I paid off my house in my 30s. I knew then and still know that "financially" it was never going to be the best thing to do, but mentally for the rest of my 30s and now my 40s I couldn't be happier having zero debt.
You reduced your risk in multiple areas and freed up decisions and introduced opportunities you would not otherwise would have had (sorry for the passive voice).
But broooo what about stocks dude! Invest in ETF! PULL all your money out of your mortgage and chuck it in crypto dude! Shares bro! People that say this are never going to be debt free and never rich.
Something they dont talk about is how over 25% of new home were actually bought by investors, not people looking to live there. Even if boomers sell all the houses or more home become available, the problem wont go away, as wealthy investors will still buy up those supply of houses. This will keep the houses prices up.
Not a word about banks, equity firms, Blackrock, buying up houses after the 2008 cruises as assets. You cannot discuss the housing cruises without discussing this. Or discussing that largest luxury houses generate more profit than smaller non-luxury. Developers build for profit.
These uncertainties will always be there. Thing is, If youre not ready for it, you shouldnt be in the market business { crypto stock, real estate }or get you a skilled practitioner.
@@derrickholfman2 I've been looking to get one, but have been kind of relaxed about it. Could you recommend your advis0r? I'll be happy to use some help
@@derrickholfman2 That's really great. I've tried doing some research myself to hire a financial advisor, but it's really overwhelming. Could you recommend who you work with, please?
Paying off your mortgage frees you from the ‘chains of the system’. I’m 45 and am now prepared to take more risks with my career, savings and investments in the future knowing that I own my house in full.
I bought my house in 2009. I paid it completely off in March of 2020! I entered my 40s completely debt free! 🎉 I finally saved many years' worth of expenses so that I can dive into starting my own business and not worry about money. 😊
It's nice, but what a waste. Multiply the total extra amount you paid for your house by ~7%, and that's what you could have been earning every year by doing nothing.
Something no one is talking about is theses scenarios assume you will have the same income and job over 20-30 years. What if you lose your job or can no longer work. I’d say pay off your mortgage
It seems pretty simple to me. Paying your mortgage off in the event of losing a job or getting hurt and not being able to work simply makes it easier to pay your bills with the savings that you have. You're savings last longer the less you have to pay every month in bills which means paying your mortgage off will help you survive in the event of a downturn. Some people think it's all about making money and not just about security preserving money.
Say we both lose our jobs. I have my 300k of those extra house payments in the bank/index funds vs someone who hasn't because they put that 300k in their house's equity. Whose house do you think the bank will take first? I'll be able to pay my mortgage for many many months. (I'd even be able to pay off the mortgage in full literally years earlier than you, should I choose to do this, so even if one is deadset on a paid-for house, this is a faster way to do this.)
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
consider moving your money from the housing market to financial markets or gold due to high mortgage rates and tough guidelines. Home prices may need to drop significantly before things stabilize. Seeking advice from a financial advisor who understands the market could be helpful in making the right decisions.
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
I just googled her and I'm really impressed with her credentials; I reached out to her since l need all the assistance l can get. I just scheduled a caII.
Paying it off is probably the best thing you can do! I got my home in 2019 & I'm already 42% into my loan. (We started at 3.5%). I can start investing large sums of money once my house is completely paid off!
I got lucky so I was able to pay more for mortgage and put money towards Roth and 401k. I bought a condo in Vegas for 60k in 2008 But I think for an average home buyer with a fixed rate I would tell them to do this over paying off house early. Get a Roth IRA set up and contribute to your employer 401k as much as they'll match. My retirement community I work at has a 6% match which is to pretty high most places only match 3%. Anyway sorry for the ramble and it's all our opinions anyway.
I totally agree that its a win win either way. I support those who prioritize paying down their house. But at such a low 3.5%, i dont think i could convince myself to not invest. 😂 Id advise others to focus on putting that money into less liquid investments like IRA & 401k, Bonds etc, to keep themself from temptations to withdraw. Even physical Gold would potentially be a decent less liquid investment if you planned on keeping it for more than a decade. Gold underperforms stocks short term but as weve seen it keeps pace long term and the slight premium to you pay definitely incentivizes you to keep it longterm assuming you’re not buying from sketchy brokers advertising on conservative pundit shows; those premiums are criminal.
What peace of mind, though? It always seems flawed logic to me. The money you would have used to make extra payments is still there in your account. If the bank wants to foreclose, you just transfer the full amount to them. (You can actually pay it off in full earlier than someone making simple extra payments on their house.)
