Why You Should NOT Pay Off Your Mortgage Early

[@Riggsnic_co]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[@Jamessmith-12]

If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.

[@kevinmarten]

Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.

[@JacquelinePerrira]

Impressive can you share more info?

[@kevinmarten]

Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

[@JacquelinePerrira]

She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.

[@kburkes4245]

Interesting video. When I started over at 50 after a divorce 15 years ago left me with nothing, I knew the key to my retirement would be no debt. I am eight months away from paying off my house, retiring exactly one year from today, have no other debts, and have zero regrets. Regardless of what happens with the economy, I will have a decent place to live. Nothing can take away that piece of mind.

[@sschueneman]

I agree. I feel the same way.

[@wolverine9079]

Congratulations, Great job

[@wolverine9079]

@@MyBelch Maybe, but paying 200-300 is a lot better than 1500. In my case ( California) 450 is better than 2000 a month

[@jeromewelch7409]

Awesome work @Kate Burkes , kudos enjoy your well deserved retirement! Agape Sister

[@consumerdebtchitchat]

@@MyBelch I don't know a single person who lost their home due to non payment of property taxes. I purchased 100k instead of 200k property and paid it off in 2.5 years due to a large downpayment. My HOA Fee, taxes and insurance are under $500 month. My old apartment was 1k when I left in 2020 and is now renting at 1700 / month.... 675 sq ft / 1 bedroom, Tampa. My only goal when I got my place after divorcing at 48, was to pay it off FAST - because with covid and jobs being lost, I wanted the ability to live on half my income. Now I can put 30 percent away easily into retirement.

[@mikerew9132]

Paid off the house in January. 8 years early, and don't regret it a bit. I'm 6 months completely debt-free, and it is a great feeling.

[@Retiredmco]

Congratulations 🎊 👏 💐 🥳 🎊 brother to the smart people's club.

[@jamescalifornia2964]

Yup ... 👍

[@firemipspy1198]

Mine is paid too. Being in debt is signing up for slavery to the lender. So cool to be free!

[@Retiredmco]

@@firemipspy1198 Yes, the borrower is servant to the lender!!

[@TahoeRealm]

Agree Mike! Paid ours off 18 mo back instead of keeping the cash and happy beyond belief👍

[@joethecomputerguy1]

I was fortunate enough to pay off my mortgage when I was 48. I didn't live my life trying to keep up with the Joneses. I lived under my income level. I did without luxury items and funneled those extra funds to paying off the mortgage. Don't get me wrong, I lived quite well and I have no regrets. Because of all those years living under my income I learned to live smart. Because of that I was able to retire when I was 52. That was not 6 years ago. 6 years of living in retirement that NO ONE can take away from me. There is a lot of peace of mind in that. Paying off a mortgage is probably the most free and liberating thing I have done in my life. I highly recommend it, not for the money, but for the liberty it provides. I had a plan out of college that I wanted to retire early. I implemented that plan and it paid off handsomely. Still does today.

[@consumerdebtchitchat]

I agree!!! Congrats!!!

[@amt7877]

Awesome I am 48 and will pay off my mortgage this month

[@cashflow68]

I agree with you. It’s a piece of mind. I got mine paid off in 1999. Bought the house which I still in , in 1980. Put 2 kids in college and began investing. 8 yrs ago at age 58 I fully retired financially free. Living off my dividends and waiting until 70 to collect SS.

[@Chiroman527]

Cash Flow Investor....Congrats on your financial achievements. I'm 71 (Oct 2022). My single regret is that I did not refinance my mortgage for a 15 year fixed rate sooner. Did it probably about 7 or 8 years ago.while my wife and I were still working and makimng good incomes. I still have a Mortgage balance that has been reduced with major paydowns via collecting my Full SS benefits when I hit 66 YO, 5 years ago. There are differing opinions about waiting until 70 for collecting 32% more in SS bennies. Based on my acc'ts info where he told me (I was a morgage Loan Officer for over 40 years ), Take the Bennies at 66, if you wait, it will take you 8 years of collecting the increased bennies to make up the lost 4 years of received benefits at Full retirement. "take that money and paydown or pay off your debt". I paid down our mortgage by sending a majority of that SS benefits to the Lender to shrink the balance sooner. One factor in the matrix is that collecting SS benefits is still Taxable Income and should be taken into consideration bc while working you are in a higher tax bracket (25-35%). But I was able to save more money in the 401k (took the full $24K per year). That too is Crucial ingredient in the plan. This video argues about selling off Asset (Stock Assets) to pay off cheap (3% ) mortgage debt. With the decline of the stock market and INFLATION at the highest in 40 years (thanks Joe!!) , I foolishly got sucker punched (after preaching to my adult sons about Bear Market periodic upswings), to keep certain stocks and in fact buy others with Dividends. Big Mistake. Should have sold off enough stock and /or add some non earning cash and paid off the Mortgage. I'm watching the market very closely now and striongly enetrtain doing just that. The capital value increases of those stocks are dubious now, and the declines in the values are considerably Outweighing the dividends & the Inflation is eating away at any income and savings. Paying off the mortgage (yes even at 3% ) will reduce the drain on the monthly cash flow and far outweigh the monthly dividend and interest income (CDs, Savings accounts) loss by selling those assets. This video has served me to better focus on this aspect of our financial well being. Good Tidings to You. PS: We too put 2 kids through College in the midst of all this. FTR, the past 20 Months of this "Administration" has completely ruined the financial interests of all generations. INFLATION is a Beast that destroys everything. Joeflation compounded that many folds.

