we moved into a new home (with a brand new mortgage, to boot) last month and i have been setting up the auto pay options with my lender. we secured a 30 year loan at 6% and i figured i could pay a bit extra each month and trim about 10-15 years off the note. well, when i initially set up the auto pay, i figured instead of paying extra principal i could take it and invest that money elsewhere. if i'm borrowing at 6% (really, somewhere around 4% because of the interest deduction), i reasoned, i could put that money into the market, which historically returns around 10%. so, that's how i set it up.
then, a few days later, i reasoned a bit differently and reset my auto pay options so i was paying extra. i would be saving the guaranteed 6% (or the effective rate after applying 25% or 33% or whatever depending on my tax bracket) and i wouldn't have to worry about putting that money at risk in the stock market.
but now, i'm back to thinking that i should just pay the monthly payment, invest the extra, and sit back and relax. right now, it makes the most sense to me. yeah, i'll end up paying about twice the price of my house over 30 years. but in 30 years, my extra investments should easily return a double. so, absolute worst case, it's a toss up. best case, my monies that would have otherwise reduced the price of my loan will end up beating out those gains.