The smartest way to spend extra money Last fall, I refinanced my 30-year mortgage to 15 years. Consider how long you plan to keep the house. If you sell when property values fall, you will lose any extra money you put into the mortgage money you could have invested elsewhere. Of course, you can't lose money if you never sell your house. So if you plan to keep your house for many years, I suggest you pay down the mortgage.
Mutual funds are attractive, but they carry a level of risk, especially in the short-term.
Paying off your mortgage amounts to a sure thing. Every dollar you put toward your house earns a guaranteed rate of return your interest rate. And don't worry about the tax effect of the early payoff. Remember that the amount you'll lose to Uncle Sam only adds up to a portion of what you'll gain through lower expenses. You will still come out ahead with an early payoff on your mortgage.