No. of Recommendations: 2
"Lets say you owe $100K on your mortgage. According to the SWR, this is worth $4k/yr - plus you get to increase it for inflation.

Your annual mortgage payment is $10K/year, for the next 12 years.

Is it better to pay off the mortgage, or keep the $100K and pay it for 10 years.

Let's suppose:
Mortgage interest rate - 3.5%
Investment returns - 7%
Inflation - 2%
Just the standard deduction, not enough to itemize.

I think I know the answer (pay it off over time), but I want to see if I'm missing anything. This excludes all the psychological factors like the peace of having a paid for house, etc.

V "

Presumably, you have $100,000. on hand with which you could pay off the debt?
So you wonder if you should pay off the debt or invest the $100,000 versus possibly
investing the $10,000 annually over the next 10 years.

The assumptions of the return and inflation play a large role. What if the market
turns bearish? What if inflation rises? What if some situation occurs where you
cannot pay the $10,000 mortgage?

Generally, the built in assumptions are the factors that change the conclusions - or
change the impact of risk in the scenarios. What changes might occur if you
had to sell the property before paying down the mortgage for instance?
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