ed investments, such as 401(k)s, IRAs and educational plans are often overlooked by homeowners. The Federal Reserve Bank of Chicago concluded in a recent study that many borrowers making Before you pay down your mortgage or decide that it isn't wise to tap into your home's equity, think twice. While you certainly want to avoid leveraging home equity to make risky investments, there are some very prudent ways to improve your financial situation without a lot of risk.

A home loan is one of the lowest cost loans available because mortgage interest is tax deductible for most people (check with your tax advisor for specifics). A home equity loan at 7% is equivalent to borrowing a 4.55% for a homeowner with a 35% marginal tax rate. By contrast, credit card rates can be 18% or higher, and auto loans average around 8%. Consolidating higher-rate, non-tax deductible debt into a mortgage will save you money.

Tax-advantaged investments, such as 401(k)s, IRAs and educational plans are often overlooked by homeowners. The Federal Reserve Bank of Chicago concluded in a recent study that many borrowers making p

nts, there are some very prudent ways to improve your financial situation without a lot of risk.

A home loan is one of the lowest cost loans available because mortgage interest is tax deductible for most people (check with your tax advisor for specifics). A home equity loan at 7% is equivalent to borrowing a 4.55% for a homeowner with a 35% marginal tax rate. By contrast, credit card rates can be 18% or higher, and auto loans average around 8%. Consolidating higher-rate, non-tax deductible debt into a mortgage will save you money.

Tax-advantaged investments, such as 401(k)s, IRAs and educational plans are often overlooked by homeowners. The Federal Reserve Bank of Chicago concluded in a recent study that many borrowers making

ax deductible for most people (check with your tax advisor for specifics). A home equity loan at 7% is equivalent to borrowing a 4.55% for a homeowner with a 35% marginal tax rate. By contrast, credit card rates can be 18% or higher, and auto loans average around 8%. Consolidating higher-rate, non-tax deductible debt into a mortgage will save you money.

Tax-advantaged investments, such as 401(k)s, IRAs and educational plans are often overlooked by homeowners. The Federal Reserve Bank of Chicago concluded in a recent study that many borrowers making

rast, credit card rates can be 18% or higher, and auto loans average around 8%. Consolidating higher-rate, non-tax deductible debt into a mortgage will save you money.

Tax-advantaged investments, such as 401(k)s, IRAs and educational plans are often overlooked by homeowners. The Federal Reserve Bank of Chicago concluded in a recent study that many borrowers making

ed investments, such as 401(k)s, IRAs and educational plans are often overlooked by homeowners. The Federal Reserve Bank of Chicago concluded in a recent study that many borrowers making prepayments to their mortgage rather 401(k) contributions are "making the wrong choice."

You can contribute up to $4,000 a year (so can your spouse) to a Roth IRA. Because its earnings are tax-free, you compare its investment return with your mortgage's after-tax interest rate. In the 7% home equity loan example, if you can earn more than 4.55% on your Roth IRA, it will be the better investment.

Coverdell ESAs and 529 plans are similar. Like the Roth IRA, the earnings on these educational savings plans are tax-free. If you have kids, taking full advantage of these savings plans may be a better bet than paying down your mortgage.

Are you taking full advantage of your employer's 401(k) contribution match? The match is free