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should I pay off my mortgage or invest?
Posted on 12/14/19 at 6:15 pm
Posted on 12/14/19 at 6:15 pm
Just refinanced my house From a FHA to conventional and a shorter term saving me roughly 67k. I only have about 65k left on the loan(20 years 3.625%).
Soon I will be getting an injury settlement, after I pay my enormous amount of medical bills I’m expecting to have around 50-60k in cash, possibly a little more.
I would save around 26k in interest if I just paid it off.
Should I continue to build my portfolio and keep the mortgage for my credit or pay off the house?
Also, I’m 26, I have don’t have a car note or any credit card debt.
Any advice is appreciated, thank you.
Soon I will be getting an injury settlement, after I pay my enormous amount of medical bills I’m expecting to have around 50-60k in cash, possibly a little more.
I would save around 26k in interest if I just paid it off.
Should I continue to build my portfolio and keep the mortgage for my credit or pay off the house?
Also, I’m 26, I have don’t have a car note or any credit card debt.
Any advice is appreciated, thank you.
This post was edited on 12/17/19 at 11:34 am
14
Posted on 12/14/19 at 6:20 pm to Lsutiger2424
I’d sure as hell pay off at least half of it if you want to keep a mortgage for your credit.
Posted on 12/14/19 at 7:03 pm to Lsutiger2424
What’s your interest rate?
Are you itemizing your tax return?
What’s your overall retirement savings looking like?
Emergency fund?
Are you itemizing your tax return?
What’s your overall retirement savings looking like?
Emergency fund?
Posted on 12/14/19 at 7:17 pm to Shepherd88
3.625 interest rate
Yea I itemize my tax returns
Have a solid pension program at work. I’ll be able to retire at 50 with 95 or 100% highest average 4 years salary including benefits.
Yea I have an emergency fund already.
Yea I itemize my tax returns
Have a solid pension program at work. I’ll be able to retire at 50 with 95 or 100% highest average 4 years salary including benefits.
Yea I have an emergency fund already.
Posted on 12/14/19 at 7:37 pm to Lsutiger2424
Personally, I would not pay off the mortgage as quickly then. You’re more likely to have a better net positive return by investing that money.
Posted on 12/14/19 at 8:47 pm to Lsutiger2424
I'd never pay off a 3.625% mortgage. Odds are you will make a higher return in the market in basic index funds if you aren't stock savvy. My suggestion is to A) Max a Roth IRA and then throw the rest into broad market index funds in a taxable account. Save a few grand and do something nice for yourself.
Posted on 12/14/19 at 9:59 pm to Lsutiger2424
The others have made some great points, but I tell people this is the one thing that I'm all about doing for the "warm and fuzzies" even though objectively the numbers won't show you better off.
That said, you can do it another way... If you have the 50k, you can invest it in a high yield/dividend portfolio and pull off around 4.8-5.0% or $2500ish a year.
Your numbers didn't add up when I threw this into an amortization calculator... I got total interest of Total Interest Paid: $26,478.40.
Anyway, you could put this $2,500 towards the mortgage, get it paid off in about 11 years and have a portfolio at the end of it that has grown modestly over that period of time.
Also, even better than this, is moving the $6,000/yr over to your Roth. Get your tax free account as big as you can. You are the perfect age to pay for the ponzi scheme for me when I get old enough to use social security.
Amort Sch.
That said, you can do it another way... If you have the 50k, you can invest it in a high yield/dividend portfolio and pull off around 4.8-5.0% or $2500ish a year.
quote:
I would save around 50+k in interest if I just paid it off.
Your numbers didn't add up when I threw this into an amortization calculator... I got total interest of Total Interest Paid: $26,478.40.
Anyway, you could put this $2,500 towards the mortgage, get it paid off in about 11 years and have a portfolio at the end of it that has grown modestly over that period of time.
Also, even better than this, is moving the $6,000/yr over to your Roth. Get your tax free account as big as you can. You are the perfect age to pay for the ponzi scheme for me when I get old enough to use social security.
Amort Sch.
This post was edited on 12/14/19 at 10:07 pm
Posted on 12/15/19 at 5:28 am to Lsutiger2424
Pay it off, then invest.
Posted on 12/15/19 at 7:25 am to Lsutiger2424
Fund a Roth for 2019 and again for 2020 after Jan 1st. Then conside td what to do with the rest. With low interest rate mortgage I'd probably invest it. Only pay off loan if youre going invest payments not just spend it elsewhere. Also, what's likelihood you're actually going to keep home for life of loan?