[@truthalonetriumphs6572]

Sounds like you guys have an anxiety problem. If you kept a $200K mortgage at 3% interest, you can easily earn 6% after taxes. That's $6K extra every year which is 2 or 3 vacations. You are just leaving money under the table for "peace of mind." Why not stay at home and not drive? Or not eat in restaurants? That will give you peace of mind? Peace comes from relaxing and not being over anxious.

[@mrbigglesworth375]

We paid off all debt including mortgage at 36 years old. This freed up our income to invest heavily. Mostly in blue chip dividend growth and paying individual stocks. Retired 2 years ago at 52. Most people puzzled how we were able to do so. The video isn't inaccurate. Yet it is an example of the process of rationalization to keep the status quo and hence stay on the rat wheel. Become debt free as soon as you can and FREE up a lifetime of future income cash flows. Or keep trying to outsmart yourself and slave away. It's your choice. Heck it's your life. Cheers!

[@Tchild2]

Buddha couldn't have said it better.

[@pbow7023]

So glad we paid off our mortgage back in 2019. My husband now has a critical illness at 64 & may not be returning to work. I only work part time & we could not of handled the payment. I am so thankful we made that decision. You just never know what the future holds.

[@pbow7023]

​ Are you the grammar police for this channel? I was under a tremendous amount of stress when I made that comment & now my spouse is dead.

[@Happybidr]

@@pbow7023 I’m so sorry to hear of your loss.

[@l.a.rivasesq.8841]

We paid off our mortgage in 2014. I retired at 50 in 2020. My spouse retired the following year when she was 50 years old. I know we paid with valuable dollars instead of the current inflation reduced value dollars. However, being debt free is very liberating.

[@HolySchmidt]

Well said LA

[@dlg5485]

I had about $25k left on my mortgage at the end of 2021, with approximately 3 years left on it. I decided I wanted it gone and set out in Dec to pay it off in 6 months and I just made my final payment, almost 6 months later to the day. This was the right decision for me because I had extra income flowing in from overtime at work and I was already saving about 30% of my income toward retirement. Now that the mortgage is done, I can increase my savings rate to 45% or more and still have a bit more disposable cash flow for whatever I want. Obviously, I wouldn't have reduced my saving to pay down the mortgage, but I didn't have to do that.

[@darlenepaul2918]

Wow! That's awesome!

[@amyyates8273]

Well done!!

[@bartdaw6681]

Paying off you mortgage early is like getting a large pay raise.

[@stevenbiggs159]

I’ve heard some folks say that you shouldn’t pay off the mortgage early if the interest rate for the mortgage is low, If we get rid of our mortgage, we are eliminating the biggest expense in our retirement budget. Early saving and investing money creates compounds growth, it's a beautiful thing.But it takes focus and discipline. You need to be focused enough to commit to a plan and a process.I’m a dividend investor, my wife and I have invested in the s&p500, both through my TSP with the government and through fidelity in her 401-k. Cashed out 370k from the S&P and invested with a full service broker.. Until about 3years ago we were 100% in the s&p after over 30 years. I’m retiring at the end of the year at 59, while my wife will retire next year at 54. We currently have 5.7 million in out tex deferred savings.

[@ishaandevaj5587]

this is inspiring. I have seen people who collapsed financially in old age because they did not have an investment when they were still earning. Investing is something that everyone should do for a better future.

[@robertlandis416]

I think people who suffer are the ones who don't think about their future and don't invest. Investing has really saved many lives and got people off the streets. everyone needs more than there basic salary to be financially secured. the best thing to do with your money is to invest. Money left in savings always end up used with no returns.

[@coffmanleonel6227]

Wow this is inspiring! I’m looking at making some passive income with investment from stocks , do you mind telling who your financial adviser / broker is?

[@skibum6422]

@@coffmanleonel6227 Here we go...... make a zillion dollars in two months in a sinking market..... wanna bet?

[@tiffanyjordan5188]

one of the biggest lies ever told is believing that the govt gives a s*it about your financial life.

[@belowsealevel8663]

Paid off my 30 year mortgage last year, it took me 13 years. I'm 50 and this year with my company match I'll be dropping $47,000 into my retirement account. Debt free, stress free, and loading up my retirement account when the market is going to bottom. Best decision I ever made.

[@consumerdebtchitchat]

2 mortg. payments left for me and then it's 25 to 30 percent into retirement. Love it!!! Congrats.

[@amt7877]

@@consumerdebtchitchat congrats one more payment for me

[@MIchaelGuzman737]

Home prices will come down. Look at how much the monthly payment has gone up with the new mortgage rates. Add to that the recession and the fact that mortgage guidelines are getting more difficult. IMO home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes...

[@kashkat987]

I was actually in the market to purchase a home recently but obviously it isn’t a buyers market right now. There was “last minute” price increases, and the demeanor that new home builders and realtors are “if you don’t pay that amount then someone else will”.

[@elizabethyork590]

@Linda Nemirow I will be happy getting assistance and glad to get the help of one, just how can one spot a reputable one?

[@elizabethyork590]

@Linda Nemirow Thanks for this. I just read about Theresa Mary Chamblee. Quite an interesting lady to look up on the web. I left her a mail so i'm waiting for her reply on the subject matter.

