I would assume the rate of 4.75% will be locked in for 30 years. Until you can make more than that rate by investing, you are best off putting extra money towards the mortgage. If MM rates, or CD rates, rise above 4.75% then, at that time, you can put your excess cash towards investments instead of the mortgage. Also, you are right that you will get taxed on any interest income that you have on the investments. But, you must also calculate the tax savings into your mortgage rate. You will most likely be able to itemize, so the effective mortgage rate will be closer to 4%, or a little less. If you wind up just short of being able to itemize, try doubling up on your real estate taxes. That way you may at least be able to itemize every other year.