"Q:" I will be getting around $80,000 in cash from the sale of a property. I have 13 years left on my mortgage, with $70,500 remaining in principal. The house desperately needs a new roof and a new driveway. If I pay off now, I will be saving $1,000 per month to use for the repairs. Should I invest the $80,000 or pay off the mortgage?
-- Zia, St. Peters, MO
Your note says that your home "desperately" needs a new roof, so it seems to me that making that repair is a priority.
I would use a portion of the cash to repair the roof, and depending on how bad the driveway is, maybe make that repair as well.
You didn't indicate if any taxes will be due on the $80,000 you will be receiving from the sale of your other property, but if so, you need to reserve for that as well.
The decision on whether to use the amount left over for investing or paying down your mortgage, should be based on a number of factors:
â€¢ The interest rate on your mortgage.
â€¢ Expected investment earnings, based on your risk tolerance and investment horizon.
â€¢ Your income tax bracket.
â€¢ If there are any large purchases that need to be made in the near future.
â€¢ The balance in your emergency fund.
â€¢ Adequacy of your retirement savings.
Make sure you take all of the above into consideration before using the whole $80,000 to pay down your mortgage.