[@RoadieWingZZ]

Yep it’s happening already in my area. For sale signs are now lingering in yards. 6 months ago houses were sold in hours; not days or weeks. People that contracted to build houses 6 to 9 months ago are now moving into new houses that are worth less than they paid. Smells like the crash of the 80’s all over again.

[@jumemowery1050]

Paid off the mortgage about 5 years ago. I'm watching because your content is always great! I always learn something. Thanks a million!!

[@1lorijb]

Payed off my home and updated it 5 years ago, best thing I've ever did😊

[@dee4435]

I've updated all of my major appliances and have a new AC system. Now focused on paying off mortgage -- hopefully within 18 months. Would like to semi-retire by age 63, and that's coming up fast!

[@sschueneman]

I purchased my home and paid it off many years early. I lived in a frugal way and made regular adjustments to my life style to pay off my mortage early. The adjustments were never painful. The paid off mortgage is liberating to say the least. When the pandamic hit two years ago my concern was not for having a place to live or how to pay rent. This all made the rising cost of living much easier to bear as i had no other debt. If I had made poor choices earlier in life ($5 coffee each morning or large credit card balance or a $700 phone) I would surly be paying for those decisions during this shift in the economy in the last two years. I am so thankful that I perservered and stayed frugal in order to have the life I have today. Not having credit card debt during this economy is HUGE. I dont know how folks who have large debt find internal peace in this economy. For me it was and still is all about choices.

[@alecharper515]

The comments on videos like this are as interesting as the subject being discussed. As Covey states, "begin with the end in mind". I formulated a baseline financial plan when I was 37. I still have it in my 3-ring binder now 35 years later. Nothing fancy, just simple arithmetic. I chuckle at my assumptions and can see where we have gone wildly "right" and "wrong", but in the end, we retired two years ahead of plan (i.e., age 55). I need to be careful not to become sanctimonious as I survey my world to see others still grinding away, still keeping up with the Joneses (something that I used to do...), but I am satisfied that we pulled-off our plan.

[@raymonddowns6064]

I agree, if anyone is trying to pay extra on the mortgage while having any other debt that is a bad idea no matter what the market or economy is doing. Payoff consumer debt first smallest to largest then avoiding new consumer debt and after building a nice emergency cushion then start putting extra cash towards the mortgage.

[@edennis8578]

We had a 30 year mortgage. Our pay schedule was one mortgage payment divided into two half-payments per month. By doing that, we paid it off about 10 years early with absolutely no pain.

[@HolySchmidt]

Fantastic E

[@bikebudha01]

Back in the day, my wife and I qualified for $250k loan. We bought a $100k house. Paid it off in 13 years. Have been living "rent/mortgage free" for the past 14 years. Buying 'well under our budget' was one of the smartest moves we ever made.

[@charleswatkins6402]

You are excellent, smart and give great advice but, if you pay off your mortgage, you dont have to worry about the market or other things, they take care of themselves. And you only have to do it once.

[@HolySchmidt]

Thanks for the compliment Charles

[@zonker2u808]

I locked in at 2.87% in 2021. With the added interest tax write off, it's less. With the true inflation rate at 10-12%, I'm getting paid to have a loan.

[@sandrarobinson4448]

Paying off the mortgage early allowed me to retire early. I am so happy that we did.

[@princesskaitlinhazelwood4703]

Paid off my house at 49. Three months later the pandemic hit. I rested easy. The problem with the scenario that he lays out is that it assumes no risk and no future problems. After you pay off your mortgage, you have p!envy of fans to invest.

[@darlenepaul2918]

So true they never acknowledge the risk!

[@Tchild2]

And it assumes a market return that may not materialize. Remember 2001-2011? SP was flat for 10 years.

[@denisep.98]

Excellent video! Since the early days of this market's decline this year, we reduced our investment dollars (but still dollar cost average, never leave the market!). The difference is what we put toward our mortgage principal. So, we are still buying stocks in a down market, while essentially "earning" the equivalent of our mortgage interest rate, while we paid down the house. As long as we don't compromise our cash flow, all is good!

[@chriskasprzyk6235]

You've got this backwards. Buy low, sell high is the rule. When the market down is when you put more into investments and when it is up you pull back and pay extra principal.

[@denisep.98]

@@chriskasprzyk6235 Typically, yes. However, we want to retire next year, and want the mortgage - our only debt - gone! This could be done without liquidating assets, AND without stopping investing altogether. Bonus: when paid off early enough, there may still be plenty of time to reinstate full investing dollars well before recovery! Win-win. 😃❤️

[@mattcolver1]

I'm retired. During the 2020 pandemic we refinanced our house to an interest rate lower than 3%. We also took out some equity and paid off cars and credit cards and got some much needed work done on the house. So glad we did that. I don't think getting rid of assets is bad if you can get top dollar for them. We sold our vacation home in April and got a lot more than I thought it was worth and now just a couple months later home values are dropping where we sold that home. That gave us a nice cash cushion and we also don't have the expense of a second home. We've booked some nice trips. We also have decent cash flow from pensions and social security. We sleep well at night.

[@user-fr3hy9uh6y]

I like the way you make difficult subjects easy to understand. My finance class taught me that Cash Is King. During uncertain times, even more so.

