Is Paying OFF Your Mortgage Early a MISTAKE? / Ask The Money Nerds

  Рет қаралды 34,199

Garrett Gunderson

Garrett Gunderson

Күн бұрын

Пікірлер: 109
@Frannieville
@Frannieville Жыл бұрын
I’m not worried about paying off my mortgage because the banks may want their money back. I’m more worried about having a job loss or illness and no way of paying off the mortgage.
@munix9351
@munix9351 Жыл бұрын
Get a savings account then and put all that extra money in. Also get mortgage insurance which covers you for at least a year. Or ensure you have a years of emergency money that can cover the whole year
@Frannieville
@Frannieville Жыл бұрын
@@munix9351 sometimes a year won’t do it. a lot of stuff can run into years. I don’t trust insurance companies too much, especially when you’re ill and you have to jump through hoops. I don’t want to keep paying interest to the bank when the house can be paid for. too many if’s. just pay the dang thing off (house) and be done with it. investing isn’t that great of thing either because when the market takes a dip your money is gone for a while and you still have the house payment to worry about. when you’re not feeling good simple is a good way to go.
@KC-dr3cg
@KC-dr3cg Жыл бұрын
Absolutely I do not pay off my mortgage and I'm giving my children cash now because if I have to go into a nursing home there's a five-year look-back they could take away all of my money for the nursing home I'm young enough that I probably am not looking at a nursing home for 10 years
@suzanneemerson9787
@suzanneemerson9787 Жыл бұрын
@@KC-dr3cgInvest in good health.
@suzanneemerson9787
@suzanneemerson9787 Жыл бұрын
You are uninformed. Mortgages are not callable loans any more. It’s illegal for a mortgage lender to tell you you have to pay off early. Didn’t you hear him say that change was made after the Great Depression. Also, mortgage insurance is a type of life insurance that pays off your mortgage balance when you die. It doesn’t pay your mortgage if you are alive and stop paying, even if you are disabled and can’t work. Term life is better. It leaves your heirs money that they can use to pay off the mortgage, or spend on whatever other needs they have. If they don’t have enough income to continue paying the mortgage, they can sell the house and move to somewhere cheaper. Just get enough term life coverage to cover the mortgage balance at a minimum. It’s so much less expensive than mortgage insurance.
@jaimepascua3518
@jaimepascua3518 3 жыл бұрын
in my opinion, I would prefer paying off the mortgage early if i could. looking back 10 yrs down the road, i realized that i could have saved more on the interest, and refinancing it every year was a mistake because instead of paying it closer to 30 yrs , the clock just keeps on reseting back to 0 when is could have been 10 yrs ahead of the game. Now i feel older, i could not work more and my mortgage seems just started.. If i were to do it again, i should have paid it faster..
@Savannah-ed4rv
@Savannah-ed4rv 3 жыл бұрын
That's the biggest mistake- paying so much in interest! I'm refinancing and the papers say tht my true interest being paid is over 50% !
@livenotonevil8279
@livenotonevil8279 3 жыл бұрын
Paid off my 25 year loan in 15 years. Just an extra 100 a month toward principal. VERY liberating. I never even bothered to calculate the tens of thousands I saved in interest. Once it was paid off, my options were myriad.
@Savannah-ed4rv
@Savannah-ed4rv 3 жыл бұрын
@@livenotonevil8279 Congratulations! For only $100 that's an amazing amount of time and money saved! You're an inspiration!
@michaelgreen8844
@michaelgreen8844 Жыл бұрын
I think paying off your mortgage is absolutely the way to go. There are levels that people have always tied to financial institutions and you have to decide the lesser of the two. Wealth is a matter of having time back in your life and leverage your options in life.
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Wealth is truly a byproduct of a life well lived. If your objective is to pay off your home, great. I always want to help people understand the methods of fulfilling their objectives and the economic impact of their choices.
@michaelgreen8844
@michaelgreen8844 Жыл бұрын
@@GarrettGundersonTV I got where you were coming from. My whole point is owning yourself and like my guy savings minus debt says banks don't buy mortgages. People buy mortgages. But great piece and enjoy your day sir.
@michaelcordell875
@michaelcordell875 8 ай бұрын
I think it’s important to consider the true value of a mortgage interest. The bank rate maybe 3% but after 30yrs it really equates to 150%. You’ll have to have some great investments to beat that. Just something to consider
@GarrettGundersonTV
@GarrettGundersonTV 7 ай бұрын
150 percent after thirty years. If you get 6 percent. You are at 300 after thirty years.
