Should I Pay Off My Mortgage Early?

[@DarrenMossman]

I like Dave Ramsay's answer to this question. Pay off your mortgage and if you don't like it, you can always go out and get yourself a mortgage .

[@samdunn717]

that's a great way to say it

[@dr.elvis.h.christ]

Except this guy has a really low rate. You may not be able to get that again.

[@11Bravo84]

Not at 2.625%

[@elmateo77]

His mortgage interest rate is 3.5%, you can't get that these days. He'd be better off taking the money and putting it in a high interest savings account (current yield is around 5%). He'd make about $1400 a year off the rate difference on his remaining balance, and if rates drop low enough that he's not making a profit he can always take the money out and pay off the mortgage whenever he wants.

[@evr0.904]

@@elmateo77 Wrong. Learn how math works.

[@CaptainCoook]

Good way of thinking about debts, you get the interest instead the banks if you pay early. The peace of mind knowing you're debt free is truly liberating. I've seen people leveraging (borrowing) too much for "investment" like stocks and crypto - they don't count the taxes and stress that comes with them - and certainly not the whales that will rug pull the retail investor whenever they can. And the increase in house prices can be greater than the portfolio you select.

[@rally_chronicles]

The return on ahome will be vastly inferior than to invest in stocks

[@brianmorgan1204]

Move your mortgage payment from monthly to bi-weekly. Increase the amount you pay by some regular amount that you can handle. Throw any 'spare' case you have at the mortgage. The earlier you do all this, the better.

[@westerberger69]

A few years ago, while I was still married, I came into a personal windfall that I kept separate from my marital assets / bank accounts. I wanted to pay off my mortgage, as well as do some significant improvements to the house, but something about my wife's behavior told me not to. Not long after, she filed for divorce and got half the house. Had I spent $300k on paying it off and improving it, I would have given $150k of it to her. So in my case, paying off early would have been a mistake.

[@JohnSmith-dm8ly]

moral of the story is buy a house before you get married, and make all home repair payments and mortgage and insurance payments out of YOUR PERSONAL acct. She doesnt go on the deed, she doesnt go on the mortgage, she doesnt pay anything toward the home maintenance or mortgage or anything

[@westerberger69]

@@JohnSmith-dm8ly she wasn't on the mortgage or deed. I was shook down in mediation. You are correct, don't comingle assets. But even that doesn't mean shit in mediation or court. Better idea - DON'T GET MARRIED

[@JohnSmith-dm8ly]

@@westerberger69 yup

[@mt9727]

@@westerberger69if you get married without a prenup in a 50/50 state it doesn’t matter if you keep you payments separate. An inheritance can be kept outside the marriage as long as it is in a totally separate account and nothing ever gets spent on “the marriage “ otherwise you’ll loose half that too

[@evr0.904]

The mistake wouldn't have been paying off the house, it was getting married.

[@dansemacabre6515]

As a former loan officer, *YES! ABSOLUTELY!* Pay it off ASAP. If you examine how your loan amortizes, you'd be a fool not to. Be certain you can pay direct to your principal without penalty

[@Eluderatnight]

You pay more than double by end of term.

[@dansemacabre6515]

If you're in a 30-yr fixed rate, you absolutely have to put as much money down as possible towards the principal in the 1st 15 years. Otherwise you're exclusively paying interest & the debt is undiminished. Even a couple hundred bucks a month extra towards the principal will have a profound impact across the duration of the loan. The most important part is to absolutely specify the extra monies are to be directed towards the principal. Many lenders are sneaky & will direct it towards interest if it isn't specifically earmarked as such

[@Ralph-i5m]

Paid off my mortgage six months ago. Thought I would have an extra $2,500 monthly. Nope. Found something else to spend it on. Trip to Mexico. Kilo of silver. Trip to Peru/Argentina. Christmas gifts. Etc.

[@killjoyredux8361]

Yeah but you had trips and experience

[@Dan-440]

That's the point. You upgraded your life.

[@deutscherfischer55]

Exactly. You can spend that mortgage payment money on anything you want every month for the rest of your life.

[@raymondnecke5806]

Once our mortgage was paid off , we've used the same monthly amount to buy gold & silver and gradually built it up

[@evr0.904]

So you correctly paid off your mortgage and then incorrectly budgeted the newly available funds?

[@GhostRider-870]

I have a 2.25% rate on my mortgage. My FU fund is paying me 4% via my HYSA. As soon as my HYSA drops below 2.25% I'll look at paying off the house and telling my boomer boss to FU.

[@evr0.904]

Or you could just pay off your house... helps to do some math every once in a while.

[@legoguyver7459]

@@evr0.904 is a super troll

[@digitalman2112]

Totally agree. So many seem to think that paying the bank $10k in interest is worth getting $2k tax deduction. Pay it off. Sleep better at night. Especially in retirement. Do you want a mortgage payment in retirement?

