Should You Pay Off Your Mortgage Or Invest Your Money?

[@HazeltineLLC]

The older I get, the more I value LIQUIDITY. I'm glad you included liquidity in your analysis - it's very important. Thanks as always for the great content - can't wait for our next video!

[@jaredshowers1]

Me too!!

[@HazeltineLLC]

@@jaredshowers1 Yessir!

[@c.parker8439]

When you make an extra mortgage payment, should you make a principle only payment OR principle and interest only payment? Thank you in advance for your answer. Good luck

[@DenzelNapoleonRodriguez]

@@c.parker8439 principle first always. When you make an extra mortgage payment if it’s after the scheduled payment then it should automatically go to principle. If you make a payment before the due date and the bill is due chances are that payment has to get satisfied first before you can pay extra.

[@c.parker8439]

​@DenzelNapoleonRodriguez Thank You so much

[@DVul]

I don't understand why you bother with cents, it's just noise at the strategy level, and likely to be incorrect regardless as there are static growth and interest rate assumptions which are 100% going to be incorrect in practice

[@DenzelNapoleonRodriguez]

@@DVul paying attention to the cents is a preference. It’s simply a practice I do. When the IRS wants to know how much I made I submit the cents, when my accountant wants to properly calculate all my deductions I put the cents, when I pay for the things often there is cents. Others may like to round it’s your choice

[@anitamaxwellskipper]

I'm asking this question because I don't see our mish mash in my binge watching. We have a PLOC and were recently approved for an interest-only HELOC with a 3 yr draw period). We have a HELOAN that I regret taking (we owned our house outright before this) and credit card debt. If we only have three years, should I focus on debt payoff or using velocity banking to pay off the HELOAN. All of this was done before I discovered yout channel. Now I'm trying to fix things.

[@DenzelNapoleonRodriguez]

@@anitamaxwellskipper I don’t think you can have a HELOAN and a HELOC at the same time. You were approved which is nice I’m pretty sure they will pay off the balance of the HELOAN close that out and you’ll just have the HELOC. I would call the bank to verify that process. With a 3yr draw period you can also ask the bank if they allow renewals of the draw period so once you get close to the end of the draw period you can just ask them now is it possible to renew the HELOC. If they so no not a big deal you can always go to a different bank and apply for a HELOC way before the draw period ends

[@anitamaxwellskipper]

@DenzelNapoleonRodriguez Thank you for replying. This is why I wrote my question because I have not seen a case study like ours on your page yet. I think I heard you refer to it in one of your videos as being "tricked". I was told it was a HELOC, when we started the application and then "let's get you a fixed rate" later in the process. We received checks to pay off debt for the whole amount. We now make a monthly mortgage payment with escrow. Because we didn't have a mortgage, it is now in first position. We also now have the second position revolving HELOC with a different bank, but again, it has a short draw period..I will ask them about an extension as you mentioned. Continue the great work! We appreciate it.

[@DenzelNapoleonRodriguez]

@ ok this is good to know so just to be clear you have a home equity loan in the first position and it looks just like a regular mortgage payment with a fixed interest rate. You also have an existing 2nd lien HELOC or did you get approved for it and it is not active yet?

[@anitamaxwellskipper]

That is correct about the HELOAN. We received the payout for the HELOC last week but have not touched it yet. It is not one where you draw as needed. We have an interest-only payment due Feb. 1 (another issue I have learned some watching you) I know the money needs to be working for us because we have a payment due. Right now, we are thinking of moving our remaining debt into it because the interest rates are higher and it would give greater cash flow. The payment would be less than our total cc pmts. We will still have money left on the HELOC. Trying to decide if we should do velocity banking on the cc debt in the HELOC first before chunking the remainder of the 2/3 at the mortgage since the payment is already determined based on the full payout we received.

