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FlowMaster
LSU Fan
Member since Jan 2009
274 posts

Mortgage principal paydown

Close to the middle of a 15 year home mortgage fixed at 30%. Owe about $170k and sending in a $20,000 principal payment this week to knock down to $150k. Still have about $75k in cash after this.

55 years old and SICK of the corporate grind. 5 year plan to retire at 60 and cannot get here soon enough!!!

Heineken Light iced down and ready to pop!



FlowMaster
LSU Fan
Member since Jan 2009
274 posts

3% that is :)


AUCE05
Auburn Fan
Member since Dec 2009
40420 posts

What is the home value?


FlowMaster
LSU Fan
Member since Jan 2009
274 posts

About $650k - $675k conservatively


AUCE05
Auburn Fan
Member since Dec 2009
40420 posts

Something to think about. You could refi and cash out some equity. For example. Dumping 500k in SCHD would cover your house payment per month while still giving decent growth. You could retire sooner.


HarveyBanger
Member since Mar 2018
921 posts

quote:

Something to think about. You could refi and cash out some equity. For example. Dumping 500k in SCHD would cover your house payment per month while still giving decent growth. You could retire sooner.


Outside of the fact that you won’t find another 3% rate right now, this is probably a bad idea


LSU_historian
Member since Apr 2022
43 posts

What an idiotic idea


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272
Upperdecker
US Space Force Fan
St. George, LA
Member since Nov 2014
27069 posts

Yes, OP should refinance his 3% mortgage for a 6% one. Brilliant


natsoundup
Simpsonville, SC, Jupiter, FL,
Member since May 2013
334 posts

Why is the op even asking …sell now and rent. Buy when you figure out where you want to retire to…


Im4datigers
LSU Fan
Northern Virginia
Member since Oct 2003
3784 posts

Keep in mind that you are now on the aggressive side of the amortization curve. The overall majority of your monthly payment is now going straight to principal vs the other way around in the beginning of your mortgage. Will be even more after the principal reduction.



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alpinetiger
Auburn Fan
Salt Lake City
Member since Apr 2017
5295 posts

quote:

Close to the middle of a 15 year home mortgage fixed at 30%. Owe about $170k and sending in a $20,000 principal payment this week to knock down to $150k. Still have about $75k in cash after this.

55 years old and SICK of the corporate grind. 5 year plan to retire at 60 and cannot get here soon enough!!!

Heineken Light iced down and ready to pop!

Owning your home outright is never a terrible option. Personally I don't have any mortgages. However, while inflation is 9.1% you might want to consider putting that $20k to use somewhere else. You can always pay down the mortgage later with a larger nut. You're hedging inflation and "sticking it to the man" right now with the 9.1% inflation / 3.0% mortgage spread.


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323
TorchtheFlyingTiger
North Carolina St. Fan
It's Germans
Member since Jan 2008
1452 posts

Put the $20k in I bonds and earn 9% for now. Probably best to invest vs pay down a 3% mortgage. Do you already have plenty saved for retirement? If not, probably need to be more aggressive with that $ to make retire by 60 feasible. If you do have enough, look into rule of 55 to access 401k early no need to wait until 59.5 if you want to leave the grind.


Turf Taint
LSU Fan
New Orleans
Member since Jun 2021
4092 posts

quote:

fixed at 30%


I almost had seizure on your behalf!

Whew, 3%!

Hear you on corp grind!

My thoughts would be to rid of bloat in lifestyle first and reduce cheap debt (eg, 3% mortgage) in descending sequence, all based upon what your nest egg is projected to produce in income to cover expenses.

If mortgage principal paydown is necessary part of the financial math, good on you and make it right as soon as possible to meet your "elimination of corp grind" (applaud you for that!).

All things equal, I tend to think cheap debt elimination goes last in financial math descending order of things that need to happen to enable exiting the corporate grind. However, having just spent a couple of weeks at HQ of my company's worldwide office, I hear you loud and clear.

Good luck!


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31
Fox McCloud
Member since Oct 2020
3313 posts

quote:

Something to think about. You could refi and cash out some equity. For example. Dumping 500k in SCHD would cover your house payment per month while still giving decent growth. You could retire sooner.


Horrible advice. Just wow.


Im4datigers
LSU Fan
Northern Virginia
Member since Oct 2003
3784 posts

quote:

Something to think about. You could refi and cash out some equity. For example. Dumping 500k in SCHD would cover your house payment per month while still giving decent growth. You could retire sooner.


Dumbest advice ever. If cashing out do a damn HELOC, but that would Even be dumb


Auburn80
Auburn Fan
Backwater, TN
Member since Nov 2017
5517 posts

Math will usually tell you to invest and not pay down a mortgage.

Psychology and peace of mind say pay down the mortgage.

I’m 63 and I retired at 61 with no mortgage. It was worth it to pay off for me. Debt hangs over you when you are not bringing in an income.


Oenophile Brah
LSU Fan
The Edge of Sanity
Member since Jan 2013
7506 posts

quote:

Put the $20k in I bonds and earn 9% for now. Probably best to invest vs pay down a 3% mortgage. Do you already have plenty saved for retirement? If not, probably need to be more aggressive with that $ to make retire by 60 feasible.

This.
There is basically no immediate benefit for a partial pay down on a low interest mortgage. A goal of being debt free at retirement is fine but build that nest egg as big as you can then deploy at your final debts at retirement. IBonds are perfect for that $20 right now and maybe the next year plus.


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81
Zzyzx
LSU Fan
Member since Nov 2018
1202 posts

Was going to post this too.

At 3% he is essentially MAKING MONEY by not paying this off early because of the inflation at 9%. You’d basically be paying an extra 6% to pay down a little principal now. I’d invest that amount now and revisit paying down the mortgage when inflation eventually comes back down


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121
Fat Bastard
Atlanta Braves Fan
Member since Mar 2009
61143 posts

quote:

Dumbest advice ever.


IKR. that much principal dumped into a dividend paying only 3.4% in this current climate? wow.

quote:

If cashing out do a damn HELOC


yup. he can use it with velocity banking IF he wishes to pay down later.

quote:

but that would Even be dumb




yeah at his interest rate and based on amount he owes i'd sit tight for now in this climate and invest.


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11
I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
36927 posts

Good for you bro!

Most people never know the feeling of waking up and not having any real debt.

When you don't have a car payment or a house payment your life decisions are 100% different.



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