If you suddenly inherited $500,000, what would you do with it? A lot of people very quickly reply, “Pay off the house!” However, in many cases, that instinct to shed yourself of mortgage debt is the same instinct that will dismantle the potential generational wealth that provided the inheritance in the first place.
If you bought your house more than a few years ago and your credit score paints you as a responsible borrower, it’s likely your interest rate is somewhere in the neighborhood of 2.5% to 3.5%. Using that half-million-dollar inheritance to get rid of your mortgage would save you from paying that interest, but at what cost?