[@jefflewis2096]

I bought my house at the bottom of the 2010 crash at 4.85%. I paid off the mortgage in 6 years saving 200k in interest. It was hard but not impossible IF you know the difference between WANT and NEED

[@truthalonetriumphs6572]

Sounds like you guys have an anxiety problem. If you kept a $200K mortgage at 3% interest, you can easily earn 6% after taxes. That's $6K every year which is vacations. You are just leaving money under the table for "peace of mind." Why not stay at home and not drive? Or not eat in restaurants? That will give you peace of mind? Peace comes from relaxing and not being over anxious.

[@jefflewis2096]

@@truthalonetriumphs6572 I not sure how you got your numbers. In California you can't find a house under 200k. Nor can you get 6% on 200k saved. And since you can't get a loan at 3% anymore: you must be thinking about refinancing a balance when the rates were low. The fact is, an interest deduction on taxes gives you NO money back. It simply lowers your gross income. 3% on 200k won't change your tax bracket by itself so you're fooling yourself into thinking the deduction is cash. If, however, you pay off your mortgage early, you'll keep ALL the interest saved instead of paying a bank which releases that interest plus fees, plus fanny and Freddy insurance payments directly to your pocket for a total closer to 10k per year times the mortgage duration. Not only that, once its paid off, you don't have to worry about losing your job and therefore your house. Playing the long game makes banks wealthy. Playing the short game makes YOU wealthy

[@truthalonetriumphs6572]

@@jefflewis2096 I was talking about people with $200k left in their mortgage and a 3% interest acquired a couple of years ago (as an example). 80% of the people have these low interest loans and there's no reason to pay them off. You can deduct the mortgage interest against your taxes too. You can keep money for investments and emergencies. Listen to the video with an open mind.

[@martyi398]

We refinanced last year from 3.7% to a 2.6% rate mortgage, cut 2 years off the life of the loan and $5k cash in our pocket after closing, monthly payment hasn’t changed all closing costs were paid by mortgage company, I was shocked frankly and asked lender what was the catch? They responded they wanted to keep/have our business, we owe less than 100k on remaining balance and have been advised to pay off as agreed

[@HolySchmidt]

Sounds great Marty

[@ag4allgood]

No debt. Paid off in 2020. I'll close my eyes & watch !

[@TahoeRealm]

Agree👍👍👍

[@charlessmith7141]

Great video! One thing left out though is the income tax liability of withdrawing from 401, 403b or IRA accounts to payoff a mortgage balance early. Then balancing that against interest savings at different points in time of course. Cheers

[@roychastain2958]

We sold stocks (equities) to pay off all our loans (house and cars). Immediately felt a large boulder removed from my back. What seemed like a financially unwise decision turns out to be smart given the 2021-22 market crash. Plus, we saved the payments and were able to travel to Europe with no debt. Investing in the stock market decades ago(even at small levels) was very beneficial,

[@marcosgarciaalvarez7017]

True but peace of mind has a value too.

[@jamesfarmer876]

I paid off my mortgaqe before I retired and have never regretted it. I can sleep at night knowing I don't have to sell my investments at a discount to make my mortgage payments.

[@HolySchmidt]

Thanks for the point James.

[@donnanorris4733]

Hate to admit it but I don't understand not paying off the mortgage early. Understand inflation is higher than the interest rate. I'm 66, retired. Owe 45,000 on my home. Interest rate 4%. Property taxes are rising 15% a year so I want to pay home off sooner rather than later cause of ever increasing property taxes. I apply extra $ every month, but will not sell assets to pay it off quicker. Reading comments most already paid off their mortgages - a mute point for this discussion.

[@Bandaid17]

Yes assets have shrunk in the last 2 years so I don’t think I’ll dip into them to pay off our mortgage. I think the rationale is not to spend the base and to wait out the storm until valuations are better if you are able. Not everyone can though so this is a timely video that shows both sides of the coin.

[@teams3345]

Thanks. We paid cash for our current house. Mostly from previous home.

[@doctordetroit4339]

If you have a low rate mortgage (like last year) and you get COLAs, you will inflate away your debt. But you gotta be smart AND disciplined.

[@johndbro1]

I've been paying extra on my mortgage, so I could pay it off when I turned 59 1/2 - but recently I stopped paying extra, because of financial issues with my job. But given the inflationary spike, and the likelihood of a significant raise if I get a new job, I can see the point in not paying extra - the percentage of my income attached to my home will go down correspondingly to the new work income.

[@kennethmelnychuk9737]

You need to understand that if you pay your mortgage over the amortization period, you will have paid close to 3X the original price of your home during that period. It’s best to find a way to pay your mortgage off early as you can place the former mortgage monies towards building an emergency fund, investments if you want. Stay away from auto payments and other debt. If you need to use a cc, pay off the charges immediately. AVOID DEBT, keep your money to yourself, pay yourself first.

[@billb7794]

I just bought a retirement home for $1.1M in April. Locked in a mortgage of $920K at 3.75%. Plan was to sell two properties which would net me enough to pay off the whole mortgage. After selling the first property, I chose not to put the money into the mortgage but rather opened an investment account that will be invested in fairly safe, dividend producing stocks. I believe I can produce a steady 6% return on the money in that account, which once I sell the second property, will easily cover my mortgage and then some. Big caveat is, my retirement plan was not overly dependent on these assets to retire. So if you can safely keep these assets separate and earn more than your mortgage (not to mention the tax benefits), its not a good idea to pay off the mortgage. Another big plus is, if you’re lucky enough to have a couple of good years with that investment, you can take some of your gains and dump it into the mortgage (mine allows for unlimited reamortization) to lower your mortgage payment too.

