Last week my partner of 14 years died sudden. I will be getting some insurance money. I thought I would pay off the house, since I now am back to a single income instead of having two. I declared BK last year, but have a much better job now and I will be fine I guess financially.

If I pay off the house it will take about half the insurance money, so I would still have money to put away for emergencies. I am getting all kinds of advice and I am not thinking clearly.. .

I have used what savings we did have to pay for her funeral.

Linda

I am sorry for your loss. do what you feel most comfortable with, but IMHO paying off a mortgage early is not always the most fianancially sound move. run some numbers.

I am an insurance agent, when this situation happens, we encourage you NOT to pay off the mortgage....many many reasons why, but first, you lose the tax deductions which can be huge, second, invest it in either an annunity or mutual funds, something to earn you some more money, doesnt always have to be long term investments, Not sure how much you are getting, but $1,000,000 makes $50,000 a year in interest alone.
Best suggestion is a financial advisor, in fact if you dont have one, get suggestions from 2 or 3.

Linda,

I am sorry to hear of your loss. This is never an easy time to think about money.

A few questions need to be asked at this point before any advice can be given:

What is the balance left on the home?
How important is it for you to know the home is paid for?
How long do you plan to stay in the house?
How secure is your current job?

There are many other questions but these are some good starters. I think the advice given by Coyotesfan and Hedgemoney is accurate. You have to decide what your priorities are?

I know some people who can't sleep at night knowing that they owe money on their home. I know other people who are very comfortable carrying debt and feel confident that they can manage the debt service.

It is true that a mortgage can be a great way to deduct interest on your income taxes but this assumes you itemize your deductions (You probably do).

A few other questions come to mind about the house? Did you and your partner own the house as tenents in common or joint tenancy? Did your partner name you as a beneficiary in her will?

Again, please know that I am sorry for your loss.

JRo

My sincerest sympathies to you, I'm so sorry for your loss.

I'd pay the house off for the peace it will give you. Just don't remortgage it if you run into trouble in the future. Invest the old house payment into an IRA or 401K every month.

Sorry to hear. Very sad times.

You should probably talk to a financial planner and sit down and do some math. Right off, despite the tax deduction on the mortgage interest it's only a deduction it's not a tax credit. Which means while it's nice to have it if you actually have the money to get rid of that interest all together that may be the wiser thing to do.

Consider this, if you pay $12,000 a year in interest and you're in the 25% income tax bracket that's only 3,000 a year you're saving and you're spending $9,000 (Assuming 6% interest on the mortgage) a year on interest just giving it away to line someone elses pocket. So let's assume you have $200K left on the mortgage which wll get us to that 12K interest figure. If you took that 200K and invested it at 5% you would get 10K for the year. Now you have to consider that as income so back to the 25% tax so you give about $2500 to the government and keep 7500. So, 7500 + your 3K tax savings comes out to $10500 so by not paying your mortgage you made $10,500 but by keeping it you spent $12,000 so you have a net loss of $1500 for the year. Of course this all depends on your tax bracket and the interest rate on your mortgage.

A word of advise however, if you do pay off your mortgage I would recommend you continue to make your monthly mortgage payment to yourself (unless something comes up and you absolutely can't) and stick it into a good interest earning account. You'll be amazed at how fast that money will turn into a very large sum.

Very sorry for your loss. The first thing you need to do is NOTHING. Any competent advisor will tell you not to take any action while the emotional pain is so fresh. You did not have the money before and it will be there ready for you when you can think clearer.

Advice I would offer going forward-- Most insurance companies never actually write you a check, they give you a checkbook from which you can draw against the insurance proceeds. Get a check for the full amount and deposit it in a MM until you can sit and make a clear cogent plan. As for paying off the mortgage or investing. The question is "can I get a better effective return than my mortgage rate/?" If yes invest, if not payoff. Alot depends on the total amount of money you are getting. If you get 100K or so, that is only enough to put in a mutual fund. No matter what anybody says,the effective return on most mutual funds is somewhere south of 5%, at that rate the mortgage seems like the right option. If you are looking at closer to 500K(enough to go into a managed Platform, that might be the way to go. In any case, just take your time.