Question about mortgage payoff

[Roadster1]

Hi;

My wife and I are in our mid-40s (no kids) with about $20K left to payoff our $395K home mortgage and no other debt (car, cc, etc.). We have $70K in our safety fund, $190K/yr combined salary and around $400K in investments (401K, IRAs, CDs).
My plan is to pay off the home loan by the end of 2014. Would there be any reason to not fully pay off and close out the loan other than to defer the $20K into an investment which I do not want to do? In other words, are there other reasons to keep a loan open with a small principle amt lingering?

[KTP]

I would pay it off and reduce your bond exposure in your accounts by $20,000 (ie, move money into stocks). Consider the $20,000 as a guaranteed return CD at your current interest rate. Of course we are using the standard deduction, so any amount of our 3.625% mortgage we pay off is like getting a CD with a 5% before tax yield.

[Roadster1]

I would pay it off and reduce your bond exposure in your accounts by $20,000 (ie, move money into stocks). Consider the $20,000 as a guaranteed return CD at your current interest rate. Of course we are using the standard deduction, so any amount of our 3.625% mortgage we pay off is like getting a CD with a 5% before tax yield.

So you would not have a problem reducing a safety fund from $70K to $50K to pay off the loan?
Thanks

[JoeP]

If I were in your shoes, I'd pay it off tonight. The money that gets freed up can go toward maxing out your pre-tax retirement funds if they aren't already maxed out. Nothing preventing you from investing (more) in the post-tax market.

[KTP]

So you would not have a problem reducing a safety fund from $70K to $50K to pay off the loan?
Thanks

With a paid off house and a $190,000 a year job, $50,000 is a quite sufficient emergency fund.

Figure worst case both of you lose your jobs, you will be able to collect unemployment for at least a year. Add to that the $50,000 and you could take 2 years to find other jobs and still not need to dip into your investments.

[bjl584]

With no kids and a paid off house $50,000 seems to be a sufficient EF. I agree with the others. Pay off the house and be debt free.

[HappySaver]

Do you have any large upcoming purchases you're expecting to make (car, etc)? If so, that would be a reason to keep the $70k in the bank. You're on schedule to pay the loan off anyway at the end of the year; at this point the amount you're paying in interest must be negligible. So no rush in paying the loan completely off, unless it just makes you happy to do so.

[LivingAlmostLarge]

Agreed congrats!