@RichardRietdijk yes , but what if you get injured? What if you get a new girlfriend and want to impress her with an expensive car, and she leaves with the car? Paying off the house early helps prevent you from doing foolish things with your money. Maybe that's why moat millionaires pay off their house.
I paid off the mortgage. I did it fully aware of all the angles. The peace it has given me is worth any financial benefits (I also paid it in 11 years, so the overblown opportunity cost calculations the present in these clips would be further skewed in my situation). The fact that I could now cover all my necessities with an entry-level job if I ever lost my job is amazing and freeing. I can also easily save 35% of my income, donate another 10%, and still live pretty well now. No regrets at all.
overblown opportunity cost? The most generic investment in the world, teh S&P 500, has returned over 5x in the last 12 years. 15% YoY return including dividends. Still don't understand how peace is achieved locking capital into an illiquid asset when that same capital could be liquid and available for the exact concern: potential loss of income. Additionally, the income going into the house has been taxed, by at least 20% for a lot of people in the US .. nobody seems to care about that or that they can avoid these taxes with a better plan. Instead the concern is the rate on a mortgage that is well below the taxes they are paying.
To each their own, for sure. But there are better ways and I see tons of "pay off mortgage" videos and zero videos about what Ramsey himself mentioned in one of the clips in this video: millionaires = paid off house "and 401k". The 401k is the secret here. There is a wide "sweet spot" that can fit a lot of folks that arbitrages house debt, income tax reduction, tax sheltered capital gains and potential company matches that can build wealth extremely fast. All while providing a huge set of assets for emergencies and setting up for retirement. all at the same time. The myopic fixation on debt is holding a lot of people back. It wouldn't be as frustrating to me if "pay off house" coverage was balanced against what I describe above. Anyone who actually has excess cash flow outside of "life" and a mortgage can benefit from it. c'est la vie I guess
My wife and I's monthly payment was $2415 month. We would pay an extra $500 a month towards the principal. We currently just refinanced to get a lower interest rate and to get off of PMI. Our new monthly payment is $2915 a month. We plan on still paying $3700 a month but are now going to do bi-monthly payments.
making the payments quarterly, in addition to adding, a payment each month and watch how fast the payments begin to drop on your amortization chart. I've got one more year after starting about a year ago. The timing of the payments is everything. This is the only thing that they all leave out when doing the videos.
Instead of extra payments, I suspect you would be better off putting the $782 per month into shares of Apple and Amazon. The video more or less describes how you can get out of being a debt slave When you have cash you have options. Smart people hold on to cash. They don't instantly shove it toward debt. Once it is used to pay on the debt, it is no longer accessible.
One part of this vid that I do like is the idea of not taking on a large debt in the first place. I think there should be a balance between the amount of debt you incur and the amount of cash you can invest. I would rather have a $1000 house payment and $1000 going into stocks than a $2000 house payment and no stocks. If you have cash and you’re confused I will suggest you contact a finance advisor
The decision on when to pick an Adviser is a very personal one. I take guidance from Sharon Ann Meny to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
Paying off mortgage early makes much sense. I was able to pay my 211K in about 3 1/2 years. I am 42 and retired living off a pension. I started teaching and would deposit my entire teaching paycheck to my principal each month (about 4.3K). I would see the loan amount dramatically decrease each month. Now that my home is paid off, I still teach but added a pool to our home and take yearly vacations with my family.
Bought a cheap house outright, and paying the renovations off as I go. I already own the grass underneath my feet, and after two decades of renting, this is pretty awesome. By the end of the year, I'll be fully renovated and therefore "paid off." If you can stand to live a year in a construction zone. Not for everyone.
Paid off house early. Least satisfying "accomplishment" in my life. I got a better feeling when I sold something and made money or got rid of a payment.
I have two paid off houses and there is zero chance either will be foreclosed on even if I lose my job or become disabled. All I need to do is pay property taxes and insurance. Maybe not the best from a pure return on capital standpoint but you can’t beat the peace of mind.
That is the point. You never own your home free and clear because you have property tax and insurance. You only truly “own your property” when you have an investment that pays for your mortgage, property tax and insurance. That can only be done by having your money work for you and NOT in equity in the property that DOES not work for you. .
