- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: When to pay off the mortgage
Posted on 9/16/22 at 3:08 pm to slackster
Posted on 9/16/22 at 3:08 pm to slackster
quote:
It’s not flawless, but like you said, it’s usually coupled with investing the extra money
This is why we have tried to pay off our house early. I can convince my wife to live somewhat frugally when there is a tangible goal. But we would never come close to investing the amount that we put towards the house. So in reality we pay around $1200 extra a month towards a 2.65% loan vs investing 4-500 and blowing the rest on dining out, clothes, etc
1
Posted on 9/16/22 at 3:15 pm to dltigers3
quote:
This is why we have tried to pay off our house early. I can convince my wife to live somewhat frugally when there is a tangible goal. But we would never come close to investing the amount that we put towards the house. So in reality we pay around $1200 extra a month towards a 2.65% loan vs investing 4-500 and blowing the rest on dining out, clothes, etc
I’m fortunate not to have that problem since I pretty much handle all of our finances and my wife is frugal (unicorn, I know). However, I can understand that compromise.
Posted on 9/16/22 at 3:43 pm to slackster
I handle most of our finances, she handles most of our spending…kidding
She is actually great, but she is a goal oriented person, so investing isn’t her strong suit. She is the type that would pull all of her money out on the 1st big down day in the market
She is actually great, but she is a goal oriented person, so investing isn’t her strong suit. She is the type that would pull all of her money out on the 1st big down day in the market
Posted on 9/16/22 at 3:55 pm to Grinder
quote:
use savings to pay off your mortgage?
It would have to be some special circumstance, like having a whole bunch of money in savings and no debt other than the house.
Posted on 9/16/22 at 4:31 pm to 632627
quote:
For anyone that took advantage of the insane low rates during the pandemic, you’d be a fool to pay down your mortgage any earlier than scheduled.
I'm honestly struggling with this question. Didn't have a mortgage for 8 years, and now have a 15 year at 2.25%. I sort of hate having it, but it's less than 25% of the value of the home if I were to sell it today. I just hate having it generally, but don't want to pay off because of the rate. It's a good problem to have I guess.
Posted on 9/16/22 at 7:18 pm to tigerfoot
quote:
At the end of the day, being secure in my home and property and reduced monthly budget going forward has a value. Hope to have mine paid off in 5-7 years.
paid mine off 11 years ago. yes i had a high rate and did not owe alot left and no it was not worth the refi closing costs so i paid it off. has paid off in spades. however for anyone who owes a ton with a low rate just milk it for now. pay off everything else. different people have different situations.
Posted on 9/16/22 at 7:31 pm to Grinder
I don't have a mortgage now but when we move I plan to pay off my mortgage on a schedule that would match up with when I want to retire. That will probably mean paying on a 15-20 year schedule depending on when we pull the trigger.
I know I could save more money buy investing that extra or whatever but I plan to put +/- $50k in retirement accounts (roth and 401k) a year and another chunk will be in investment properties plus maxing out ibonds when it makes sense to so paying off a mortgage early won't really hurt our investing. I know I am not an OT baller making $350k but we will make more than double the median household income for the area so it is not like we are poors either. I know I can go back into my own business and make whatever I want but that is a lot of time invested and that time is worth something.
I know I could save more money buy investing that extra or whatever but I plan to put +/- $50k in retirement accounts (roth and 401k) a year and another chunk will be in investment properties plus maxing out ibonds when it makes sense to so paying off a mortgage early won't really hurt our investing. I know I am not an OT baller making $350k but we will make more than double the median household income for the area so it is not like we are poors either. I know I can go back into my own business and make whatever I want but that is a lot of time invested and that time is worth something.
Posted on 9/16/22 at 8:02 pm to Grinder
Paid mine off at 42. Best thing I ever did. Just a good feeling. That’s all I can tell ya !
Posted on 9/16/22 at 8:20 pm to dltigers3
quote:
Wouldn’t the same be true if you paid off early? You still have the hard asset
Yes but paying it off early means you used more valuable dollars to acquire the same asset. Why wouldn't I want to maximize the value of my dollars? Paying 2020 mortgage with 2040 dollars means I created value because the 2040 dollars are worth significantly less than 2020 dollars at the loan origination. The PITI doesn't change because the loan is a fixed dollar amount (not fixed value).
quote:
An inflation hedge is an investment that is considered to protect the decreased purchasing power of a currency that results from the loss of its value due to rising prices either macro-economically or due to inflation.
A mortgage is an inflation hedge because it allows you to purchase something today with money that is devalued in the future. Your 2040 dollars being paid on a house bought in 2020 are receiving the value of 2020 dollars. The money you use in the future to pay towards your mortgage was protected from inflation. If you bought a house in cash and had no mortgage then you used 2020 dollars to buy a 2020 house. The same thought can be used for paying it off early or even just paying extra without paying it off.
Posted on 9/17/22 at 8:20 am to iAmBatman
FREEDOM!!!!’
Posted on 9/17/22 at 4:13 pm to Grinder
quote:
What parameters would you look at that would tell you to use savings to pay off your mortgage?
It’s an unexpectedly complex decision.
