Pay down 4.375% mortgage, or invest in the market?

Another option for you would be to pay down your mortgage with the $30k and open up a home equity line of credit. Rates are around the 4s for Lines right now. THat way its still available for you to use and you no longer have that balance on your first mortgage. The stock market isnt considered liquid. You have your money tied up and have to succumb to the ups and downs of the market.

Quote from YfzinJay : Another option for you would be to pay down your mortgage with the $30k and open up a home equity line of credit. Rates are around the 4s for Lines right now. THat way its still available for you to use and you no longer have that balance on your first mortgage. The stock market isnt considered liquid. You have your money tied up and have to succumb to the ups and downs of the market.

This is incorrect. The market is considered liquid. A house on the other hand is consider illiquid. The whole idea is that you can convert to cash almost immediately.

First off, Do you feel comfortable in your position in life with the debt-load you currently carry and with job security and etc etc. I am assuming from your post, that you do feel comfortable about where you currently are financially. With that in mind, it comes down to whether or not you think there are great deals to be had in the stock market. It appears that you are treating this 30k as investment money, so whether you "invest" it in your house by paying down your mortgage, or you invest it in the stock market, you should pick the option thats most appealing. Paying down your mortgage = safer investment with a guaranteed savings amount from the reduction of your balance. Investing in stocks = riskier investment with no guarantee of any return (but probably a guarantee of a wild ride hah), but the potential for much greater returns.

One final thing to consider is the tax implications of both scenarios. I am assuming you currently get a tax deduction for the interest you pay on your mortgage, so if you used the money to pay the mortgage down, you might reduce your tax savings from the mortgage interest. Just one thing to keep in mind because, depending on your tax bracket, that could have a sizable impact on your tax bill.

And if it were me, I would invest in the market because I believe that there are some great bargains to be had in there right now, but thats just my personal opinion.

Quote from Zytos : Hello all, I'm new to this section of Slickdeals. I hope you guys can give me some input on my following decision: I have around $30k to with which to either: a) put towards my 4.375% fixed mortgage ($525k outstanding on a ~$670k house), or b) buy a diversified ETF (I have my eye on Vanguard's VYM, which is a collection of "high-dividend" blue-chip stocks). On the one hand, I think paying off the mortgage is the safer investment; but on the other, I sort of value the liquidity of putting the money in the market. Also I'm in my late 20's and would view the purchase is a mid- to longer-term investment, so I would ride out the storms in the market. I already have some cushion in a low-yield (0.80%) savings account. I have no debt other than the mortgage. Just wondering what you would do with the spare $30k, because it's currently in savings, and I don't think it's doing much for me right now. Thanks.

First thing you should do is refi that mortgage. I see jumbo rates at 3.875% today, they have been lower in the past, and may fall again on the next bad economic news.

Quote from General Ghoul : First thing you should do is refi that mortgage. I see jumbo rates at 3.875% today, they have been lower in the past, and may fall again on the next bad economic news.

I second that, first do a "NO COST" refinance, and get rate below 4% (you should be good as your LTV is pretty much with what broker want that to be.

Don't put money in the house(you never know what will happen in future), rather keep it in bank, put in iBonds or buy the stocks/etf/funds which you think have good chance of appreciation.

Pay the mortgage.

Take whatever you feel comfortable gambling with out of that $30k and short the market. It's not the time to invest in anything unless you have a gut of pure iron and can sit comfortably while everything deflates around you.

If you think rates are "low" I think you're in for a real treat. Wait till the 30 year takes out 2.5% or so. Bernanke's last stand is to flatten the yield curve to insanely low levels which means interest barring capital is at risk which means mortgage rates will continue to drop.

Even your standard bank account is at risk. Things are going to get out of control quickly and you need to protect your assets. If there's a run on the bank, your "liquid" fiat could be locked up for weeks.

The stock market is not a form of savings anymore than going to a casino and handing your cash to the pit boss and praying you'll get it back in ernest. It's a fool's paradise that there are "bargains" in the market because it's dollars in, dollars out.

Whatever's left over goes into gold bullion. Be your own central bank and enjoy counterparty-free wealth preservation. There's no other alternative, sorry.

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Refi, then pay off the mortgage. It's basically a guaranteed way to make your money work for you. If you invest in the market (which isn't doing so great right now..), you could make money, then pay off more of the mortgage. Or you could lose money, and end up not being able to afford the mortgage, or paying higher rates, or just paying it back slowly at the same rate. It's win-lose.

If you just pay back the mortgage, you're basically saving yourself 4.3 (or whatever your refi rate is) percent per year. Guaranteed money is the best kind, and will also help you budget better for the future, which means you can live comfortably and not worry as much about the money. Keeps the stress out of your life, if nothing else.

Let's keep it civil, this is not the Podium.

I'd buy an oil related ETF right now. I should say, I did buy an oil related ETF on friday.

I don't think shorting the market is a good long term investment. Yes, it may pay off short term.

Bonds are very expensive right now. Very little yield there.

Buying oil, on the other hand, appears to be a great long term investment to me.

Real estate might be a good investment right now, but you already control that investment vehicle. I think you should use the capital you have on something else.

Have you considered a real state ETF like URE? Perhaps that gives you the best of both worlds. Whatever you do, trust your intuition.

If you don't have an emergency fund, that needs to come first. In a perfect world, you should have 6 months on hand. $30k in money from the sky is a great way to do that. It needs to be liquid because you need to be able to get at it, obviously, in an emergency.

After that it's personal preference. I'm paying down my mortgage rather than investing outside, but I put more value on debt service than I do on the value of potential gains elsewhere.

Pay the mortgage, market is very unstable right now.