Should I pay off my 7.5% mortgage?

I do not have enough deductions to itemize so I do not receive any benefit from interest deductions. I only owe just over 45K and have about 14 years left to pay. I have no other debts. I do investments in the stock market, mostly IRA's and 401k.

What you need to look at is the opportunity cost of using your funds to pay off your mortgage. Assuming that the outstanding mortgage is your only debt, if you use your money to pay off the loan, that money can't be used in your investments. If you can earn more than 7.5% on your money by investing it, you are essentially throwing money away by paying off your debt.

Say, for example, that with your investing, you can earn 10% return on your investments each year. By selling off your investments to pay off your loan, you're saving 7.5% a year, but you're losing 10% that you would have made, so you're basically losing 2.5% on your money each year.

yes

yes

If you are comfortable you are saving enough for retirement, then I see no reason not to pay it off. Why pay 7.5% interest if you are able to pay it off.

Why would you not pay it off. You just stated you dabble in the market. Would it not be better to get a 12% return on your money instead of paying 7 1/2% percent to someone else. A $1000.00 bucks a month in a Mutual fund could net you over 100k in 7 yrs with a avg return. If if your were getting tax benefits from write off they would likely never be better than you using that moneyt for yourself. Whomever stated a mortgage is a good thing was terrible wrong, especially if you can afford to pay cash. I say pay it off and invest your money in the market.. Yes you could invest the 45k in the market and probably get 12% return but if you keep the mortgage your ginving away 7 1/2% of the 12 leaving you a 4 1/2% return on your 45k. If you pay off the 45k and start investing what use to be your monthly mortgage payment you will realize the full return and within 3 or so yrs you'll have your original 45k back, no mortgage, and well on your way to more money. Do the math and enjoy.

Doc

no,bargain

You see ,
Firstly i would like to say to you that the interest rate you are paying on the mortgage is too high . I am a part-time loan officer in a mortgage company and we have interest rates with the higher 5 and lower 6 but never 7.5% .
What you should do is pay-off the loan and have another mortgage loan for the house and invest that sum on the IRA and stock market and gain from there .
So you will be gaining from the income tax benefits as well as the gains from the stock market.If you are from Arizona or California then i can help you in terms of loan.
regards,
kish

It's never the "wrong" decision to pay off the mortgage.

Having said that, it might not be the "right" decision either (depends on what you might earn on that money elsewhere).

Can you earn 7.5% on your money over the next 14 years? Most likely you can. However there is no absolute guarantee of this.

Keep in mind, that it is not an "all-or-nothing" decision. You could do both and hedge your bets (accelerate payments AND increase your savings).

At 7.5% you might want to consider refinancing.