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jonacpa, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 3118
Experience:  Helpful answers to economic and financial questions.
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Pay off the house

Customer Question

I bought a house and have a $135k mortgage on it. I put $40K down. Two years ago I inherited bonds worth $145K that generate an income the same amount as my mortgage payment. I also have other investment income that generates the same amount as the bonds. I thought of selling the bonds and paying the house off. While doing this leaves no tax deductions it also saves $11,000 a year in interest, lowers my income by $12,000 a year thereby also lowering my owed taxes. It looks like a good idea, no debt, lower taxes, own my home outright (everything else is owned too (cars, etc.)but it also lowers my income (though with the mortgage this would be a wash, money in, money out).
Do you think this is a good idea, to me the only risk is that the bonds might do better down the line, but I am also 64 and retired and owning everything has appeal and I can live on my income and my social security which I get now. I also have no other deductions like medical, only my interest on the mortgage would make me eligible for a schedule A. What do you advise?
Submitted: 11 years ago.
Category: Finance
Expert:  jonacpa replied 11 years ago.

I think the most likely scenario for the bonds is that they will decrease in value as interest rates rise - which appears highly likely at this point. Based on your overall situation, as outlined, I think selling the bonds and using the proceeds to pay off the house is a wise move.

If you need further information or assistance, please let me know.

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