[@hardykornfeld1733]

Like some who have already commented, I’m in the fortunate position to accelerate principal payments on a 15-yr fixed 2.25% mortgage without selling appreciated assets. I’m near retirement but still working, putting the max into tax-deferred retirement accounts weighted to equities, and when I hit 70 in September, I’ll have to begin taking social security that I don’t currently need. I view the extra principal payments as a tax-free, near zero risk investment with a 2.25% return. Any bond or other fixed income asset would have be high risk to get near that return. Except for I-bonds, which I max every year for the emergency fund.

[@HolySchmidt]

Thanks for the comment Hardy

[@CAMusicFan]

Great video, Geoff. I appreciate your presenting this side of the debate. While there are certainly no guarantees with equity investments, historically they have been reliable enough over time that we're comfortable leaving our money in them for twenty years instead of paying off a mortgage that is locked in at less than 3% interest. The key for us is having enough cash to be able to keep our hands off the investments when they periodically go south like they have (so far) this year.

[@Blublod]

Faced with paying off a 15-year $145,000 mortgage at 3.2% with 5 years of monthly $2,500 payments left on a $1,600,000 house in late 2021 (appraised), I chose to refinance to a new 30-year mortgage at 2.5% with monthly PI payments of $475. Why you might ask? Well, because as this video points out, cash flow is king, and being retired early (I'm 58) it made more sense for me to preserve appreciating assets such as investment real estate, not touch any of my pre-tax retirement investments (I qualify under the rule of 55 so an IRS penalty was never an issue), and still be able to keep up my standard of living while continuing to pay for the kids' college. One thing I definitely didn't want to do was to return to the certifiably insane "woke" labor market because early retirement is the best thing since sliced bread: no wokism, no vaxx anything, in fact, you can't be cancelled, period. Some friends thought I was crazy because most people's goal is to pay off their mortgage, and even the lending bank agent asked "why" having examined my assets, but the last six months since the refinancing have proven that my move made sense because the monthly payment is so low I don't even miss it, and I have preserved my assets without the need to liquidate a dime. Now, if I could only do something about the escalating property taxes from my county and municipality... but that's another story.

[@cheo6372]

Well said! I agree with you on everything.

[@cheo6372]

Well said. I agree with everything you mentioned.

[@hoss6981]

Very smart with an interest rate that low over 30 years the bank is losing money lol and your assets are going up. Also with property taxes do you really ever own your home anyways ???

[@MrGoodaches]

I still feel OK about having mortgage in retirement. Here's my scenario. Never carried any debt for credit cards, cars, or airplanes. Always had mortgages. Occasionally would use special financing but always paid off before interest kicked in. Ex wife got house with high equity in divorce a couple years before I retired. To buy my retirement house without mortgage would have meant taking six figures out of 401K and having that plus pension plus part time job income add up to a tax bracket that would be like making a down payment twice on the house. As it has worked out inflation is higher than my mortgage interest rate. Even if I wasn't paying back the mortgage with dollars worth less than the dollars I borrowed, by buying a modest home my mortgage payment is nearly inconsequential - ten days of groceries and toiletries cost more than the monthly mortgage payment. The key for me has always been to never own anything I couldn't afford to maintain in top condition. By not stretching to have things that own me I've had more flexibility to manage total long term costs rather than scramble on monthly cash flow. The amount I spend per month for this mortgage (my only debt) is insignificant to my monthly cash flow but taking the equivalent amount plus tax out of my 401K would have been a significant hit to the future value of my 401K and the income I expect from it when I reach the time I intend to open that spigot. Anyone think I'm doing math wrong? Others using similar thought process?

[@UnlikelyToRemember]

I'm solidly in the payoff your mortgage camp. We bought our house shortly after our son was born. We had to use a 30yr ARM to get in the door, but in a couple of years we quickly refi'd to a 15yr but paid it off as if it was a 10yr. This meant it was paid off shortly before our son went to college and then the cash flow we were using for the mortgage went into paying tuition. All things considered, pretty painless. If instead we had kept a 30yr mortgage and saved the "excess" payments in a college fund, with the way the FAFSA works, he would have gotten less financial aid. Had interest rates/investment returns skyrocketed during the time we held the mortgage, we could have fallen back to the 15yr payment and invested the "excess". But I probably still would have used those returns as a lump sum to pay off the mortgage before doing the FAFSA (pretty much the only two things the FAFSA ignores are your primary residence and retirement accounts).

[@vinnyg2619]

Interesting! I refinanced my mortgage last year because it was cheap money and I save quite a bit of money on my monthly payments. My idea was to make it as affordable as possible when we do retire without taking a large chunk that could benefit me in other ways. Not saying I'm correct in that thinking but it seems to work when running the numbers.

[@truthalonetriumphs6572]

Sounds like many guys have an anxiety problem. If you kept a $200K mortgage at 3% interest, you can easily earn 6% after taxes. That's $12K every year which is 2 or 3 vacations. People are just leaving money under the table for "peace of mind." Why not stay at home and not drive? Or not eat in restaurants? That will give you peace of mind? Peace comes from relaxing and not being over anxious. A low interest home mortgage is not a liability, it's an asset.