[@DenzelNapoleonRodriguez]

@@anitamaxwellskipper what is the bank name of the HELOC if it is not a revolving HELOC and you can only access it via checks then that would be an incorrect HELOC for velocity banking. So tell me the bank name and if it is revolving and can be accessed via online transfers

[@Nsmithq99]

You don't need a white board full of numbers to decide. Financially, the answer is easy. Can you achieve investment returns greater than your mortgage interest rate? If yes, invest, if not, pay down your mortgage. With a 5.38% mortgage, you can probably do better investing. The flip-side is risk and comfort in having a paid for home. The risk is zero on your mortgage, vs some number on the investments. Only you can decide on those. But sure...paying down the mortgage has no risk...you will "earn" 5.38% on the money you pay back, only the risk of losing the opportunity of greater returns from investing.

[@DenzelNapoleonRodriguez]

@@Nsmithq99 thank you for your comment although if it were so easy to decide majority of Americans would not have financial troubles but that is not the case and here we are majority of Americans struggle with their finances so being able to see the numbers actually broken down to help decide I think is important. Also when you looking at 5.38% amortized versus investing and earning a higher rate of return doesn’t mean you’ll have more money in the end. Average rate of return is the biggest lie in personal finances when you actually look at the internal rate of return or any investment the number is way less which is why I made my point about you need to earn way more than the avg to beat the amount of money you save by paying your mortgage off early.

[@Nsmithq99]

@@DenzelNapoleonRodriguez Again, you are overcomplicating things. There is no such thing as "5.38% amortized...". It's simply 5.38% APR, charged monthly. Amortization simply means how much of your payment goes towards interest and how much to principal. On a "fully amortized" loan, the payment amount has been calculated to exactly pay off the loan in the stated term with a fixed payment amount...even though in the early years the majority of the payment goes towards interest and in the later years it's the reverse. But this is not a big secret, it is simply how the math works out. So if you make extra payments, it will reduce your principal and hence the amount of interest you owe. No magic there. As for investment returns, you may be right to question what is an achievable return, but the math is still simple, if you can "earn" more than the interest you are paying the bank, you may as well do so. As I said, paying the mortgage is a guaranteed rate of return vs investing you may or may not achieve your goals.

[@DenzelNapoleonRodriguez]

@ correct amortization is a form of payment no dispute there

[@DenzelNapoleonRodriguez]

@ so if I can earn 5.39% you’re saying I should invest instead of paying off my mortgage? If not what is the number that I can easily invest and earn more than my cost of the mortgage?

[@jaredshowers1]

We owe 292k new build in 2021. Appraised at 450kp. Interest rate is 2.95 property taxes are about 7k. Already have a 2nd lien heloc for 45k. Been learning about the 1sy lien heloc. Started velocity banking a month ago. It's ridiculously amazing... Fire.

[@Ozibiey]

Should have kept the 2.95% rate. That’s as good as gold! You can do chunking with a 2nd Lien HELOC would have been better, perhaps chunking a little more than your income and paying it down

[@jaredshowers1]

​​@@Ozibieywe have the 2.95. Never said we went with the 1st lien just looking at it. Probably gonna remove the escrow and pay the regular mortgage payment. At 1900. That puts 600 towards 7200 a year. principle and paying taxes at end of year with 2nd lien heloc. Velocity banking strategy

[@mohair57]

Is it too late for us who are in our late 60s. We just had a job loss that significantly changed our income. We were making at least 10 grand a month. We have at least 70 grand in debt. Plus house and car payment. We have been living off our retirement fund and credit cards. It's going fast. It wasn't much we started out with 80 thousand now down 40 thousand left. My husband found a new job, thank God, but making a lot less than he was. I had a hair studio working for myself but had to close it down because of rental problems. And I thought I would retire from it since I'm at that stage of life. Couldn't start it over. I just can't afford it now with the job loss. I have so much more to discuss, but this post is way too long. Need to know if we can be helped at all. Before I commit to making an appointment with you. Need help figuring this out. Help!!!!

[@jaredshowers1]

It's never to late!

[@danbrown1815]

If you have a home with equity in it look into a HECM. That might help... I don't have one myself but from what I read One huge benefit is you don't have to make mortgage payments

[@javiersuarez5499]

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[@jaredshowers1]

Gonna be fire. Christ is king! Holy ghost

[@smsadirul3]

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[@javiersuarez5499]

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