Pay ahead on mortgage vs saving

Mortgage rates are ridiculously low. I personally would prefer to use that to my advantage in investing, but everyone has a different level of comfort. The fact is everyone puts a different price on peace of mind with little to no debt. Everyone has a different situation, too. Mathematically you can use current rates to your advantage, though. Also how much time do you have to track your investments? Do you want to set it and forget it?

Low rates. Inflation. Both friends of an investor. I wouldn’t pay extra. Your mortgage payment will still be the same when McD workers make $15/hrs

I'm pretty risk averse. I actually really like the idea of having no mortgage and absolutely want that to be part of my retirement plan, but it's hard to justify paying it off when rates are under 3% and the market is returning ~18%.

Often forgotten is that your mortgage is a great inflation hedge.

If the value of a dollar decreases, your principle amount owed remains the same so you actually get a benefit.

In short, I am hard pressed why ANYONE would not want to payoff their mortgage as slow as possible at historically low rates and possible inflationary environment.

I've built a spreadsheet that will show you down to the penny and you can manipulate numbers until you are blue in the face and see the overwhelming difference as to why you should NEVER pay extra on a mortgage. In fact, I'd tell you to take every dollar in equity out and invest it at these rates assuming you have a good home investment and you plan to stay there.

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 I am hard pressed why ANYONE would not want to payoff their mortgage as slow as possible at historically low rates and possible inflationary environment.

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Somewhat agree. I am paying mine down a little quicker because I want my mortgage done a few years before retirement

I paid off my 15 year mortgage in 5 years with double payments. I am now putting all my extra money now into stocks. Feels freedom not having to pay that note. My stock portfolio now is growing.

There is a way to justify both sides to this situation. I just hated writing that check . The house is now paid off to the penny and I can now put extra cash into my brokerage account. My mortgage company asked me to finance another house with them

Mathematical vs emotional/psychological is hard to grasp. No mortgage makes folks “feel” better financially but the math doesn’t support paying it versus the opportunity cost of investment.

TLDR answer: Pay minimum on your mortgage, invest extra money in the market. When your brokerage account has enough to pay off your mortgage balance, begin assessing when you feel it will make sense to lump-sum your remaining mortgage.




My 2 cents....


I think paying off a mortgage early has alot of merit going for it, even with sub-3% interest rates.

From a FIRE perspective, reducing your monthly expenses is as powerful or more powerful than increasing monthly income and there's also an obvious sense of security imparted by owning your residence.

Mathematically we all know paying off a low interest mortgage early is obviously less profitable. I think somewhere along our paths in life we will all cross a threshold where the security and independence outweighs the mathematical profit.

I don't think it's wrong to pay extra over the course of the loan and I realize the HELOC option is there to retrieve cash if it was ever needed. But I think extra money to an investment account rather than the mortgage maintains the cash availability option while also maximizing the mathematical advantage. I think with low interest rates this is going to be the most right answer for most people most of the time.