I understand what you were thinking..
What is your note rate ?
**That is your cost of the money.
(If you could make 2%, would you get a 1099 and have to pay taxes on it, netting much less?)
If you just want your mortgage out of the way, pay it off.
Depends what your future plans are.
I’m sure your credit is great. You will always have access to cash at some rate.
I have dealt with many people who are house rich and cash poor. They were in a rush to pay off their house and ran in to trouble because they lost their job and/or can no longer qualify to refi and take money out for one reason or another.
I’ve met people with lots of equity in their home who don’t sleep well at night because they worry about their cash flow.
I’ve also had people tell me that they sleep better at night with a nice cash cushion in the bank even though they have some debt that they could pay off if they wanted to.
It’s not a matter of right or wrong; it’s what you feel is right for your situation.
The wild card is that nobody knows what their future holds.
There are virtually no risk free investments today that will beat your mortgage rate, net after tax.
(With some risk there are lots of options)
**********************************
Another way to look at it is:
If you pay it off now and give up $75,000 in cash,
your guarantees are:
1) No more monthly payment of P&I
2) You will not have to pay $2750 interest over the next 3 yrs
***********************
If you can invest the money correctly, you may be taxed on the income that it generates, so you will need to receive a much higher rate than your note rate just to pay the interest and be even.
