Oxford Planning Group's Blog

At Oxford Planning Group we hope you will be amazed by a unique experience. In our Blog we will include periodic information and viewpoints that we hope you will find interesting. We welcome your thoughts and ideas, and if you'd like to learn more about any specific area, please just let us know.

Should you pay off your mortgage?

Whether to pay off your mortgage seems like it would be a simple item to review.  It's actually a bit more complicated than you might imagine.  In this blog we will review a few considerations for whether to pay off your mortgage or not.
 
Typically a mortgage debt would either be paid off early with a lump sum payment or by increasing the amount of the payments over time to pay the debt off more quickly.    It is important to review whether this extra cash will be needed for anything else.
 
Here are some questions to consider before moving forward and paying off your mortgage.
 
Do you have adequate emergency reserves?
  Depending on your personal situation and the type of work you do, we would recommend between 3-8 months of emergency reserves be available to you.
 
Do you have any upcoming cash expenses, such as the purchase of a car or repairs on your home?
 
What is the interest rate of your loan?
  There may be circumstances with a low interest loan that you will want to consider keeping your cash and investments in the market rather than paying off your loan.  If you have a low interest rate mortgage and feel you have an opportunity to earn a higher rate of return in the market, you may consider not paying off your mortgage faster than the normal payoff.  Remember, this has risks. Market corrections come unexpectedly and there is no way of knowing how long market corrections will take to recover.  In 2008's market correction, many people utilizing this strategy were left with investments worth significantly less than the mortgage debt they still owed.  Whether to hold a mortgage and invest the difference will depend on an individual's risk tolerance, market conditions, and your personal tax bracket.  All should be reviewed before considering this strategy.  While this looks appealing, many investors may find this too risky a strategy.  
 
What is your tax bracket?
  Some tax professionals believe that it is best to have the mortgage deductions to benefit your tax return.  I agree that the deduction does take taxes off of your highest bracket, but the deduction still does not cover the full cost of the interest paid.  In my opinion the tax consideration is really a blend of the net after tax cost of borrowing the money and whether to leave money invested in the market as indicated above.  
 
So, in short don't jump to conclusions.  Be sure to review your personal situation carefully.  No single strategy is right for everyone.  This blog is intended to give a brief overview, in layman's terms and is not intended to be tax advice.  Oxford Planning is happy to help with this analysis at any time.
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Welcome to Oxford Planning Group, LLC

It is with great pleasure that we welcome you to Oxford Planning Group. The firm was founded by Shaun M. Eddy, CFP®, MSFA, AIF®, who has over 25 years of experience in financial planning and investment solutions.   At Oxford Planning Group, we are "Focused on Your Tomorrows".  

 

Planning needs change regularly - whether its a new job or business, a new-born or adopted child, a marriage or divorce or other new opportunities, Oxford is ready to handle the details.  In a society that has become busier every year and has many things competing for our time, we at Oxford are aware that keeping track of personal and business financial issues becomes more challenging every day.  We strive to give clients back some of the time they are currently spending in these areas and to help simplify and streamline much of their planning and investment needs.

 

Across many industries we are seeing rapidly advancing technologies desiged to reduce the costs associated with business transactions.  At the grocery store you have automated check out machines, at banks you have ATM machines and in many businesses its nearly impossible to talk to a live person.  At Oxford, we look first to the needs of our clients.  Our services and processes are build around our clients needs first, and then we look for innovative solutions that enhance the quality of those services.    

 

In closing, we look forward to working with you for many years to come and we thank you for your confidence in our firm and its services.  If you do not currently work with us, please take the time to learn more.  Our web site includes our contact info and there is never a charge for an initial meeting.  At Oxford, we believe you will be impressed by our unique way of working with our clients. 

 

  
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10713 B Birmingham Way
Woodstock, MD  21163
Phone: 410-995-8711
shaun@oxfordplanning.com

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