Special Report: Time to Pay Down the Mortgage?

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Many investors are contemplating a big financial question these days concerning their homes.

The debate about whether it makes sense to pay off your mortgage or not really depends on each person's particular situation. As people get older, their appetite for risk slowly wanes. Despite our best efforts on Dividend.com to stress the long-term positives of investing in dividend-paying stocks, many individuals still have money parked in money market accounts (which can't even keep up with inflation) and abhorrently low CD rate accounts.

For those who are simply terrified of any risk, paying down your mortgage based on where interest rates have been - and likely will continue to be for the next several years - makes sense. For example, if you're paying a 6% mortgage and leaving your money in a low-interest account (essentially earning you nothing), your best strategy could be to pay off your mortgage, thus erasing the 6% APR. The potential loss of any sort of inflation hedge won't matter because of the piece of mind you'll be getting.

For others, I would recommend looking at other ways to cut down debt, especially where the interest rates are much higher than mortgages, such as credit card debt. Also, if your company offers it, take full advantage of tax-deferred retirement options like a 401(k) matching benefit. Even looking at your current life insurance situation makes sense - ensure that you have adequate life and health insurance based on your current situation. You could even consider disability and long-term care coverage as other places to wisely spend your money, instead of giving up the yearly tax deduction you receive as a result of your mortgage.

At the end of the day, there are several arguments against paying off your mortgage, but the decision will always involve many factors even beyond the items I mentioned above. Of course, our recommendation is always to grow your money over the long term in high-quality dividend-paying stocks.

Paul Rubillo is the founder and CEO of Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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