@nelsonrecinos4354
@nelsonrecinos4354 Жыл бұрын
It would be good to clarify; When you pay off your mortgage, you are paying off only the LOAN, principal and interest. You are responsable now to keep up with your property TAXES and fire Insurance. Don’t think you are completely free of payments because you still have those two.
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Yep. Property taxes! But no mortgage.
@Frannieville
@Frannieville Жыл бұрын
So what you have way cheaper rent.
@trediaz4012
@trediaz4012 Жыл бұрын
At this point, id pay my s*** off fast as possible. If i lose my decent job and have to work in fast food, ill still have a home
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Well. Make sure that you have liquid funds and do t lock it in your equity before it's paid off. Good luck.
@trediaz4012
@trediaz4012 Жыл бұрын
@Garrett Gunderson I'm currently a renter. I will take your advise 👍🏽
@mike125520002000
@mike125520002000 3 ай бұрын
That was me during Covid. Took out my 401 k and paid off my house. Refinanced at 2.9 percent to build a back house where I currently live and rent the front house
@FredDogification
@FredDogification 3 жыл бұрын
Going pay off my mortgage in the next 90 days. Save on the side is much better option than extra payment every month.
@Itwasme007
@Itwasme007 Жыл бұрын
I will never refinanced my 3.25% fixed for 30 years. I will pay it off and live in my home until I die.
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Cheap money. Fixed interest is great.
@ButcherBird-FW190D
@ButcherBird-FW190D Жыл бұрын
I have the ability to pay quite a bit extra to my mortgage, but I'm putting the extra $ into the stock market. Briefly, I have 8 yrs left on a 10-yr mort at 1.875% fixed rate. Ungodly low; so I'm happy with riding the loan out for the duration. Almost free money; and with inflation where it is, I'm paying it off with cheaper and cheaper dollars. So my federal pension goes straight to my Schwab account; and I happily live off my salary (CFO at a mid-sized Credit Union).
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Yep. I'm not as much a fan of the market, but wow, great interest rate and spot on about inflation.
@ButcherBird-FW190D
@ButcherBird-FW190D Жыл бұрын
@@GarrettGundersonTV Yes Sir... And heck, I'm earning right at 5% on my Schwab MMA account. I'm in the 32% marginal federal bracket, and 2.5% flat-rate State (AZ). With rounding; call that 35% marginal taxes. Hence, 325 basis points leftover out of the 500 bps face yield (at least for now)... I'm still ahead by 1 and 3/8th's on the current arbitrage, and that's even at the MMA rate. My only real fear now is that my fiance wants to retire (she's 56, 3 years younger) and I'm thinking she wants to do so with me footing the tab for everything going forward. That's a pricey little proposition there.
@suzanneemerson9787
@suzanneemerson9787 Жыл бұрын
Curious how you got that 10 year fixed rate mortgage at 1.875%. Is that the introductory phase of a 30 year loan where the loan becomes variable rate after 10 years?
@ButcherBird-FW190D
@ButcherBird-FW190D Жыл бұрын
@@suzanneemerson9787 And fair enough question. I worked at a bank wherein we purchased Amerihome, and we were basically putting $250M on our books per day re: purchased mortgages, while selling $2B to $3B blocks to Fannie and Freddie every couple weeks. Sebonic had a 10-year, basically almost no-cost refi ($1,400 in costs). Took my 15-year mortgage (which I was 5 years into) from 3 and an eighth, to 1 and 7/8th's. Breakeven was 6 months, so I bit. Noting, my tri-merge FICO was 826, the LTV on the property was 35%, and my DTI's were 11/11. So, yeah. I rather easily qualified. Noting, the payment is up there, but, Yassum.... Sub-2% mortgage rate. Peace.
@ButcherBird-FW190D
@ButcherBird-FW190D Жыл бұрын
@@suzanneemerson9787 And, I guess I should add. No, this is not a discount. Nor a step-up. Nor anything else. Just a straght-out, 10-year term from the get-go, fixed-rate mortgage.
@bryantotty
@bryantotty 3 жыл бұрын
I have studied real world money for years and the advice here is amazing. Finally someone who doesn’t assume people are to stupid to make their own risk assessments and decisions!
