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re: Pay $1,000 extra to house or invest?
Posted on 6/14/16 at 1:09 pm to GoIrish02
Posted on 6/14/16 at 1:09 pm to GoIrish02
Yeah I go back and forth on this but my thought process is I can do a lot with the extra money that I will free up and you always have to have a place to live. So not having any money is factually accurate but you now have means to pay for things you would not have if you still had a mortgage payment. And for me to pay off the mortgage at the current rate I am going is only 6 or so more years. Not 15. So I would not be able to amass 180K in that time frame.
Every situation is different and things can change, but this is the preferred option for us at this time.
Every situation is different and things can change, but this is the preferred option for us at this time.
1
Posted on 6/14/16 at 1:49 pm to statman34
As long as you're okay throwing basic concepts like opportunity cost, the time value of money and liquidity out the window to pursue this short sighted strategy, enjoy having no mortgage and no money for the next 6+ years.
Good luck getting access to your equity if you lose your job, get disabled or have a financial emergency. As someone with college expenses on the horizon, liquidity should be a bigger priority.
No matter the term left on your current mortgage, if you can get money at 3.75%, you should invest the surplus elsewhere. At a minimum, you stay liquid and get flexibility, not to mention you can buy assets that yield more than home equity. The yield on home equity is always 0%, plus you have to sell your house and incur very high transaction costs should you need to realize it.
Your house will never pay you dividends, produce earnings or appreciate more than equities (historically) or otherwise put money in your pocket.
Good luck getting access to your equity if you lose your job, get disabled or have a financial emergency. As someone with college expenses on the horizon, liquidity should be a bigger priority.
No matter the term left on your current mortgage, if you can get money at 3.75%, you should invest the surplus elsewhere. At a minimum, you stay liquid and get flexibility, not to mention you can buy assets that yield more than home equity. The yield on home equity is always 0%, plus you have to sell your house and incur very high transaction costs should you need to realize it.
Your house will never pay you dividends, produce earnings or appreciate more than equities (historically) or otherwise put money in your pocket.
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