• SmartMoney

Should I Pay Off My Mortgage?

Question: I am tempted to pay the $300,000 balance on my mortgage and live debt-free. How do I estimate the tax benefit of the interest paid on the mortgage?

– Gaurav Aggarwal, Andover, Mass.

Answer: “Live debt-free” sure has a nice ring to it. Estimating the tax benefit involves just a few simple calculations and a little help from an online calculator, like the one on SmartMoney.com. The key question to ask: Is what you expect to earn by investing the money likely to be greater than the cost of the mortgage, after the tax benefit? If so, it may make sense to keep it invested, says Lynn Mayabb, a Kansas City, Mo.- based financial planner with BKD Wealth Advisors. And while they’re uncommon these days, some prepayment penalties do exist, so be sure to check your mortgage contract.

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