@@DMS20231 You really can’t put value on “peace of mind” or “happiness. Paying off your mortgage early is a good idea if that is what satisfies those needs. My approach is to keep my 2.75% mortgage “gift” and use extra $ to make a much higher return. In my situation I have enough $ saved to pay off my mortgage. However I use the $ to produce enough to also pay for my property tax and insurance. Basically it is separate account that produces passive income to cover the costs. Best wishes to all….and do what is best for your own situation!👍
I paid my first home , and my second home I paid fast , now I am working in my third home i will paid even fast than my second . It is a great way to paid your home early .
The thing you have to hear and not tune out from John’s video clip is the word could! 8% is a possibility it’s not guaranteed. The market will have down years as well as up years. The best approach I have found is do both. Pay off the mortgage early while still investing.
THIS is VERY important. What most people don’t understand about 2008 is that it was over then. Sorry, but it was. The Fed printed so much money and lowered rates to zero such that we flooded our economy with CHEAP money in an attempt to get Americans to take on more debt. So we had car debt, record student loans (even fraudulent schools for nursing etc. that cost 10 times more?), credit cards, other consumer debt, mortgages, etc. Now, like the gentleman said, “on average 8% per year…” well, that’s using about 100 years of data, decent sample yeah? Not so fast, this Ponzi scheme has only been running for about 100 years. What happens when there’s another recession?! I thought about this in 2017 and NO ONE was talking about it, but one thing I knew for sure was that no mafia gives up power willingly. Notice how we’ve been in the biggest growth cycle in human history? Now enter COVID. Ah-ha, now you’re taking, how does the Fed print money to stave off collapse so they can rally and buy up all the assets? Rates are zero remember so they can’t lower them anymore. Create a war. Now watch it all burn to the ground just like every where else they’ve done this, but this time… there will be no recovery, look around, everyone is from the third world, they’re just happy to be here and would like it better with a lot of chaos, it’s not like they’re going to be engineers.
I paid 18 extra principal payments over the years. I would pay the monthly payment but also using the amortization schedule I would pay the next “principal owed amount”. This way I knew how much interest I saved. So far $8000. Lots of money to be saved in the beginning of the loan but not much in the last 5 years or so
I refinanced my home back in July '21. I went from a 30 year fixed @ 4.25% to a 15 year fixed @ 2.87% - initial balance $142,300 with a regular monthly payment of $1400. It's almost 3 years later - all but the first payment included additional principal payments of $900+ but I've been really stepping that up over the last 6 months with $5000, $3000, and mostly $2000 additional monthly principal payments. Today's balance: $78,900. According to my original 15 year loan amortization schedule, $78,900 lands in the month of December 2028 so I've already knocked off 4 additional years. My Plymouth, Ma. home is worth $350,000 today and I have no other debt.
Hey credit Shifu - I have been watching your videos for quite some time now. I just wanted to say thank you for making educational videos like this one. No one ever cares to teach people about simple financial subjects like this 🙏
Two point that I don't see addressed in these videos that I am curious about: the interest you earn by investing versus paying extra toward the mortgage does incur a tax consequence (probably long term capital gain) which should at least be a consideration (assuming you have already maxed out your ROTH contribution) when calculating the cost/benefit numbers, and you hinted at it near the end of your video, but the inflationary impact on your money in 5, 10 , 20 years; that $2,000 mortgage payment will be a smaller portion of your income and worth less over time than its buying value is today, I think ? Still some great points.
There's also a tax advantage to paying off a mortgage vs. investing. Money made from investments increases your income, and thus income tax (unless it's all sheltered). No tax on mortgage payments though!
Funnily enough the exact opposite in Switzerland. High wealth tax. Most Swiss never pay off their mortgage, only paying the low interest (no principal), which also is deductible from income.
Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?
Agreed the role of advisors can only be overlooked, but not denied. I remember in early 2020, during covid-outbreak, my portfolio worth around $300k took a slight fall, apparently due to the pandemic crash, at once I consulted an advisor in order to avoid panic-selling. As of today, my account has yielded big fat yields, and leverages on 7-figure, only cos I delegate my excesses right.
this is huge! mind if I look up the advisr that guides you please? only invest in my 401k through my employer for now, but enthused about diversifying my investments for a prosperous financial future
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Marisa Michelle Litwinsky for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
I was in the process of paying my house off early, then the place I was working was sold and shut down, my next job moved to Mexico. I wound up losing my house and all the extra I had paid into it. So based on my experience, I would save or invest the difference until I could pay it off in one lump sum. I would have lost less if I hadn't paid extra and I would have had more in savings to have made payments until I got back on my feet.