Posted on 12/16/19 at 9:43 am to TorchtheFlyingTiger
Get debt free ASAP. It’s crazy the amount you can save once you are there. A credit card that you pay off monthly will keep your credit score up if that concerns you. Once you are debt free and build a nice amount of money, you won’t be concerned with a credit score. You can then buy things cash. Don’t be a slave to the lender.
Posted on 12/16/19 at 11:54 am to Lsutiger2424
The idea of not having a mortgage is just too damn attractive to me. That piece of mind is worth more than I could possible make in the market with the money.
Personally, I am paying off my mortgage.
Personally, I am paying off my mortgage.
Posted on 12/16/19 at 12:05 pm to Lsutiger2424
I'd save it, and pay small additional amounts onto the mortgage. Max your Roth IRA for this year and next, stick the rest into a low cost index fund, and go about your business as usual. Keep on working, saving, using other revenue streams to pay down the mortgage. But money in the market over time is the long-haul winner.
Posted on 12/16/19 at 1:34 pm to Lsutiger2424
Age old question that depends a lot on your specific personality and investment beliefs.
Posted on 12/16/19 at 2:18 pm to Lsutiger2424
If you can be disciplined and take the money that you save per month from the mortgage payoff and invest it, then it can be a smart move.
Most people just spend it though.
If you can take the money that you want to use for the payoff and invest it “wisely” then it will be your best move. Invest it stupidly and it will be horrible.
Most people just spend it though.
If you can take the money that you want to use for the payoff and invest it “wisely” then it will be your best move. Invest it stupidly and it will be horrible.
Posted on 12/16/19 at 2:35 pm to Lsutiger2424
Paying off your mortgage isn’t always the best move mathematically speaking but it’s a hedge against bad shite happening. And many times in our lives, bad shite inevitably happens. Having the money freed up for life’s bad shite can make things bearable in difficult times.
Posted on 12/16/19 at 2:42 pm to GCTigahs
quote:
Paying off your mortgage isn’t always the best move mathematically speaking but it’s a hedge against bad shite happening
A fat bank account is the best hedge against bad things. Paying off the mortgage sinks all of his liquid cash into one highly illiquid asset. If something "bad" happens, he's got a limited cash supply without liquidating his house.
Whereas, with $50K in an index fund, he's insulated from short term job loss (can cover his mortgage with his actual money), without needing to liquidate his house.
Posted on 12/16/19 at 2:55 pm to hungryone
I disagree. If I have a $1,500/mo mortgage, pay it off, and save that note, I’ll have at least $18,000 after 1yr. So sooner he pays it off, the faster he can start saving and paying himself instead of the bank.
Posted on 12/16/19 at 3:00 pm to Lsutiger2424
You can go either way as long as you invest it wisely (if choosing the investment route).
I'm also of the group that sees a mortgage-free future as too damned attractive to pass up. However, if you go this route you should take that mortgage money and put it into your IRA and emergency funds. Once you get the fund up to a 6-month backup and your IRA is funded for the year you can begin spoiling yourself a little.
I'm also of the group that sees a mortgage-free future as too damned attractive to pass up. However, if you go this route you should take that mortgage money and put it into your IRA and emergency funds. Once you get the fund up to a 6-month backup and your IRA is funded for the year you can begin spoiling yourself a little.
Posted on 12/16/19 at 3:57 pm to Bard
If its your retirement house, I'd pay it off. If not, invest it. OP is 26, absolutely no reason to pay it off here.
OP what I'd do is open a separate investment account or just use it to buy one investment fund for example. That way you know exactly where that money is. Then in a year if you want to pay it off, do it.
But if OP wants to buy another house, needs a loan, anything else where he would pull equity from his house he has to re-loan the money. I just don't think at 26 it makes sense to pay off a house.
OP what I'd do is open a separate investment account or just use it to buy one investment fund for example. That way you know exactly where that money is. Then in a year if you want to pay it off, do it.
But if OP wants to buy another house, needs a loan, anything else where he would pull equity from his house he has to re-loan the money. I just don't think at 26 it makes sense to pay off a house.
Posted on 12/16/19 at 4:35 pm to hungryone
Why all the downvotes when this is completely accurate?
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