Originally Posted by jp467
This type of advice comes from someone that doesn't have investments just a saving account getting .5 percent interest.
Absolutely. Its simple math. If I am borrowing money on my mortgage at a net cost to me of say 2.5%...and I have the money I would have spent for that house performing at say...5%...if I paid off the mortgage I am loosing that 2.5% net gain I'm getting on that money.
When you factor in that we all hope our homes will go up in value over time, and that value growth is based on the total value of the home and only 20% of that value is cash that would otherwise be mine...the potential for gain is even higher.
Remember too, if you're investing the money that you would be using to pay down/off your mortgage wisely with good returns, barring some catastrophic loss that money will be there...same as it would be if you used it to build equity in your home. Homes loose value too at times...as we've seen. Whether the money is in your home or invested...its at risk. If its a high return investment its likely at more risk there, but investing is always about balancing risk with return.
Now...if you are someone who just wants to be debt free and have savings in the bank and its not about maximizing your returns thats fine. Worked for my grandparents...my grandmother is 90 and we just had to put her in a nursing home...she had saved about $14,000 over her whole life. But she always had a roof over her head and money in the bank.