I’m with you, I currently pay about 10% extra each month and might increase that to 15/20% at some point, but won’t go crazy because of the opportunity costs vs saving/investing 👍🏾👍🏾
I like that paying off my mortgage is guaranteed while investing the money has risk. Even if my house loses it’s monetary value it’s value to me as shelter is still priceless
@@calebwharton3007 nope, more in savings and investments. But 2.25% compared to 5.2%+ is like free loan. I am not worried about how much interest I pay over time if I can make more money now.
Paying off my mortgage is part of my retirement plan. I'm throwing around $900 a month extra to the principal. At that rate, I have about 5 more years. But the way inflation is going, 5 years from now, the property tax and home insurance may be as much as my mortgage today in 2024...smh
My mortgage amounts to $2,068.41 per month. So, I rounded the payment up to $2,100.00 per month. I see a separate entry on my monthly bank statement of $31.59 for Principal Curtailment. Its not much, but it was an amount I could afford to throw in extra when I refinanced my home 4 years ago for a 20 year term at 2.99% fixed rate.
9 years left but wish to finish in 5 years so overpaying to accomplish this. interest rate at 1.63% and yes, i know i can get more elsewhere but decided to do both. save and invest.
I’m so glad you did a video on this. I’ve really been going back and forth on this. I locked in a rate of 3%, my mortgage is still higher than I’d like I can’t do what my parents did with refinancing for a lower payment every couple years I’m really thinking just make the payments and save the money elsewhere
Dave Ramsey is elementary school level of financial advise and should be viewed at as such. You want to build wealth you won't do it by prepaying your mortgage unless your mortgage interest rate is sky high, say 6.5% or more. Personally there is no way in hell I would pay off my mortgage early. At 2.375% fixed APR that would literally be the single dumbest thing I could do. Even my cash accounts are generating twice that return, much less my investment accounts. Due to changes in the stock market and housing market, over the course of the last year my liquid assets have grown over 100k in value while my home value has dropped almost that much. Put extra money into paying off your mortgage early instead of save and invest elsewhere, when you lose your job you still have bills and need food to eat, which you can buy with your liquid savings and investments but not your home equity unless you sell or take on debt. That's assuming you can even get someone to give you a home equity loan without income.
Paying off the house hundred percent. Can’t beat that piece of mine plus from what I bought the house to what it’s worth now I’ve made more than your 8% on the stock market over 30 years.
The only reason why I’m considering paying off my mortgage early is because I’m about 15-20 years away from retirement and I have about 28 years to pay off my mortgage. Part of me wants to go into retirement with no mortgage. Still, I’m focusing on investing more in my retirement account right now because I know that it makes more financial sense. I’m focusing on saving at least a million dollars in my retirement account. Plus, as my income increases, the mortgage payment will hurt my pockets less and less.
For those who are planning on doing payments, another advantage is the value of the dollar going down. You would be paying down your home with less valued dollars over time. I may have missed him saying that in this video but, I didn’t here him say anything about the de-valuing of the dollar.
No right or wrong approach. It’s a blend of math vs. real life. Paid off house reduces risk. You take an opportunity cost, you gain resilience. It’s a trade off. I chose to pay off the house early. I’m a millionaire, but still depend on a corporate job. If that job goes away, at least my family isn’t going to be displaced.
It really depends on how much money you have after paying all your monthly bills. For those that are struggling to make ends meet, they really can't do any of the things you suggest. But if one has extra $1000 every month, I would definitely put $100-$200 extra every month towards principal payments. The rest will go to investments like self education, stocks, crypto, etc..
I am the bread winner of my house. I have 2 kids and a wife. I paid off the mortgage so if something happen to me, I know my family have a place to stay. It would be my biggest regret if II have to leave this world and knowing my family is struggling.
Actually a lot of home insurance policies will pay off your mortgage completely if you die, so your family would be mortgage free. I don’t want to take away from your achievement, but with mine, that is the case
To add, if you live in a state like Florida where insurance companies are leaving people high and dty by charging them outrageous insurance premiums, IF you can get one at all. That kind of changes the equation on whether or not you should pay off your house when add in the ridiculous insurance costs on your mortgage. You cannot self insure until you've paid off the house, also, the insurance companies are never going to pay you what they policy says, it's a complete scam.
Bought a condo in 2011, paid it off in 2019 with money from a side gig. Just bought another condo in 2024. Will sell the first condo at a handsome profit and invest the money. Consider what 1,000 shares of FEPI could generate every month . . .