@stickybandit2346
@stickybandit2346 Жыл бұрын
You are not even talking about how the 3 months, 6 months, or 2 years of "comfort reserves" is impossible when you have to pay insane property taxes.
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Are you in Texas or Florida? One of the no state tax but make up for it on property tax places?
@rickchandler2570
@rickchandler2570 3 жыл бұрын
I'm leaning to pay mine off next month. One thing people don't think of is just because you pay off your mortgage it doesn't mean you still won't have payments. You still have to pay insurance and property taxes that you previously didn't see because it was rolled up into your mortgage. My mortgage was $1800 a month but after I pay it off, I still have a $500 a month insurance+taxes payment.
@Savannah-ed4rv
@Savannah-ed4rv 3 жыл бұрын
As long as you owe property taxes, you never really own your home. What a scam.
@livenotonevil8279
@livenotonevil8279 3 жыл бұрын
You'll have that regardless of what you do
@rickchandler2570
@rickchandler2570 3 жыл бұрын
@@livenotonevil8279 Not my point. I've read a lot where people think that when they pay off their mortgage then it goes to zero. They don't see the insurance and taxes coming out so it's not something they think of having to take care afterwards.
@livenotonevil8279
@livenotonevil8279 3 жыл бұрын
@@rickchandler2570 I see your point. I guess I'm kinda (very) shocked that folks wouldn't realize that.
@rickchandler2570
@rickchandler2570 3 жыл бұрын
@@livenotonevil8279 I know what you mean. So many things I've discovered about how little people know and how little they are prepared is simply shocking.
@dustinmorris1317
@dustinmorris1317 Жыл бұрын
It’s a very interesting topic. The price of time and the amount of money in the system are two main factors. Paying off a $250k mortgage to earn back the $500/mo in interest is less than a 3% return, less than the price of time. What is time worth? More than 3%. Always. If tbills pay more than a mortgage, it would be insane to put the money into the mortgage. Which is riskier? Real estate is risky; much more so as a place to park cash vs tbills. But no one thinks it is until it is. Great vid and love the discussion. Cheers!
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Great point and summary. Thanks.
@glennyaney9534
@glennyaney9534 3 жыл бұрын
Great conversation! I love the contrarian way of thinking.
@GarrettGundersonTV
@GarrettGundersonTV 3 жыл бұрын
Glad you enjoyed it!
@EPYCMX
@EPYCMX 3 жыл бұрын
Don't pay off your 3% mortgage on a property in the US, invest in 5% gov bonds in Mexico... free money!
@Savannah-ed4rv
@Savannah-ed4rv 3 жыл бұрын
Where is there information on buying those bonds, and is it legal?
@skipjack000
@skipjack000 3 жыл бұрын
Great topic! Thanks for the discussion. Very helpful insight... as always.
@GarrettGundersonTV
@GarrettGundersonTV 3 жыл бұрын
Good to hear from you Jeff. Thanks for watching.
@SugarRimBar
@SugarRimBar 3 жыл бұрын
Grabs coffee...sits at desk...opens mind....READY TO LEARN!!! THANKS GARRETT!!!
@michaelb.8953
@michaelb.8953 3 жыл бұрын
I just did the same exact thing. Garrett is awesome, I'm surprised he doesn't have 500,000 subscribers.
@GarrettGundersonTV
@GarrettGundersonTV 3 жыл бұрын
Boom!
@andrewstotty1146
@andrewstotty1146 3 жыл бұрын
Like gambling they only talk about their wins. I love you videos keep the positive vibes going!!!
@hellokitty8552
@hellokitty8552 Жыл бұрын
Well you’re speaking about this intellectually and academically. You factor in a lot of variables that are valid. But you need to understand a lot of people at your intelligence level think they’re above common sense so they tend to take more risk and or make bigger purchases and or think they’re smart enough to not fall for money scams (ie bad investments ahem crypto or even bad purchases.). From what I can see, people who do well financially who didn’t even go to ivy or competitive schools treat money management like behavior management. People who do well in school but end up financially in despair are just reckless. Take it with a grain of salt. Toodles.
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
I would advise to manage and mitigate risk rather than simply take it. But I get what you are saying.
@allmyvids400
@allmyvids400 Жыл бұрын
I pray in the name of Jesus Christ that my bank accounts will be safe and correct and that God will absolve all my sins and pour his graces and mercies abundantly in all the vital and essential areas of my life. Amen.