[@jesseforce9933]

I just got up and have to go do a 12-hour shift so I'm going to do all this voice to text. Rich Dad poor Dad logic says that the mortgage is a liability. have people in your own life lose their house and then you will have the answer of what you should do. anyway I paid mine off a little under 14 years early. my credit totally went to shit after that but oh well I have about a year salary in savings and three cars paid off as well now. my taxes and insurance are a little under $3,000 a year and I bring home a 1,900 every two weeks so life is good. it felt like I graduated high school a second time when I was sitting in the bank office and everything was going away.

[@JohnSmith-dm8ly]

credit score doesnt matter if you dont borrow money!

[@jesseforce9933]

@JohnSmith-dm8ly bro I'm right there with you. I just view it as another scheme the man put in my way to try to control me.

[@evr0.904]

@@JohnSmith-dm8ly This.

[@dingleberrypie6612]

3.5% is a negative rate compaired to rate of inflation. Pay a couple hundred extra month and sit on that that loan.

[@evr0.904]

That's not true. Learn how math works.

[@xDomAWx]

Hey Cappy, did you ever decide on if your gonna make that minimalist housing course?

[@koolandblue]

I paid of my house in a little over 5 years. It’s essentially been an extra $1100 per month tax-free without doing any extra work or taking another job. It’s pretty sweet. I don't exactly have "F You" money, but I have "never worry about money again" money. Paying off my house allows me to invest a lot of that money and live as if I make about $12000 more per year than I do. Mathematically, it makes more sense to invest the money you would spend on paying extra principle against your mortgage. But there’s more to finances than math.

[@Eluderatnight]

I'd argue paying off something with 3% interest while inflation is at 12% is a not logical unless you cancel home owners insurance.

[@evr0.904]

Inflation averages 2%. It is not current 12%, though it was previously 12% or higher.

[@Mazatzal]

I have to laugh. There are many entities in the US that can take your home from you, and you cannot stop them. And for those of you saying that the market can tank and greatly diminish the value of your saved Dollars if not wipe them out? This is true, however if the market crashes and wipes out your savings your mortgage is going to be one of the last things on your list of worries.

[@Bluemoon30-06]

Mind listing some of these entities? I know if your house is paid off and you don't pay the property taxes, Uncle Sam will pull up and show you who REALLY owns that house, but beyond that I know nothing.

[@WOWster007]

@@Bluemoon30-06The state can enact immeniant domain if they need to expand a road or highway or build some government building. You will be moved out of your house and the state will pay you what they think your house is worth. (Always on the low side). I would specifically avoid houses near roads or major highways for this reason.

[@grandarchon6969]

@@WOWster007 Eminent domain is rare. It's not every day they build a new highway through your particular neighborhood. They also tend to pay at rates similar to homeowner's insurance (110-125%) of the value.

[@Mazatzal]

@@Bluemoon30-06 Have you been to a divorce court? A bankruptcy hearing? A hearing imminent domain regarding private property? I have and have seen decent, law-abiding citizens stripped of their property and wealth, all using the law that is on the books. Yes, there are many, many more examples. Read history, you will find countless examples of a man murdering his brother to possess his brother's lands.

[@Mazatzal]

@@WOWster007 I watched this done to put interstates though my city. I saw local governments use the right of imminent domain to take possession of private property even though they had a half dozen properties just like it.

[@joblo1978]

Yes, pay it off, AND invest. It’s not an either or question. The more mortgage you have left, the more you save in interest fees. At least get rid of PMI payments ASAP. Look at your amortization schedule to see what not paying it is costing you each month, and go from there.

[@spongebob-ek1fp]

The only risk is now being more of a target of lawsuits because you have assets. But I would pay off the house before investing in the stock market or similar.

[@MuhammadIrfan-ye5zf]

Most banks (at least in my country) only allow paying off mortgage by 3/4 of the term otherwise you are paying penalty. By then the banks already received most of the interest. Either way the bank wins.

[@roccoross2220]

Don’t forget the taxes. You’re going to taxes (eventually) on your investment. If you are putting your money into a HYSA you’ll pay taxes on that interest each year. You don’t pay any tax on paying down your mortgage.

[@JamTheHam32]

I bought my house for 230 cash, and the cash offer was likely the only reason that I won the house. If I had a 3ish percent mortgage, I’d put my money in the market and let inflation eat up the value of the mortgage.

[@grandarchon6969]

Most people don't qualify for the mortgage interest deduction now, because most people don't itemize after Trump's tax plan took effect. Obviously it depends on your income, and other deductions if you itemize or not.

