Pay Off Mortgage vs Invest
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Editorial verification: Examples on this page are checked against FutureCalc core formulas before publish. Source: cross-checked with OpenStax TVM basics and Investor.gov investing basics.
Compare rates, then risk
If your expected after-tax portfolio return exceeds the after-tax mortgage rate and you can tolerate market risk, investing surplus cash can win on paper. If returns are uncertain or debt stress is high, prepaying is a guaranteed return equal to the loan rate. Model the loan path with the amortization calculator and opportunity cost with the loan future cost tool.
Decision checklist
- Emergency fund and high-interest consumer debt first
- Capture employer 401(k) match before extra mortgage principal
- Compare after-tax mortgage rate vs expected after-tax returns
- Stress-test with lower returns using the investment calculator