@ThinkBlueAZ
@ThinkBlueAZ 3 жыл бұрын
Such an important point that extra payments toward a mortgage tie up capital in an illiquid asset and don’t reduce the monthly payment at all. If you’re inclined to want to pay off the home early, at least set the $$ to the side, save it, and consider this when you can pay it off outright and at least be free of the monthly payment. Even then, not something I’d do for the reasons Garrett discussed. Low interest rates, security and flexibility of liquid cash savings for future, more profitable opportunities, etc.
@mmmmkay4773
@mmmmkay4773 3 жыл бұрын
They aren't trying to reduce their monthly payments when paying extra. That extra brings down the principal, which brings down the interest.
@ThinkBlueAZ
@ThinkBlueAZ 3 жыл бұрын
@@mmmmkay4773 yes. Brings down total interest paid over the life of the loan but if you still have many years to go to pay it off, are you really benefitting by saving 3% (or less) on extra principal pay down or should you keep it in reserves during uncertain times or on the sidelines for better ROI opportunities. I opt for the latter.
@Frannieville
@Frannieville Жыл бұрын
@@ThinkBlueAZ good for you. I’d pay the house off. better to have the house paid off when investments tank than to have a house mortgage with tanking investments.
@HealthyServant
@HealthyServant 10 ай бұрын
If you save the money and pay it later rather than now, then you defeat the reason for prepayment, i.e., saving on interest on the amortization schedule
@JoeyLocig
@JoeyLocig 3 жыл бұрын
Ove that your talking about crypto, but during all the money printing its just as bad to old USDC. USDC should be used to hold earnings from bitcoin and other alts during a bear market. Or can be used as a non tax vehicle between wallets where you then swap for other tokens.
@rodrigoalejandrooicataquin7877
@rodrigoalejandrooicataquin7877 Жыл бұрын
3% mortgage interest rate, 22% credit card interest rate. Really cheap credit. In My country mortgage interest rate is 19% right now. I would love to have real state in usa or Canada, at 3% to 5% in a 30 years mortgage, I would rent it si the real state Will pay it's Own credit and I would put money in short term low risk instruments in latinamerica (from 8% to 15%). Well, diversification may reduce devaluation risk.
@tcjones4386
@tcjones4386 Жыл бұрын
Who is this guest? Rich who??
@naurnah98
@naurnah98 Жыл бұрын
This was a great discussion covering many important topics, thanks!
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Nice. Glad you enjoyed it.
@BlockTechGold
@BlockTechGold 3 жыл бұрын
Great points but how will this be effected when Hyperinflation hits and the real estate bubble pops?
@Savannah-ed4rv
@Savannah-ed4rv 3 жыл бұрын
So, using a Heloc to pay off your mortgage isn't a good idea? ie., velocity banking..
@adolisfernandez1321
@adolisfernandez1321 3 жыл бұрын
Looks I never had made 3% return on my retirement, so in my case paying my mortgage early I will be saving money. I am in Canada thing are little different, imagine where a live average price is 450,000 so you renew mortgage every 5 years and I’ll pay around 67,500 of interest in those 5 years. I’ll never make that return, if you have idea where to get that money please let me know. My interest right now is 1.73% and I’ll pay for 5 years 15000, even though I don’t believe that I will get more than that on any return if you think I will please advice
@HappyCleanersWA
@HappyCleanersWA 3 жыл бұрын
What are you saying? You don’t think you can find more than a 3% return? S&P will give you 10%
@adolisfernandez1321
@adolisfernandez1321 3 жыл бұрын
@@HappyCleanersWA I’ll check S&P. Thanks
@livenotonevil8279
@livenotonevil8279 3 жыл бұрын
@@adolisfernandez1321 There is no guarantee of 10%. Or 7%, or anything. Paying down your mortgage is the wisest thing you could do - it's a guaranteed return.
@ggrthemostgodless8713
@ggrthemostgodless8713 3 жыл бұрын
I haven't said it man, but I love your channel and content... been watching it some and I just figure I tell you.
@GarrettGundersonTV
@GarrettGundersonTV 3 жыл бұрын
Great to hear! Thanks for taking the time to let me know.
@jillmondt5398
@jillmondt5398 3 жыл бұрын
I like the idea of a family bank.
@GarrettGundersonTV
@GarrettGundersonTV 3 жыл бұрын
Us too :)
@jillmondt5398
@jillmondt5398 3 жыл бұрын
@@GarrettGundersonTV What is your view on Certificates of deposit? If I had the kind of money say to get one every 4 months at $1,000 each would this be a smart thing to do? Then in 10-15 years I would go into the bank, cash out the ones that can be without penalty, and slap that dough down to pay off the mortgage. What is your opinion on this?