[@ragoff]

Pay off enough principle at the beginning to lift yourself out of when the interest is the heaviest part of your payment. On a $250K house. Pay $50K onto the principle at the beginning. If you can. You now received close to 40% return on that $50K.

[@Weave.seen.this.b4]

I told people this when rates were 4% let alone the last 20 months when it was inevitable. Now we can watch rates rise and the markets mostly fall, but hopefully sometime in the next 10 years one can get a 24 month CD at 8%.

[@5.0beers70]

I plan on paying off my mortgage by March 2023. I am looking forward to it.

[@davidrpriest]

Mortgage is at 2.5%. Inflation is at 8%. I will never prepay under these conditions. By the way, with the mortgage interest deduction the real rate is closing to 1.5%. Better to use that money for investments. This is a contrarian opinion to the standard advice but the math supports my position.

[@Retiredmco]

Where you getting a fixed mortgage for 2.5% today? And you are deducting your mortgage interest?? I don't think so.

[@doctordetroit4339]

@@Retiredmco He got it last year. Mine was even lower.

[@Retiredmco]

@@doctordetroit4339 he didn't say last year. He clearly indicated NOW.

[@jamescalifornia2964]

@@Retiredmco - Don't be jealous ... 🤑

[@Retiredmco]

@@jamescalifornia2964 Jealous of what?!?!?

[@terryB4713]

Thank you once again for your Valuable information. You missed one important thing paying off Mortgage early and Federal & State taxes that are paid if you pull $$ from a 401K or 403B retirement plan. Uncle Sam gets a Big Chunk!!!

[@cathyP1961]

We paid off our mortgage as fast as possible ( 7 years ) interest rate was 9.5% .

[@kevinfestner6126]

I have been debating this. I am at 51k owed at 3.75 pct., my last debt. I purchased after the last property crash in 2009.I've been paying the mortgage down quicker. This made sense when mortgage rates were lower than my rate, as I held the risk. But, as replacement mortgage rates are much higher. This shift risks to the lender, not the borrower, moi. In the last three months, I've been reassessing my position. If inflation persists and housing prices continue to rise, albeit at a slower pace, would it not behoove me to plough those extra dollars in building up my asset value by making improvements to my property? The value of a quality of life, inflation adjusted, is just as valid, as long as my improvements make financial sense. You elucidated my debate with myself.

[@seetheforestthroughthetrees]

Hmmmm @kevin festner, 3.75% 30 year money? What could you do witth it to maximize your net worth? The DOW Jones Industrials was at 6,469.95 on March 5, 2009. The DOW was at 36,000 at its peak a few months back and is currently at 31,000. That is roughly a 5X increase. What if, instead of paying off that mortgage with extra payments, you instead invested that money in the DOW? I bet you would be able to stroke a check and pay off your mortgage today if you wanted to and still have quite a bit left over. There is always an opportunity cost. Now if you would have spent the money or kept it in low-yielding savings, paying it off early would hands down be the better move. My bet is, because you seem disciplined, that you would have invested it, and you would have a much larger net worth now. There is always an opportunity cost. Diversify. Cheers!

[@tinalippincott9823]

Thanks, Geoff. Excellent points.

[@richardc488]

Thank you Schmidty

[@paisteplayer1040]

A paid off home is peace of mind. Not just lowered monthly living expenses.

[@cindyvitale9515]

Thank you. Very useful information.

[@HolySchmidt]

You are welcome Cindy

[@donwhittaker5899]

Great video, as always. Even at 63 years old, I have actually learned that I have a higher risk tolerance than I thought. We are tapping into our $1.4M equity and we are closing on a reverse mortgage this week (yay!), and I plan on investing the $2,300/month mortgage payment we will no longer be paying. I want to take advantage of the depressed stock market to dollar cost average additional bargains. Some will go into our Roth IRAs and some will be go to an increase in my 401(k) withholding. I won't need that money for 12-15 years, so we can ride it out. Oh yea, we bought our first house in1982 and our interest rate was about 13%. Seemed like a discount from the 18% that it had been.

[@todd2456]

Wow, that's terrible.

[@donwhittaker5899]

@@todd2456 What part is terrible? Now of 40 years ago?

[@todd2456]

@@donwhittaker5899 Reverse mortgages are a complete scam and terrible financially.

[@donwhittaker5899]

@@todd2456 You must be stuck back in the 2000's with Dave Ramsey. It's whole new ball game these days. Financially, there is no downside for me. Do some real research. Read a contract, run the numbers, etc. Or just stay ignorant of the real facts and miss out on a possible gold nugget for retirement planning.

[@todd2456]

@@donwhittaker5899 That's hilarious. LOL

[@robertjeffery6100]

Probably the the best advice I’ve heard in a long time...

[@josephmolloy5300]

You always provide excellent advice. Thank you

[@meatman6660]

Yeah, nope. 1) The change in the tax laws means most people can't write of home interest. 2) With the house paid off your cash flow is increased. 3) MUST have no credit card debt. We finished paying when I was 54, wife was 51. she retired at 56 and I went a year later at 60. 2 kids through college.

[@HolySchmidt]

Nice work, although for your benefit and the other readers, interest expense on a mortgage is deductible on a balance of 1 million or less if you took out the mortgage before Dec 15, 2017 and 750,000 or less if taken out after then. You are probably thinking of state and local taxes (property taxes) which are capped at 10k at Federal level.