I've mulled this over since buying my first house a few years ago. Toyed with the ideas of velocity banking, infinite banking, and making extra principle payments, but the extra complexity never quite made it so lucrative to pursue these strategies. I want to have some flexibility now, rather than take on a low interest rate mortgage as a white whale. Besides, now that I have the mortgage, it's helping my credit mix on my credit score, so I can pursue more credit cards (which I use responsibly, of course).
It really depends on how much interest rate you have..if interest rate is below what HYSA brings, then it does not make sense..just make sure you do not touch that money..there is higher risk in investment..but if your interest is higher than what you get from the bank, then 100% yes!! Pay off your mortgage..don’t give that $$$ money to your lender.. nothing beats peace of mind…
People who say not to pay off the house and invest instead are hoping you invest into the same investment they are in too to benefit off you. My house is paid off and I don’t have to listen to anyone . The freedom and stress free I live has been amazing .
And I'm sure after paying your mortgage off you can just put that money into investments and recoup whatever you would have lost by not investing and paying your mortgage off anyways. Makes sense to me and it's safer and makes it harder for you to lose your house.
The math of investing instead of paying down a mortgage only makes sense if returns outpace interrst rate. With rates a 6.9% and short-term US treasuries, paying 5.33% paying the mortgage saves money.
One thing you didn't mention about the liquidity of the stocks investments is that yes, you can sell them at the click of a button, but that triggers a taxable event that will cost you money. One alternative is to have the investments in a margin account and take the money out as a loan. At the current interest rates, one of the best alternatives is to have a cash reserve in an account that pays 5% interest.
@@laurenm.6320 Exactly. paying back a 1.8% mortgage vs low-risk investing for an average 10-% in the SP500 is a very easily made choice. People saying "what if the bank forecloses", forget that the money they made in extra payments, is about the same amount currently in our investment account, so we could write the check to the bank in a heartbeat.
The math is a little roundabout. Just total principal x interest rate, then divide by 12. Works perfectly for most because they have interest capitalized monthly. For student loans with daily accrued interest it will be off a little bit.
It's not that simple. It's principal X interest divided by 365, and then you have daily interest. This X days between payments X current principal gives exact interest value in the next payment.
@@rafallo1333 on a mortgage or car loan it is that simple. Whether your payment is in February July does not affect it! Interest is calculated for the year, then divided by 12 for that month. I guarantee you could not find a single mortgage or car loan that differs from this. You’re arguing how the math works on a mortgage with a mathematician, statistician, biostatistician, and epidemiologist with a $100 million real estate portfolio. And you can’t even do the math. Hmmmm? I wonder who knows what they’re talking about? lol, absolutely hilarious little boy.
It is different in Canada where we renew our mortgage every 5 years, instead of having the same interest rate for the length of the loan. We get hosed here. Every time I have renewed my mortgage I have had higher monthly payments, and in 10 years I have only knocked off about 10%
Still be paying high taxes and insurance where I live. Bought my humble home in 1996. Payments of 560.00 a month. If I paid if off tomorrow I would be saving about 266 Dollars a month. At 3.5% interest, Treasury Bills are a better return.
If you have a fixed loan the principal payment and interest are combined to make up your monthly obligated payment. Your first payment will have the most interest to pay as interest is calculated as a percentage of the remaining balance, NOT the original balance. So let's say your payment is 1000 a month. Well 750 of that is going to interest with 250 going to principal. After making that payment you then chuck another 1000 at only the principal. Now the next payment will end up being maybe 740 interest and 260 principal (also adding $10 to principal payment). If you do Turbo payments eventually these numbers are going to be flipped. You will be paying 750 principal and 250 interest as all those principal payments lowered the amount of interest due for the month due to having a lower principal balance to draw the rate from. So your monthly payment never goes down, that is the minimum payment agreed upon at the signing of the loan. You can control how much you pay for interest though by eating up that principal. Banks hate it because it cuts into their yacht payments, but screw em.
My mortgage is under 3%, no reason to pay that off when I can use the same money that I would use to pay the mortgage to get ~10% dividends in covered call ETFs.
I'm terrible at math, but I have seen some estimations that paying down mortgage FAST, then using the mortgage savings (ie 1600-2500+) per month in the market, generates MORE return than doing mortgage + small amount (ie 500) in the market, by quite a bit.
I'm locked in at 2.25% on my mortgage so when accounting for inflation and savings rates the bank is practically paying me to finance the house. I'm adding a little bit of principal just to round up the payment and make it easy to budget, but I'm in no hurry. I'd rather put the money in savings and investments, especially now when they are paying well above my mortgage rate.
