Pay off mortgage and invest or stay the course?

If you have $45k that you don't need (meaning you have other funds that could be used in an emergency) I'd be very tempted to just pay off the mortgage and be done with it. Then use the mortgage payment to invest, save for college, emergencies, whatever you want.

Yes there is favorable tax treatment for mortgage interest, meaning if you itemize you can deduct the interest from your income, but in your case very little of your payment is interest at this point. you're paying about $1,000 in interest over the year, which would be a tax savings of about $250 (depending on your tax bracket) if you can itemize deductions. It's not enough to prevent me from just paying off the mortgage and having one less debt on my shoulders.

If you don't have an emergency fund saved up, I would put the 45k in a high-yield savings account, where you'll hopefully get 3% interest or better and have the liquidity to cover any emergencies without going back into debt. The interest you earn will make up for the interest you're spending on the mortgage.

"Smart" finance people will tell you that you can make more then 3% in the stock market, and it's true, on average you can make more, but you can also lose money in some years, which can be disheartening if you don't have the experience of investing through downturns. Or you can pay it off, and take that mortgage payment and invest it, and will be back to where you would have been very quickly, and you won't have a mortgage to worry about.

If you ever regret doing it you can always borrow against the house again :)

Stay the course! I could have paid off my 125k mortgage Instead:

I wrote a note paying 7%. Every month

I'm paying of my mortgage with the proceeds from the note plus $50. At the end of the 15 years I'll have 125k note

I mean think about it for just one second. You can anviously make more than 3% on your money for very little risk. I mean my schwab mm pays me over 4%

How risky is the investment and what is its return?

You have an opportunity to leverage your investment with the money you have already borrowed. Leveraging increases your risk, but also increases your returns.

Given that you can afford the mortgage repayments now and are willing to invest either way, it appears that the risk is manageable even if the investment is a total loss. Assuming that the expected investment returns are more than 3% (which may even be possible at near Nero risk like AAA government bonds), you should leverage.