[@meatman6660]

@@HolySchmidt Yes, but limited! You try to make vids for the "everyman" but then you give an example for top $1MM house that's top 2%ers. I'm a top 8% with a total net worth of $1.8M. Focus on your audience.

[@rickle52]

👍🏽 As I was advised by my CPA.

[@paultrewin5871]

Someone said to me once that you are not in debt just because you have a mortgage. You are in debt only when you start missing payments and then you are in debt to the amount of those missed payments. Someone who pays 1000 euros a month in rent is not in debt, so why should somebody with a 1000 euro mortgage be regarded as such? The mortgage repayments will come to an end. The rental payments won’t.

[@greggpurviance7252]

Always pay off early if you can. Freedom!

[@halletts1171]

Good advise as always!

[@HolySchmidt]

Thanks for the kind words Hal

[@629990]

I put the value in living In a property I own as acting like a tax credit in that it is worth what it would cost me to rent or buy a similar place in the current market. It effectively offsets that expense I would otherwise have to shoulder. while it doesn't pay me cash it does significantly reduce my ongoing shelter cost.

[@HolySchmidt]

Thanks Ken

[@williammccaslin8527]

Even tho I have 0 debt, including no mortgage, an 0 car payments, I think its wise to watch all your videos, if for nothing else, for knowledge, an thx for the vid

[@legomaster2317]

Best video yet. Great job!

[@clbcl5]

Here is my mortgage situation. All figures are approximate. My mortgage is 110K balance. To the end in around 27+ years I will pay 48K interest. By the end of the year I will receive my inheritance of around 3 times my mortgage balance. The first thing I want to do is pay the mortgage off. 1st because we are both retired so a savings of the 48K is to me a no brainier since the 48K will come from savings. That leaves no debt.

[@bjreacher6402]

I'm 59 and retired just this year -- probably bad timing given the current state of the equities market. We have two homes paid off and have purchased another house last year for $350000 @ 2.65% rate. I don't think it make sense to pay it off no matter how liberating it might be. Like Schmidt says, I don't think we're going to see that rate again for some years.

[@paultrewin5871]

I have a mortgage at 1.5% fixed for the life of the mortgage. No way am I paying that off early, even though I have the cash to do so.

[@dougmoore5252]

I do agree with you Kate, our home is paid off and we are together in this, my dear wife and I it is a fine home and in this day of chaos and inflation, it does make sense to us.

[@allthingsnu4673]

I paid my house off 2 years ago and it was the best decision for me.

[@fsm12385]

The earlier the better , peace of mind is priceless

[@davidrosenthal5795]

You know who doesn’t pay off their mortgage? Poor people.

[@user-yb5bg8im5g]

a free and clear asset is security and peace of mind. kept life simplle and stayed away from thew market. saved 200k by paying cash for my house. didn't need the market.

[@mattball2700]

I needed this video 15 years ago. I had a 2.1% mortgage. :-(

[@daver2214]

You might be the first person who paid off mortgage and is sad about it!

[@williewonka6694]

Not paying off the home loan was the route I took. I refinanced every time There was 1% reduction in the fixed rate. The mortgage rate is 3.37%. This allowed maximizing saving and investment during my working years. Inflation will eat away at the value of this debt, while equities continue to perform, on average, above inflation. Additionally, mortgage interest remains tax deductible.

[@MeliaDawnNewman]

I have been paying extra on my mortgage. But I already have plan to discontinue the practice should guaranteed rates, such as CDs start paying more than 1% more than my mortgage. But I already have an emergency fund and am contributing to my IRA.

[@stevea8351]

I won't pay off my 2.5% mortgage early. With inflation at much higher rates than the govt is reporting, it is like I am being paid to borrow. I funnel any extra money I make into real estate for passive returns. In most cases I am making 20% or more annually in real estate and making my upcoming retirement nest egg significantly better. A 2.5% mortgage rate is a valuable asset to me to grow my wealth.

[@sov19871987]

Agree, even CDs pay 5.5% right now, put that into CDs and you actually make money by not paying off early

[@christopherlynch3314]

I'm from the Ric Edelmen school on this topic. Any money in your home is trapped in the walls. Cash is king. If you are 80 years old and have low income and want to take out a mortgage on your home what will the bank say? Also, the government is practically paying you to have a mortgage.

[@writer89]

I follow Dave Ramsey and believe one should pay off mortgage early if they can.

[@kmng3207]

Finally I have paid off all consumer debt... At this time 84000.00 left on mortgage... VERY VERY little invested.. Saving as much as possible a month- have as of today 11,000... Plus 1/4ly taxes ... I am 61 will not even see retierment until 71... Torn between paying off Mortgage ASAP... What now.. So much info being purged

[@CroisMoi]

Buying a house is a suckers game. Now the market is crashing. Most people lose money. I know 2 people under 70 who cannot afford to make repairs. I sold my house at a loss in 2009. I’m looking at retiring where it is affordable.

[@Pje3ski]

It depends on what stage of life you are in. I started paying extra on the mortgage when I was about 50. Still doing it. I want no debt in retirement. I never paid extra before that because I wanted to invest, and honestly I didn’t have much extra.

[@terryevp4084]

Love your video's from canada...!!!

