Should I pay the mortgage off?

Question

Hi. I am new to all this and looking for opinions.

I inherited my mom's townhouse who just passed away. It's worth about $350k with $95k left on the mortgage which will be paid off in 10 years. Im goin to say the rate she got it at is under 4%.

I'm going through the mortgage assumption process now and was wondering if a smarter decision would be to pay it off? I will be renting it for now and pocketing roughly $1300/mo. My plan is to move into it myself in a few years or later on down.

Ive always been big with cash on hand in case something goes wrong in life. Im a cash hoarder and am afriad to spend it. Between my 401k, savings, inherited IRA I have about $380k

Just looking for opinions from people who are more experienced in investing, moving money around, etc. I'm taking this tough time in my life and would like to reposition myself and get set up for retirement in 20 years.

Randall Alan · Answer

@Mike Smith

The best answer to your question revolves around opportunity costs… ie.  what else could you do with the money you would spend to pay off the mortgage.

in a savings account it will earn 4.x% per year.  The stock market - usually 8-10% per year (but who knows with what is happening these days.)  Run some calculations on other investments… be them real estate or what have you.  Let that be your guide.

My thought is that with a lower mortgage rate you will find a better place to put your money than paying off the house.

All the best

Randy