Mortgage Payoff Revisited
I asked this question probably a year ago, didn't find the thread on a search to revive it. Opportunity arises again, and I suppose it can be said that national economic conditions have changed.
I owe ~$50,800 on my mortgage. Per the contract time, 8 years remain. 4.875%
I have a $50K CD matured. Current best deal at my bank is 2.05% for 13 months. 2.65% for 60 months, too long. I'm sure a better rate can be found, but not *that* much better.
Although one never knows what may happen, I have no plans to move or sell in the foreseeable future ... so the $50K must be paid, sooner or later, one way or another. I can save approx $9,600 in interest with early payoff.
True, the interest is an income deductible, along with property tax (~$4400) plus a little more from medical expense/insurance. Federal tax on $9,600 in the 15% or 25% bracket isn't much compared to the $9,600. I'm all for avoiding paying interest. What's the prognosis for gaining more than $9,600 in 8 years by keeping the $50K in a CD (withdrawing the interest monthly, no compounding)? I'm not willing at this time to go the market route with it. Already have some funds there.
The $50K is about 20% of my current cash, including the scorched market funds. Approx half of the total is "untouchable" in IRAs.
I have no other debt. No car payment (8 years old, may need to replace it in a couple/few years), do not carry ccard balances. My income dropped considerably 2 years ago, but I live very frugally and am getting by OK. The monthly mortgage payment could immediately start going back into savings.