Maybe, but it would probably be a small one. If I could borrow at 3.875% (or any rate, for that matter), and immediately turn around and get a sure 1% to 2% above the borrowing rate (after other considerations, such as taxes), then it would be rational to borrow as much as possible to maximize receiving free money. However, the emotional considerations of being debt-free are very understandable, and I wouldn't fault you for clearing your debt. So, even if you don't find a way to perfectly match rates and cash flows to completely arbitrage your mortgage, you might be able to lock in some safe Treasury yields until you retire, and then reevaluate rates and your situation as to whether to invest in more Treasuries or pay down the mortgage. Remember, too, that with a fixed-rate mortgage and inflation, you would be paying back the mortgage with dollars that have been devalued from when you borrowed them. Finally, when you receive the inheritance, make sure of any taxes that might be due before using it, so that you don't end up surprised with a tax obligation after you have spent the money.Debt: Only debt is my mortgage $102k at 3.875
2. I'm going to receive inheritance of $100k in a few months (currently probate). As I'm nearing retirement I plan to pay off mortgage with the money. I understand financially I could make 1-2% if I invested instead, however I really want to be 100% debt free in retirement. Is this a mistake?
Statistics: Posted by VViseguy — Sun Jun 16, 2024 5:49 am — Replies 2 — Views 327