In the span of two months, both Money Magazine and Consumer Reports have issued the question - "Should you prepay your mortgage, or invest?" It is interesting that both magazines would ask the same question, and more interesting, that both would come to a similar conclusion. We've been asking that question a long time and believe it is still a key question worth asking. While we can't say they did an exhaustive study here, their overall approach was sound.

In our approach, we don't believe there is a one size fits all strategy. Market Risk and Discipline Risk must be considered for the 'individual' borrower. The math itself is pretty simple. Historically over any extended period of time, it has been much more beneficial to invest excess cash flow than it would be to prepay the mortgage, but this is based on average market returns and average costs of borrowing - the longer your time horizon, the more likely you are to be average in those respects.

There are of course many other facts to consider, but at a minimum, I wanted to make you aware of these these two articles and how they approached their recommendation to invest, instead of prepaying over time. 

If you would like a copy of them for your files, please email me at a.j.marisca@chase.com. 

 

If you have any questions, or know anyone who may be in need of a mortgage checkup, in-depth mortgage planning analysis, credit remediation, liability analysis, investment property analysis, or a preapproval to buy a new home, please contact me! 
 
Posted by x x on 03/12/2008 04:42 PM   Comments (1)   mortgage, prepay, invest  
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