The Shocking Truth About Paying Off Your Mortgage Early

[@TimeLagGaming]

I really appreciate how you laid everything out! I’ve been putting 2k extra per month towards my principal balance the past 6 months. However starting next month I’ll be increasing my principal payments and I’m going to start investing 300-500 per month in an index fund. My house will be payed off before I turn 30. Simple answer, do both!

[@RogueFinance]

Awesome job! Thank you for the kind words and congrats on the progress! Doing both is a great way to go!

[@kyletaylor6942]

Great video! I much prefer your slower and emphasized explanations instead of everyone elses fast edits

[@RogueFinance]

Hey thanks for the kind words! It's much appreciated 🙏

[@freegame6939]

Me too!!

[@RogueFinance]

@@freegame6939🙏🙏🙏

[@Brian-dh9lp]

Having no mortgage sure relieves stress. One can handle job loss or any bad circumstance a lot easier.

[@michaelwilson7997]

You can’t eat your house. It’s actually much better to have hundreds of thousands in savings and investments if you lost your job.

[@RogueFinance]

Great point!

[@RogueFinance]

Also a fair point

[@RichardColwell1]

9:06 for anyone looking to see his advice in comparison to Dave Ramsey

[@RogueFinance]

🙏🙏🙏

[@damondiehl5637]

Newsflash: this is how every amortized loan works. The first payments are always mostly interest.

[@RogueFinance]

unfortunately not everyone knows that, so someone has to tell them. might as well be me

[@damondiehl5637]

@@RogueFinance Then don't act like it's a big secret or that the lenders are trying to rip people off.

[@RogueFinance]

@@damondiehl5637for the record I 100% think people are getting ripped off

[@freegame6939]

This was so good!!

[@RogueFinance]

Aw I love this. Thank you for the kind encouragement 🙏

[@blackpppp]

I thought you are a scam channel but it seems it is not so I'm gonna spend a little of my time to educate you. Some points. 1) Your math is fundamentally wrong. your mortgage finishes in 20 years and 7 months, so you only have that much time to invest and not 30 years. with 21 years, you'll have $191,510 earned in interest. 2) Paying down your mortgage is tax free, investing is not. If you are getting interest rate of 8%, you'll pay 30ish tax on it. If you buy stocks, at a minimum you'll pay 15% capital gain tax. 3) 7% is a guaranteed rate, whereas the 8% is not risk free, currently the best risk free investment is close to a 5% CD. 4) Inflation is irrelevant, your investment will also lose value over time. 5) There are other benefits of paying down the mortgage first, watch more Dave Ramsey to know why.

[@RogueFinance]

Hey I am not sure how you thought I was a scam...??? For what it is worth, 90% of my time professionally is spend growing and managing my coaching business. My KZbin is a cost at this point of my business journey. I spent a decade in the financial services industry and years learning and consuming everything in this arena. I am certainly not perfect, can make mistakes like anyone else, but strive to provide accurate info. That said, my math isn't fundamentally wrong. We may disagree on assumptions which is fine and yes after the fact I do see your point that this wasn't the best apples to apples comparison, my apologies. Per your second point, while I agree regarding taxes, there are tax free and tax deferred places to put $500/mo. As for the guarantee vs non guarantee, 8% is pretty conservative as S&P500 returns closer to 10% and I frankly do not agree that we should only test mortgage pay down vs another guaranteed return imho but on what better alternatives exist. I can appreciate your point regarding inflation as both assets, your home and stocks and more sheltered from inflation and I am plenty familiar with DR. I did want to note I did close with saying a combo approach is great for most people imho so there you go. I want this to be a place of healthy discussion so feel free to weigh in but please know my intention is to get it right and serve this community.

[@balinlievense9796]

I've watched another KZbin who talked about which is better paying off your mortgage or investing extra money and if you only care about having more money at the end then paying off your mortgage early left you with more money. But you have to take your mortgage payment and invest it after you pay it off 9 years investing 4k beats 30 years investing $500 a month

[@RogueFinance]

Hey good looking out. I just ran the numbers and the $500/mo for 30 years at 8% is 704,275. The 9 years of $4,000/mo is $621,075. 83k difference and perhaps not enough for someone to choose investing over mortgage pay down.

[@balinlievense9796]

@RogueFinance the numbers change a lot depending on your mortgage intrest rate. I don't know anyone with an 8% that seems really high but you you could run the numbers for say 1% through 8% going up by half a percent each that would be something new and can help people who have older mortgages and means the video will always be relevant

[@RogueFinance]

@@balinlievense9796 apologies for any confusion. 7% was the mortgage rate and 8% was the investment rate. Perhaps in the future I should go more apples to apples

[@tonygilbert5256]

I feel like I disagree strongly with your calculations. While if it was in a vacuum, you might be correct. However, the idea is that people are going to invest anyways. So then what if they pay off their mortgage early and then they turn around and invest the money that they would be paying on the mortgage during that 30-year time frame. I think that's how most people look at it.

[@RogueFinance]

I just ran the numbers and the $500/mo for 30 years at 8% is 704,275. If you (once the mortgage is paid down) invest the 9 years of $4,000/mo is $621,075. 83k difference and perhaps not enough for someone to choose investing over mortgage pay down.

[@leok7193]

He doesn't even know how to say "amortization" 🤣 financial guru right there

[@RogueFinance]

come on dude

[@Bestfriend-650]

Good explanation but I will appreciate if you run your numbers again. By paying extra 500 per month, you will be able to payoff your loan in 20 years and free up extra 3800 per month to invest for another 10 years. Using the same rate of interest compounded annually, you will end up with same or more money at the end of 30 years if you paid off home early vs invested $500 for 30 years. The benefit of paying home off early is the extra peace of mind that you have with paid off home, arguably the biggest expense. You can retire early, invest into a business, buy investment property, sky is the limit.

[@RogueFinance]

Hey thanks for the comment. I just reran the numbers and the $500/mo for 30 years invested at 8% is 704,275. The 9 years of $4,000/mo is $621,075. 83k difference and perhaps not enough for someone to choose investing over mortgage pay down. It is a bit confusing because the mortgage interest rate in the example is 7% while the invested amount is at an 8% return. Perhaps an apples to apples comparison would be better in the future.