Originally Posted by RicaLynn
I'm actually pondering this dilemma right now - I have the funds to pay off mom's mortgage, thanks to her life insurance, but do I want/need to do that? Actually it's kinda a no-brainer, because I'm going to be in school for the next 6+ years and I don't need to worry about a house payment if I'm trying to pay for tuition. I'm sorta looking forward to that payoff as well!!
I'm overprotective of my money, so I looked at the problem lots of different ways. Here is some advice that I heard along the way and it may help you to decide.
If you had all of your debts paid off, would you take out a loan against your house just to have a tax deduction on your income tax? If you have the cash laying around to pay off your mortgage, you are basically deciding to do that.
How much money are you really getting in your pocket for that deduction? Figure out which income tax bracket you fall into (say 23%) and what interest you are currently paying each year. Multiply the interest by the tax bracket and that is what you earn by keeping the mortgage. Multiple that by the years left on the mortgage. Now take the monthly payment and figure out what you would earn by putting it into investments or say, an interest bearing CD over the same time period. If you are not sure how to do the match, do a search for a financial calculator online. I used this site:http://www.dinkytown.net/
The results are always interesting.