If he’s listening to her, he’ll work ‘till he drops.
Most financially astute people will tell you never to pay off your mortgage ahead of time if it has a very low interest rate. This is even more applicable if you are itemizing your tax deductions and the mortgage interest is tax deductible.
I don’t care about all those theories out there suggesting not to pay off the mortgage.
We’ve been totally debt free for years and years. The only bills are paying off in full the credit card statements each month.
As a result we always have cash to spend because we don’t pay out gobs and gobs of interest.
Regarding mortgages, I know a guy that refinanced his home 3 years in a row just to get equity out and blow it.
Sure, there’s the money saved by refinancing and paying closing costs again can rot, however, I would think that taking what would have been your mortgage payment and investing it each month in a high interest account, would reap more benefits.
You come out ahead by paying less interest and then on all the money you would have spent on the mortgage, you can earn interest on the investments.
The problem is, most people don’t have the kind of self-discipline to rein in their finances and will spend the extra they’re saving.
I paid off my 30 year 6.75% mortgage in 16 years in 2019, thanks to Trump!......................
We always shopped for and got zero-cost refis. No points and no costs. We refi’d several times and snagged a 2.25% rate a few years ago. I found the ridiculously low rate on bankrate.com and it was with a small boutique bank in Ohio. They were easy to work with and we pushed paper electronically. We never met anybody in person. People on FR thought it was a scam and we’d never really get that rate, but we succeeded. A lot depends on finding a lender who is eager to deploy money.
Refinancing takes a bit of work, but is worth it. Don’t think of it as a one-time event. Shop for the best rate. Don’t be concerned about working with an out-of-state lender or doing everything via email and internet. Look for low- or no-cost deals. Preserve your cash and don’t pay points or costs. Years ago, we used a mortgage broker (again no cost) to find us a low rate and zero costs.
Being debt free has been great the last several years. Especially as someone who works on straight commission.
I ended up paying off my mortgage a couple years early even though the interest rate was 2.375%. I did it because the previous year the interest I wrote off on my mortgage was only about $2000. So, there was no more tax benefit to have it. At the time I did not want to put anymore money in the stock market than I already was.
However, I do live in NH where we fund our local government primarily through real estate taxes. Those are almost $800/month. I do not live in a big house either. I do not pay state income tax or sales taxes except in restaurants.
Pay no attention to those hawkingt DEBT over Independence. I have been debt free for many years with 3 paid for houses and will NEVER go in debt again.
Whent the SHTF, those with Debt will get BURNED
The money that I’ve put into stock, vs paying off my mortgage, has translated into being able to pay off my home at any moment....but at 2.8% interest rate I don’t have any urgency, each payment is 50% principal.
As I enter retirement I’ll probably just pay off the remaining balance.
It also eliminates a financial liability if something goes wrong in the future.
I have a $160k mortgage @ 3.25% on a house worth roughly 500k, and over 400k in the bank earning more than that 3.5%. I will pay off the mortgage when CD’s pay less over the long term. (I also have roughly 2M in my 401k, so I have little anxiety about paying off the mortgage.)
I think the issue is self discipline and awareness. If you refinance the house to finance a new car (I drive a 2014 Corolla, great car!) or Hawaiian vacation, it’s probably a bad idea. If you can hold on to money and watch returns and interest rates, you’ll come out ahead not paying off your mortgage.
If you can afford a better car, or nice vacation, more power to you, money is here to help you enjoy life. I do not recommend being a miser, but live sensibly, and decide what you can afford.
Paid off our mortgage early during COVID and the depressing 2020 election. Being completely debt free is a complete relief. Since my retired pay was paying the mortgage, it took me almost a year to get used to the fact I had extra money in the bank every month!
If everyone paid off their mortgages early there would be less need for these “specialists.”
Shitcoins!
Bragging
I paid $189k for my previous house and sold it for $420k. We bought this house (much larger, more land) for $320k. Life without a mortgage feels pretty good.
Keep in mind, it is very difficult to get a mortgage in this town. Too many DYI mods that won’t pass inspection. A neighbor told us “He had every tool that Craftsman made and didn’t know how to use any of them”.
Now do the state you are in and the amount of property taxes you pay every month.
If you pay a high percentage (2% or more) of property taxes, you are renting forever...
I always paid extra principal when I COULD-—Where if only $50. Average single family home in So CAL-—62 X 125 lot.
I ONLY refied my first mortgage once-—and I used that $$$$$ to buy another property out of foreclosure-—5 acres & 2553 sq ft LOG house in N Calif.
Moved to N Cal house 4 years later——— had rented it in between—and sold 1st house before it become ‘rental property for capital gains taxes. Rented it for 2 years& sold it to my renters.
Cleaned up N Cal acreage & sold it in 2004 for 3.5 times +++
what I paid for it.
Had enough TAX free profit to buy current property for CASH. NEW house/well/septic.power. Added EXTENSIVE fencing & garage.
NO MORTGAGE FOR 20 years.
VERY COMFORTABLE feeling with current ups & downs of economy & costs. ESPECIALLY on SOC SEC income.
This property worth over 2 times my investment.
lots of ideas here - some good. I’ll keep my 2.5% rate for 12 more years just for bragging rights. I still remember my first 10 3/4% 30 yr thanks to Jimma’ Carter.
Look at the amount of interest you will pay over the term of the loan. It is generally equal or more of the amount you borrowed. It is very doubtful you will make that much return on any investment.