greg writes, “You can’t put a price on ‘peace of mind.’ Pay it off.”
Poetically Ted says, “The grass feels softer and the view from the deck is prettier when the house is paid for.”
Stock market returns are not guaranteed
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“There is no guarantee the market will go up,” wrote Peter.
Reed philosophized, “Mathematically, you should invest the money. However, psychologically, you may want to simply pay off the mortgage.” He continued, “For me, I paid off my mortgage because I ‘feel’ like the market is near a peak. The feeling with no mortgage burden is worth a lot to me.”
Burt is not a fan of risk, “I agree that putting it into the market is probably too risky unless you’re certain you can stand five more years of a market correction. I suggest using it …….