I would rather have the CASH on hand to pay off the property, which would be making me money! At any time you need to pivot then do so… right now I have 3 mortgages less than 3% yet I have my money making 5%…
I recently got a huge bonus at work a few days after having purchased my house. This is enough to pay off almost half of the principle amount and reduce my mortgage payments by more than half (down to about 10 years). But I also put the bonus money into a compound calculator to see how much I would have if I invested it for those 10 years (and it's almost 3x the deposit amount which is crazy good). Now I have no idea what to do lol. The idea of paying interest to the bank unnecessarily doesn't sit well with me, but I also can't just ignore the fact that investing the money will make me more in the long-term, albeit more risky.
If it was me, I would pay off some principle and also invest some money. Try the mortgage pay off calculators with different amounts and you will find the amount of interest you save per dollar paid off goes down as you pay more. E.g. paying $10,000 may save you $20,000 in interest but paying $20,000 may only save you $35,000 (thats only $15k saved for the extra $10k payment). I would settle at a level that seemed worth it and invest the rest. I have a video looking at different pay off strategies coming out next week that discusses exactly this topic
I just did this and you're right. There's a point of "diminishing return" with paying off the mortgage. I found the sweet spot where I reduce my principle by a decent amount while also leaving me enough money to invest and not lose out on that compounding power. I'm glad that I stumbled onto your video. Thank you!
Do the math. Pay off your house early, then invest that money into the market. You will end up with more than someone who invested and had to make a mortgage payment.
The ones who say don’t pay it off are fools. I paid off all my mortgages,including my rentals. Guess what I have…MONEY and no worries. HUGE difference. I’m retired and collecting rents monthly. Life’s good
I'm closer to retirement, and late to the game. So I am busting out all the extra $$ I can to pay off the house in 10 years so I can retire with no mortgage.
We paid off our 3% mortgage 4 years before we retired. Was it smart, financially speaking? Probably not. But it's a mistake that I can live with, and I'd do it again.
Sitting at 2.125% with a 15 yr term, and 3 years paying into it, I think I will pass. I am starting to actually need a lot more money for things that break down betwen 12-15 year period of owning a home i.e. hvac, water heater or even having a need to renovate. Will rather have money available there then to put it into the walls of the home and not being able to get the equity out.
Best thing you can do is pay off your mortgage, add areas that have a great homestead exemption you can tell the lender, county tax office to promptly GET BENT.
The analogy is flawed. if you will pay your mortgage early you will have the rest of the duration of payment where you can invest the whole amount of the monthly payment in stock in addition to the amount you want to pay in extra. so we should calculate based on that!
Paying off your mortgage early is a personal financial decision. Works well for some, but mathematically you lose out on gains. $500 a month spent paying down your 4.5% mortgages for 15 years does cost you several thousand in gains from a marginal 3.5% growth. Switching jobs, being laid off, or having costly medical expenses can also be covered by money invested in the stock market. If you want to turn your starter home into a rental, why push to pay it off early and be cash poor when you go to buy a larger home.
I pay off my house within 3 years, and I feel free. Mortgage takes almost half of your pay or more a month. Start early, save up early. Don't owe anyone any money. You will feel free.
it is possible that the banks and stock markets might crash. probably a good probability in the near future. so all that money you were "making" by investing is gone. but if you have your house paid off you will be in better shape. now if the markets dont crash you'd be better off making the higher returns on your money
I can lower my life insurance, disability insurance in case of incapacity do people consider the other associated costs of keeping a home loan longer than necessary? In South Africa the home loan interest is calculated daily but money in an emergency savings fund is calculated monthly.
I dunno. I really feel like I am winning paying off a 30 year in 6 years where the bank might see 10 grand of that in interest. Then all it takes is one decent divvy stock to pay for annual property taxes and I officially "own" the property. In past eras, sure, go the distance and maybe beat the maximum interest you will pay on the house by putting those extra principal payments in the stock market, or maybe you run into a 2008 and get effed twice as hard by going underwater on your mortgage, and all your stocks crap the bed and eat the sheets. Debt sucks. Get rid of debt then you can play around without worrying about not having a place to stay anymore. That doesn't mean making extra payments either. You want the extra to go to 100% principal curtailment, not part going to interest like a normal payment.
Another opportunity cost to think about. I have $100,000 right now. Should I pay that towards my mortgage or use that to pay for improvements to my property and then get my home re-appraised and have the value of my home go up and offer me more of an opportunity to take out the lowest interest loans I can possible get?