[@westerberger69]

correct, you have to have a hell of a mortgage to itemize just based on your home now

[@evr0.904]

@@westerberger69 Not necessarily. Other things cna contribute to itemization. The reality is that 9/10 Americans don't itemize, so any small tax benefit that the mortgage presents is not applicable to the majority of the country. Even when it is, its trading dollars for quarters.

[@smithrr6]

You dont really get a tax deduction on the interest paid on your mortgage if you are taking the standard deduction. The overwhelming majority of the population takes the standard deduction. Guess what.... you still get that standard deduction even after your mortgage is paid off...

[@Dan-440]

I took out enough to pay off our house and farm in 2020. I had hit 59 1/2 and had no penalties except for the taxes. It is a great feeling to be debt free. The 401k will only be decent at best when I retire at 65, but my wife still has a decade to work.

[@roadtrip2943]

In an era of continuing debt creation and currency decline against real things why not just keep the loan

[@Advocate_plus_one]

Agree. If things keep going like this my monthly mortgage will work out to the same cost of filing my tank each month

[@Advocate_plus_one]

Agree. If things keep going like this my monthly mortgage will work out to the same cost of filing my tank each month

[@bonnevillebagger9147]

He answered that, risk and peace of mind.

[@evr0.904]

"Everything sucks, so it might as well suck a little more." Great argument.

[@TMac473]

Yes

[@CC-ru8pi]

The real question is "can I get a better rate of return on equivalent risk assets?" In this case, it would be FDIC-insured accounts, and the answer for this guy's loan is that, after accounting for taxes, he would probably just about break even on rate of return with paying off his loan by saving in a high-yield savings account or CD.

[@Thecelestial1]

Absolutely not. Let inflation pay your mortgage off. 1000 dollars today is a good chunk of money. 1000 dollars tomorrow will buy fast food.

[@Nick-ue7iw]

Inflation doesn't pay my mortgage, my salary does.

[@Thecelestial1]

@ The fact that you don’t understand means you probably should pay your mortgage down asap.

[@evr0.904]

The fact you can't do math means you probably shouldn't give financial advice.

[@Thecelestial1]

@@evr0.904 oh look, another one. Lmfao.

[@evr0.904]

@@Thecelestial1 Almost like you're so bad at math more than one person had to come and tell you.

[@michaelhurlbut4830]

It is VERY nice not having to make a mortgage payment. House is paid off.

[@pavevbogovev4045]

Pay off 99% of your mortgage and 1% when you’re ready to get another one

[@dr.elvis.h.christ]

3.5% is way below current inflation so it's basically free money to use. I'd drag that out as long as possible.

[@evr0.904]

No it's not. Inflation is "back to normal." We just experienced a huge infaltionary period, but it is not ongoing.

[@andrewpizzino2514]

Since paying off the mortgage rapidly leaving the house in the dust as far as my total net wealth.

[@evr0.904]

This! Arbitraging your mortgage earns you pennies. No one cares to do the math.

[@legoguyver7459]

If you investments exceed your mortgage rate then NOOOOOO

[@evr0.904]

Wrong. Learn how math works.

[@legoguyver7459]

@@evr0.904 d/dx✓-1

[@volvo8938]

Funny enough I feel like its more risky to pay off your mortgage. I would rather have 400k in my pocket then put 400k into my house and suddenly the housing market collapses. During covid I took a 400k mortgagee out on my paid off house for 2.5%. The government is inflating money away and in reality im getting paid to hold that mortgage because inflation is higher then the interest rate

[@MylesKillis]

What does a collapsed market have to do with anything? Are you selling it right now?

[@Ralph-i5m]

There will be no general collapse of the housing market. Certain markets, yes. Overall, no. Nor are prices coming down.

[@killjoyredux8361]

House prices are also inflating though ...as a counterpoint.

[@evr0.904]

Math has left the chat.

[@Thecelestial1]

@@evr0.904 you are schizophrenic. Every comment on this thread you’ve gone through to poorly articulate that you disagree and never actually explain yourself.

[@tracymerriman3996]

Looking for peoples advice on my situation so please chip in. Im 37 yro and make roughly 100k yr. I plan to retire early around 47 and move to southeast asia, so ten years from now. I owe $122k on mortgage(my only debt) its worth 300k. Interest rate 2.87%. i currently invest 55% of my pay into brokerage, ira, and 401k. Im debating on keep putting in around 36k into brokerage a yr or pay off house in 3 yrs? Also debating on selling my house in 10yrs or just renting it out. If i keep it and rent it obviously having no mortgage would be a great guaranteed monthly return when i retire. Selling it, id invest it all and live off of more capitol gains than ill already have. I currently have 100k in 401k 90k in brokerage 15k in roth Thoughts?

