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Pay off the Mortgage or not – after sub prime crunch

This is a question that was posed just after the credit crunch hit (was in the forum but moved to the blog)

I have been patently sitting on the edge of my seat watching my taxable investments loose 30% of their value. I have 15 years before retirement. My home is worth $325,000 and I owe $45,000 on that loan. I have no other debt. Does it make good sense to cash in some of my investments and pay off the mortgage now; in doing this I would be accepting the decrease value in the mutual funds I sell and loose the interest deduction.

Reply by Mod:

Chances are you lost 40% or so on your mutual funds/investments. I wouldn’t cash anything out if you’re 10 years away, they’ll recover. IF you have a steady job then keep on trucking with existing payments. (In fact, buy buy buy!) you’ll regret selling anything right now. if you still have a job don’t sell a thing. by the time you start retiring you’d have recovered and gained.

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