Pay off house or continue to fund IRA and 401K?

I've been trying to decide whether to try to pour all of my money into my house for the next 5-6yrs and pay it off or to continue to max out my Roth and 401k. If I decided to try and pay off my house, I probably wouldn't fund my Roth at all and cut back my 401k to about half of the max. Currently, I max out both my 401k and Roth and stick 4-5k a year in stock. I'm 27 and I figured if I paid off my house, I could basically live close to rent free the rest of my life even as I upgraded to larger houses. But I also realize how important time is when it comes to investing. Finacially, what is the better long term choice?

You are 27 and probably have had the the house for only a few years I would guess. My advice would be:

1. Fund your 401(k) up to the maximum Company match.
2. Max out the Roth IRA.
3. THEN, max out the rest of the 401(k).

The reasons that you DON'T want to pay off your house outright are:

1. Money is alot easier to pull out of IRA's and stocks if you can't work or if the economy tanks than it is to tap into the equity of your house. If you aren't working for some reason, no bank will allow you to re-finance the house to take money out. That means you'd have to sell the house, which may give you $250,000-plus in cash, but what if you only needed $50-60k to tide you over until getting back on your feet? And you'd still have to find a place to rent. The real estate transaction costs are also very high.

2. Low current interest rates. If you pay off the home and find you need to take money out later, there is a good chance that rates will be higher (potentially MUCH higher due to the weak dollar) than they are today.

3. If your interest rate is below 6%, you will make much more in the long term in stocks and equities, which have historically returned over 10% annually on average. If your interest rate is over 6%, wait for an opportunity to re-finance, especially with the Federal Reserve lowering interest rates and allowing Fannie Mae and Freddie Mac to pour cash into the system.

4. Opportunity cost. Although you will be making loan payments for up to 30 years, those payments way on down the road mean little to you now. A relatively small monthly payment frees you up from having to pay in large lump-sums in the near term. This allows you to have a chance to build up a cash reserve to buy other income investments, whether they be stocks, or rental property.

5. The mortgage interest tax deduction is nice, and actually INCREASES your annual cash flow, so that $1500 house payment (theoretical) may truly only cost you $1200 after the deduction.

For now your best bet would to make the normal payments that pay down the mortgage on timeline (hopefully you are not using an option ARM, and if you are, make sure to pay the fully amortized payment amount each month). Don't pay extra into the mortgage other than that. Extra cash should go to stocks and to make sure you have a "rainy day" fund set up for yourself (2-3 months of living expenses if you were to lose your job).

this might help ya out. good luck!
http://cheaploancheck.com/

i would have said to pay off house. but considering your age i would probably pay in roth and 401. if you could, can you pay a little extra on house and still fund the others? at your age i would say you get a tax break on the house.

u got lots to learn so start with
funding ur retirement plans u come out better.
as for pay off house loan , get pt/tm jobs and pay it off or get a budget.
visit dave ramsey.com to learn from others harder lessons. cheaper faster easier less pain.

Financially, it is almost always better to invest you money in equities than in your mortgage. On AVERAGE, the stock market returns 9% per year or more. Your 6% mortgage with the tax advantage is costing you about 4 to 5%. The difference is 4% for investing. Is the idea of being debt-free sooner more important to you than a several hundred dollars per year from investment returns?

Put as much as you can in retirement and also put as much as you can on the mortgage. Don't put anything in stocks until after you've maxed out the 401k/Roth and paid off your house.

Although mortgage rates are lower than your potential growth in the retirement funds, there is also much less risk in your own home. If your financial world started crashing around you, you would be much safer if you owned your house outright. If you factor in the cost of risk, then it makes more sense to pay off the mortgage.

You will end up with more money in a retirment fund than paying off your house. When its time to retire your mortgage will most likely be paid off and you will have good retirement savings to enjoy.