@livenotonevil8279
@livenotonevil8279 3 жыл бұрын
@@jillmondt5398 What do you really earn when you factor in what's lost to inflation?
@alicendanyuzwe3617
@alicendanyuzwe3617 Жыл бұрын
The host talks too much, doesn’t let the guest share.
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Yes. True. Older video. I have worked on it, but you are correct.
@ebejecinta8101
@ebejecinta8101 3 жыл бұрын
Mr Gerald Martins is a certified broker, I have worked with him for years,anyone who he handles he's or her trade for, i believe is so lucky all you have to do is believe in him and follow his guidance.
@brushandshovel6512
@brushandshovel6512 Жыл бұрын
Very good advise. Why is the lady in the middle not saying much?
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Because I talk too much and interrupt!
@amyk6028
@amyk6028 11 ай бұрын
Why is she there? Does she add anything? Or maybe the dudes should let her speak
@GarrettGundersonTV
@GarrettGundersonTV 11 ай бұрын
Three is a crowd. She was there to represent the viewer. I rarely have two guests anymore.
@Prr-u9o
@Prr-u9o 4 ай бұрын
If you can afford to pay it off early do so , its a no brainer.
@GarrettGundersonTV
@GarrettGundersonTV 4 ай бұрын
No brainer? My mortgage is 2.75 percent. I can get 5.15 in a savings account. 5 percent in my older cash value policies. 10 percent from an insurance company next 12 months on savings. Why is it a no brainer to pay off?
@hellokitty8552
@hellokitty8552 Жыл бұрын
Not to be judgy but you don’t look like you’re doing well financially. 🤨
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
Love when someone says...not to be judgy, but I'm going to be anyway. And anyone with a beard and long hair that doesn't wear a suit and tie isn't doing well. All good, can't please everyone. Best wishes on your journey.
@MultiBond00007
@MultiBond00007 3 жыл бұрын
How about just paying an extra amount that equals the principal every month for the first 5 to 10 years when you can save around $1 or 2 per every dollar you pay off extra!!!
@MIResident
@MIResident 3 жыл бұрын
LOL Garrett, we need to get you new sucker jokes.
@lukedejour
@lukedejour 3 жыл бұрын
Garret if your going to talk about putting your money to work, or being your own bank, you really need to get on guests to discuss De-Fi lending protocols like Blockfi, Nexos, Celsius, where you can earn 10%APR on USDC. As a trader this is where I park my capital. Crypto is life changing...
@80stunestogo
@80stunestogo Жыл бұрын
You can say that again 😅
@lukedejour
@lukedejour Жыл бұрын
@@80stunestogo lol this comment did not age well. The whole Ce-Fi sector melted down. But De-Fi is going strong for now!
@80stunestogo
@80stunestogo Жыл бұрын
@@lukedejour yes, we will see how it all plays out!
@jimray2281
@jimray2281 Жыл бұрын
Cool to see Notch Johnson land on his feet!
@GarrettGundersonTV
@GarrettGundersonTV Жыл бұрын
I look like notch Johnson?
@jimray2281
@jimray2281 Жыл бұрын
@@GarrettGundersonTV hah no your guest Jeff struck me as Tim Stack doppelgänger Thanks for the great advice- I’m waffling on how aggressive to knock down my mortgage.
@linuxinstalled
@linuxinstalled 3 жыл бұрын
This is a rock star team. Thanks for bringing Rich on.
@maschngon
@maschngon 3 жыл бұрын
I’m investing $3k a month rather than pay off my mortgage I have credit card debt at zero %. I won’t let it off until I have to pay interest
@livenotonevil8279
@livenotonevil8279 3 жыл бұрын
It would SEEM the wise thing to do. However, my conviction all along was that paying down your mortgage gave you a guaranteed return that could be measured precisely in interest saved (and I saved ten of thousands over the shortened course of my mortgage). Investments cannot guarantee anything. By the way, congrats on keeping away from credit card debt!
@jercasgav
@jercasgav Жыл бұрын
@@livenotonevil8279 A house is also not a guaranteed investment. Ask the people with surviving homes around the Cali wild fires, or in areas where the jobs left and now you can't sell your house or stay? Nothing is all security or all risk.
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