[@Mazatzal]

If I can get a higher return by investing the money than I would use to pay the mortgage down/off I would invest the money. Plus, if something does go wrong and your $500K home is now worth $325K? Now what? You are out the $175K you dumped into the home.

[@Nick-ue7iw]

Unless you are selling, that isn't an issue. Compare house values of 2006 to today. Everyone who paid their house off before the GCF is sitting pretty.

[@evr0.904]

Because you can't get an equivalent risk adjusted rate of return. You're gambling your house for pennies.

[@Mazatzal]

@@evr0.904 When the shit hits the fan reality will look horrible too many of us. This is being engineered, and we are all willing, blind slaves to this insane agenda. I suggest that as many of you that can leave the US before it is too late. You think that if your property is paid off that you are safe. Read history, property, life, and liberty have been withheld, denied, and taken away before and the same will be done with you and your possessions. Or not. I could be wrong. 😀

[@albertoacosta6788]

I could pay off my mortgage but I make the mortgage payment on average 1 week trading in the markets plus I have 150k of equity and a 3.1% rate This year I doubled in the markets making 140k this year I only owe 200k left on my home and make 80k a year I’ll wait to pay it off

[@evr0.904]

So you can't do math?

[@Furtivexx]

pay off the mortgage !

[@Captain_Jack711]

No, invest in TSLA, Bitcoin and MSTR instead of paying it off.

[@TMac473]

Yes

[@lol-ld3jh]

This guy knows

[@evr0.904]

Brain rot.

[@samdunn717]

Just pay the damn mortgage off. The stress reduction that having no mortgage achieves...

[@raymondnecke5806]

Short answer is YES , always get rid of owed debt and have a bit of backyp cash on hand

[@JohnSmith-dm8ly]

you cant look only at interest rates, you need to consider risk as well. a mortgage means a risk of losing your home, however slight. Imagine you were out of work for 6 months, 80% of people will lose thier home. But, 80% of people can cover property tax in those 6 months.

[@caseycooper2381]

The borrower is slave to the lender... his aversion to having a mortgage reflects this.

[@luckyskivvy6077]

😅 Dad is wrong in this era. Learn how to invest, trade, and use compound interest. Use Dave's payoff calculator. Compare the interest saved from paying off your house early versus investing that money into the S&P 500 for the same amount of time. 🏠 I owe 107,000 on my home. With 2.87% interest for 26 years. Projected interest costs is 43,000. If I added $200/month, I'd save 26,000 in interest. 📈 If I invest 200/month into the S&P (at a crappy 10% annual rate), I would have $262,036 in 26 years. Enough to pay off the house. With money left over. Because I spent over 4 years learning how to invest and trade, I can extract more than 25% from the markets. So... $3,000,000 over 26 years with 200/per month.

[@kenlang2154]

After paying off your mortgage early, you could invest much more than $200 a month, so your example of save $26,000 is not accurate. Additionally, you gain peace of mind, which is huge.

[@luckyskivvy6077]

@kenlang2154 I've done the math 50-11 times. 1) You ignore the appreciation rate (speed of growth) of stocks vs homes. Stocks historically appreciate faster (14-400%) than homes (5%) per year. Stocks are easier to convert to cash. 2) Home appreciation is dragged down by annual interest rates (+5%), property taxes (0.5 - 2%), maintenance rate is 1% of home value (Google says $6,400 - 18,000). That's +6.5% compounded loss against the home's value. Stocks don't have those issues. I've spent 4-5 years learning how to invest and trade. I can easily grind out +25% regardless of market direction. Add 26 years of compounded growth. The problem is TOO many people are putting TOO much into things that grow to slow or don't grow at all. Like a personal home. My ability to earn money on a laptop or smartphone gives me peace of mind.

[@Nick-ue7iw]

Sure you can.

[@luckyskivvy6077]

@Nick-ue7iw Ticker "XLG" is a an ETF that tracks the top 50 of the S&P 500. It's year to date return is 35%. It's 5 year return is 116%. 😅 So yes... with one ETF I can easily make over 25%. For stupid MFs like you, annual return is cumulative (gains - losses). I am trend ambiguous. I can trade up, down, or sideways. Clowns you like just can only buys dips and lose money.

[@evr0.904]

@@luckyskivvy6077 Glad no one in this comments section can do math.

[@luckyskivvy6077]

🛋 🛌 🚚 How many people keep the same home for life? "According to available data, the average person buys a new home around three times in their lifetime, with the median homeowner staying in a house for 13 years". Most people who pay off a mortgage will likely get a new one. So all the money plowed into a house went to sleep. It didn't grow for years and years. Inflation eat up the value. Which is why old people are fk'd at retirement. They don't have enough cash to survive. They have to sell the house to get enough cash to live. 😅 Eventually the banks will take it back.