Should you pay off your mortgage before kids go to college?

The answer depends on your interest rates. If the interest rate on your mortgage is very low, it may be better to save for college in a 529 plan that earns a higher rate of interest. If you deduct mortgage interest from federal income taxes, be sure to look at your after-tax mortgage interest rate.

Should I pay off debt or save for college?

If your student loan interest rates are higher than that, you’d save more money by paying them off — and avoiding interest charges — than by investing. If your student loan interest rates are less than 6%, putting extra money toward retirement or a brokerage account for nonretirement investing is a better bet.

Does having a mortgage help with college financial aid?

Using a home equity loan on the family home will decrease aid eligibility because the home equity loan is not secured by a reportable asset, but the proceeds from the loan are reported as an asset on the FAFSA.

Is it worthwhile to pay off mortgage?

Paying off your mortgage early helps you save money in the long run, but it isn’t for everyone. Paying off your mortgage early is a good way to free up monthly cashflow and pay less in interest. But you’ll lose your mortgage interest tax deduction, and you’d probably earn more by investing instead.

Does Dave Ramsey recommend paying off house?

To be fair, Ramsey does not advise paying off your mortgage as a first step. He wants you to pay off all of your other debt first and then start setting aside 15% of your money to stick in mutual funds. According to Ramsey himself, you’ll get a 12% rate of return if you put your money into an index fund.

Should you pay off your mortgage or save for college?

When debating paying down a mortgage or saving for college, keep in mind that you are proposing paying into an illiquid asset (your home) vs. paying into a liquid needed investment (college accounts). The extra investment in your home will not add to your financial life until the house is sold or the mortgage paid off.

How should you pay for your kids’ college?

If you’re a homeowner, another strategy to consider is paying your mortgage aggressively while your children are young. This helps you build up equity – or even pay off your mortgage in full – to pay for college.

How can I pay off my mortgage early for my kids?

The account can be used for expenses for kindergarten through 12th grade. Any money left in the fund must be distributed back to the child before he or she is 30. A great website to visit is Savingforcollege.com. If you decide to focus on paying off your home mortgage early, please revisit the biweekly mortgage payment plan.

Should you prioritize mortgage payments to pay for college?

Prioritizing mortgage payments with the focus of using the cash savings to pay for college isn’t an option for everyone, but as your child grows and your financial situation changes, this could become a viable tool for funding your child’s education. Trying to fund your education? Get tips and more in the U.S. News Paying for College center.