Following up on my post about paying down the mortgage. Yesterday, I read an article on cnn.money.com which reinforced JKC's position that putting extra money towards our mortgage is, perhaps, not the right move.
According to the article, putting money towards prepaying principal is not the best course of action if (1) you've got other debts (that is a no for us) or (2) you are not maxing out your 401k (also a no) or (3) you don't have 6 months of cash for living expenses (we are close on this one).
The next question, is how long do you plan to stay in your home. We plan to stay at least 20 years so that tips in favor of paying off the mortgage.
Then look at the tax impact, our tax deduction is $4700 the first year and our effective mortgage rate (minus the tax deduction) is 3.2%. So putting money in the stock market, like JKC argued,* is a better bet since the historical return for the the S&P 500 is between 6% and 7% (of course from 1/1/2000 to 12/31/2010 the S&P 500 provided a 2.4% return).
So, I'm still pondering this one.
*I very much enjoy getting feedback from others so I take no offense to JKC's comments or anyone else.