Anything 4% and up, pay off with the quickness. Still wouldn't consider doing it until 1) all tax advantaged accounts are maxed every year and 2) fat emergency fund/taxable accounts could cover a year of expenses.
Also if the freedom of not having a house note really appealed to me, I'd want to after 1 and 2 were done. Being able to travel, semi-retire, take a sabbatical etc. is way easier when your monthly nut is not inflated with a house note.
Posted on 9/18/22 at 10:25 am to Teauxler
quote:
Paid mine off at 42. Best thing I ever did. Just a good feeling.
People don't understand the quality of sleep and well being you have by having ZERO debt. I don't give a frick about the math.
Posted on 9/18/22 at 12:11 pm to I Love Bama
quote:
quality of sleep
The only financial thing that helps improve my sleep is my progress towards financial independence. FI is when you have sustainable cash flow from assets to cover all of your expenses. Paying off your mortgage definitely helps with the expenses portion but at the detriment to your assets which provide your cash flow.
If I have no mortgage but no means to cover all of my other expenses, I will not sleep well. If I have a sustainable means to cover all of my expenses but have a mortgage, I will sleep much better.
Posted on 9/19/22 at 9:28 am to cable
quote:
I feel like I kinda own it now
While I'm looking forward to that day, myself (decades in the future), I also realize my mother-in-law (RIP) was right - you don't own it - you "rent" it from the government via property taxes.
Plus, insurance and upkeep. I just feel blessed with such a low interest rate and I'm going to be paying back a mortgage with greatly inflated future dollars (I know, "Except for that, Mrs. Lincoln, how was the play?" - I'm looking for a silver lining, y'all.)
Posted on 9/19/22 at 10:57 am to SaintsTiger
quote:
Never, unless your interest rate is retarded.
quote:
Anything 4% and up, pay off with the quickness
I think the sweet spot still depends on where you are in the amortization schedule and depends on what you are sacrificing with other retirement savings and debt issues.
I usually hate the idea of paying down a mortgage instead of making their maximum IRA and 401k contributions.
Whether you have a high or a low interest rate the biggest benefit is paying down the first 10 or 20% or principal- as long as you are staying there for five or ten more years. Because the amount of your future mortgage payments that is lost to interest decreases dramatically (and when you check out the schedule that can mean you accrued many thousands of dollars more in equity). Is that worth doing? Probably need to look at the schedule.
If you aren't staying long enough to see those savings I don't see how it would. If you haven't maxed out retirement savings that's likely a big mistake (especially younger people lose out on the most valuable compounding years).
The live debt free people do have a point when it comes to stress. If you go full Dave Ramsey and then advance your discretionary investments after you kill the debt you do have more safety nets. That's an "eventually" goal for most people.
Posted on 9/19/22 at 11:37 am to Fat Bastard
quote:
the refi closing costs
That's what stopped me from doing it. When I only owed like $6k on my original mortgage, I couldn't stomach paying a couple of grand to refi.
Posted on 9/19/22 at 1:35 pm to bod312
Was having trouble grasping this concept until your breakdown. Thanks man!
Posted on 9/19/22 at 1:45 pm to I Love Bama
Doesn’t this assume that having debt creates stress that “disrupts sleep”?
Posted on 9/19/22 at 5:00 pm to lynxcat
Freedom is important to me and the sort of freedom I have only comes from being debt free.
When I turned 33, I quit working and traveled the world for two years. I got bored, got back in the game but I still have the freedom to disappear again for as many years as I want.
I have a full understanding of the numbers and if your goal is to maximize your retirement fund then by all means you should not be paying off cheap debt.
That is not what I want. I want to continue to do what I want, when I want, however I want and that comes from being debt free (and being self employeed).
When I turned 33, I quit working and traveled the world for two years. I got bored, got back in the game but I still have the freedom to disappear again for as many years as I want.
I have a full understanding of the numbers and if your goal is to maximize your retirement fund then by all means you should not be paying off cheap debt.
That is not what I want. I want to continue to do what I want, when I want, however I want and that comes from being debt free (and being self employeed).
Posted on 9/19/22 at 11:40 pm to Grinder
I love the MT.
My house is paid for, and there's zero chance I would take out a loan against it to invest. The people giving out this advice often claim to have nice vehicles, kids in private school, and nice quarterly vacations.
My point is that you (us) could always invest more than we do. Whether its dining out on occasion, having nice vehicles, or taking a family beach trip, there is always an opportunity cost. If someone is so determined to invest more that they forego paying off their mortgage, or giving you that advice.....make sure to ask them what they drive and where they like to eat. Because if they don't drive a clunker and eat rice and beans, then they aren't taking their own advice.
My house is paid for, and there's zero chance I would take out a loan against it to invest. The people giving out this advice often claim to have nice vehicles, kids in private school, and nice quarterly vacations.
My point is that you (us) could always invest more than we do. Whether its dining out on occasion, having nice vehicles, or taking a family beach trip, there is always an opportunity cost. If someone is so determined to invest more that they forego paying off their mortgage, or giving you that advice.....make sure to ask them what they drive and where they like to eat. Because if they don't drive a clunker and eat rice and beans, then they aren't taking their own advice.
Page 3 of 4
Popular
Back to top
Follow TigerDroppings for LSU Football News