[@yips_way]

Pay it off early if you can. Best feeling knowing you owe nothing. Paid mine off 8 years ago, 11 years early on a 25 year mortgage which made me 100% debt free. The weight off my shoulders at the time was undescribable. I got that same feeling during the pandemic while most of the people around me were in somewhat of a panic - although a fair few of them got furloughed so I missed out on the free money they were getting from the government as I retired early dag nabbit, due to being debt free lol.

[@daviddhulst1513]

Your greatest wealth building tool is your income. The more you have the more you can invest for your retirement. I would rather invest my house payment in good growth stock mutual funds, earning 10 -12%, than using it to payoff a mortgage spending 4% in interest payments.

[@mikeberg5003]

Everyone is different but there is no guarantee that you will earn 10-12%. Also consider that a 4% interest rate is on a loan that is tax deductible so it's really less

[@RoadieWingZZ]

@@mikeberg5003 Tax deductibility is not certain. Depending on income and other factors, the standard deduction often kills the mortgage interest deduction making it a moot point.

[@DrSchor]

By paying off your house, you are investing in real estate, which earns very well.

[@davidroush1224]

Agree that you shouldn't cash in depressed stocks/investments to pay it off. But I am a big supporter of getting rid of all debt. We never had a mortgage - saved and bought land with cash then slowly built our home with cash mostly ourselves over several years and it was done/paid for by our early/mid thirties. That allowed most of our income to go into investments. Do that for a couple of decades and can compound and produce millions and allow you to retire in your 50s. But anytime you can get out of debt is worth it as that means you need far less per month to get by and can save more, as well as not need as much in retirement.

[@johnnyyu7439]

CNBC get many speakers tell investors what to buy in a bear market and how to navigate during a recession. They were also the same one give the audience advise to all in so your cash will not not be eaten up by inflation 6 months ago. I take you advise anytime over them.

[@georgemckenzie2525]

All homes and all the property arevalready mortgaged . House Resolution 1491 March 9th page 83. All debt is prepaid. House Resolution 192 June 5th 1933. Please read 31 U.S Code 5118d.2. One can write "Holder in Due Course" after their autograph on any loan/credit application/promissory note.

[@jamescalifornia2964]

NO🚫DEBT

[@richardc488]

James you are unAmerican, you must have debt!

[@jamescalifornia2964]

@@richardc488 ‐ HA ! Sad but true .. .

[@sov19871987]

CDs pay 5.5% right now, there is no way I would want to pay off my 2.8% mortgage rate

[@maxshiraz3447]

Makes a lot of sense not to pay off principal on an old 3% mortgage when rates are now much higher

[@aacmove]

I borrowed 135k. My mortgage would have been 25 years and i would have paid more than 100k in interest. My flat will never be worth 220k. But not paying 100k in interest it helps me to sleep at night thanks.

[@Ramdinohikes]

I am 58 and would like to retire at 62. But with the current market conditions it may be later. I have a mortgage at 2.85 and owe 200K I have heard that I should invest in something I can get a better rate of return than 2.85 and not use that money to pay off my house. I don't owe any credit cards. I do have a heloc at 5% and owe 40K on it. That's all the debt I have. Should I invest my cash or pay down the house or heloc?

[@DrSchor]

Here is what you should not do: Get advice on youtube. Including the advice to not get advice on youtube.

[@duaneulman9915]

Thank you

[@nighthawk_predator1877]

Yes my interest rate is fixed. Up until next month's mortgage payment -May 2023 that is. I will have been paying 350.00 less a month. My mortgage is fixed in so much as the escrow remained fixed. However, since I live in Florida in a state that has a Republican majority State House and Senate for over 2 decades now and who has never met an insurance company lobbyist that they didn't love more than their constituents, I am now in a much tougher position. Homeowners insurance has never been higher in Florida and the political remedies decided upon by our state pols is no remedy at all. Many in Florida are now deciding if they can even stay in Florida in their home. If I had paid off my home by now I wouldn't be looking at a mortgage payment that basically erased the refinance deal I got a year and a half ago. I so wish I had put more emphasis into paying down or off my mortgage because I am close to retirement now and looking at an uncertain future in my home.

[@winniethepoohandeeyore2]

Paying my mortgage @ 2. 875% off in 8 years when we hit 65 is my TOP priority. Been paying extra on my principle since our first mortgage payment was due in June 2021, Already knocked almost 3 years off the life of the mortgage. Once we hit 65 property tax stops. I am very fine with no longer having a mortgage and property taxes anymore. Just paying home owner's insurance, utilities, maint and upkeep is fine with me! The economy can totally crumble but I will have a paid for roof over my head and zero property taxes at 65. NOT having those bills anymore INCREASES MY ASSETS.

[@jerrym2367]

Curious what state you live in where property tax stops after 65? TIA.

[@bryanwhitton1784]

We also would like to know.

[@RoadieWingZZ]

I doubt your property tax stops. More likely the tax rate or assessed value will freeze at the then-current level. Better check your situation before failing to pay due taxes and having your home taken away by the taxing authorities.

[@winniethepoohandeeyore2]

@@RoadieWingZZ It stops here for vets, ppl 65 and over and other cases, they even want to expand property tax exemptions for numerous other people

[@bryanwhitton1784]

@@winniethepoohandeeyore2 Where is here?

[@whidbeyrules5566]

I have no debt aside from my house. I want to be debt free in 5 years. Owing nothing is worth it to me.

[@anomaly2990]

You didn't mention most homeowners property taxes go up after paying off a home by losing exemptions.