Anyone regret paying off mortgage early?

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Adenovir
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Re: anyone regret paying off mortgage early

Post by Adenovir »

mrsgoldilocks wrote: Mon Jun 07, 2021 9:29 pm Currently, I have a mortgage of 30 years at 2.5%. Since the beginning (which is Oct 2020), I have been paying extra so that I will pay off the mortgage in 15 years. And I'm also thinking to have early retirement around that time as well.

However, I'm always thinking if this is the right decision. Given that if I invest the extra payment monthly with 80/20 over stock/bond and my balance at the end of the 15 years, according to simulation, it's almost 100% chance to be able to cover my ending balance of my mortgage even after factoring in capital gain tax.

I understand that this is totally a piece of mind and personal preference thing; and for everyone who had paid off mortgage ahead of schedule, do you regret not investing your extra payment?

I really hate myself always going back to revisit my decision. I just wonder if others' personal experience can help me settle the issue.
No regrets. We paid off our mortgage when we "downsized" in 2018 for three reasons.
1. We didn't want the pain and hassle of getting a mortgage.
2. We didn't want a mortgage payment
3. We considered the equity in the house like a bond equivalent and reduced the bond allocation in our investments accordingly which maintained our exposure to stocks.
"Investing is simple, but not easy" - Warren Buffett
coachd50
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Re: anyone regret paying off mortgage early

Post by coachd50 »

bg5 wrote: Thu Jun 10, 2021 8:59 am
topper1296 wrote: Thu Jun 10, 2021 8:52 am I paid mine off early and just enjoyed my 3rd month with no mortgage payment with zero regrets. I could get laid off tomorrow (I've been laid off 3 times in my career) and would have a lot less stress by not having a mortgage payment hanging over my head. I don't care what the math says...you can't put a price on that.

Totally agree and people continue to just look at the numbers and not factor in RISK. Nothing wrong with debt but make no mistake about it that debt is RISK and things can change quickly in ones life.
I agree, but to play devil's advocate, some people continue to just look at the risk, and not look at the numbers. They say "not having a mortgage over my head relieves stress" without recognizing that if they didn't pay down/pay off then they would likely have a pile of cash (presumably invested) as well.

I made my decision based on my interest rate being 4%. I don't regret paying down and paying off because I have a more conservative nature, BUT I do think I regret the way I actually paid off the mortgage. I should have done more planning on that for tax purposes.
SethJane42
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Re: anyone regret paying off mortgage early

Post by SethJane42 »

bg5 wrote: Thu Jun 10, 2021 8:59 am
topper1296 wrote: Thu Jun 10, 2021 8:52 am I paid mine off early and just enjoyed my 3rd month with no mortgage payment with zero regrets. I could get laid off tomorrow (I've been laid off 3 times in my career) and would have a lot less stress by not having a mortgage payment hanging over my head. I don't care what the math says...you can't put a price on that.

Totally agree and people continue to just look at the numbers and not factor in RISK. Nothing wrong with debt but make no mistake about it that debt is RISK and things can change quickly in ones life.

Exactly. Debt is rife with risk, paying it off is not. Nothing but upward spiral when one is debt free. And here I sit on a piece of property that is mine as long as I pay the 1600 a year property tax.
Admiral
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Re: anyone regret paying off mortgage early

Post by Admiral »

topper1296 wrote: Thu Jun 10, 2021 8:52 am I paid mine off early and just enjoyed my 3rd month with no mortgage payment with zero regrets. I could get laid off tomorrow (I've been laid off 3 times in my career) and would have a lot less stress by not having a mortgage payment hanging over my head. I don't care what the math says...you can't put a price on that.
Again, not discounting your feelings. But this is a behavioral choice. If you have the money to pay off your mortgage but choose not to do so, then if you lose your job you spend your savings to pay the mortgage each month. Same result, you're just doling out the money in dribs and drabs not all at once.
'
The only thing different is the interest you're paying. That's the "price" as it were.
ttcbj
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Re: anyone regret paying off mortgage early

Post by ttcbj »

I didn't purchase my first house until 35 (around the time I got married and had my first child). I paid cash for it. It's a house we plan to stay in forever. Around that same time I also paid off my wife's medical school debt (I think it was about $40k).

In retrospect, both of these decisions yielded lower long-term wealth. But, 10 years later I have plenty of wealth and I don't regret it at all. I like the psychological benefits and simplicity.

One thing that has really surprised me in life is how much my attitude towards money has changed as my wealth has changed. Up until my early 30s, I was super frugal, almost grumpy about spending. My spending didn't increase even as my income did. After getting married and having kids, our spending increased dramatically, but it was still conservative, saving ~30% of pretax income, 50% of after tax income. Post-COVID, its really sunk in for me that we have 'enough' and life is short, and I am starting to spend a bit more (just bought a Porsche for $100K, and a $6K small catamaran, for example, very supportive of any spending my wife wants to do).

I think the truth is that paying off, or not paying off, your house isn't likely to make a huge difference in your wealth. It is all the other decisions you make (living below your means early in life, saving a lot, making career decisions that increase your income, not buying too much house, etc) that will really add up to significant wealth.

I think the decision to pay off a mortgage feels big because of its psychological impact, but in terms of building wealth you'd be better off focusing your efforts elsewhere, because its pretty marginal. If it were not so marginal, this thread would have a more decisive outcome, instead of many good points on each side.

EDIT: Perhaps a rule of thumb would also be, if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it. If you can treat your house as just a place you live after paying it off, and your remaining liquid assets are still very sufficient for retirement etc, go for it if it pleases you, but it's not super important either way.
coachd50
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Re: anyone regret paying off mortgage early

Post by coachd50 »

ttcbj wrote: Thu Jun 10, 2021 9:33 am

I think the truth is that paying off, or not paying off, your house isn't likely to make a huge difference in your wealth. It is all the other decisions you make (living below your means early in life, saving a lot, making career decisions that increase your income, not buying too much house, etc) that will really add up to significant wealth.

I think the decision to pay off a mortgage feels big because of its psychological impact, but in terms of building wealth you'd be better off focusing your efforts elsewhere, because its pretty marginal. If it were not so marginal, this thread would have a more decisive outcome, instead of many good points on each side.

EDIT: Perhaps a rule of thumb would also be, if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it. If you can treat your house as just a place you live after paying it off, and your remaining liquid assets are still very sufficient for retirement etc, go for it if it pleases you, but it's not super important either way.
This is as about as an insightful post as I have seen on this topic.
LeslieSmiley
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Re: anyone regret paying off mortgage early

Post by LeslieSmiley »

bg5 wrote: Thu Jun 10, 2021 8:59 am
topper1296 wrote: Thu Jun 10, 2021 8:52 am I paid mine off early and just enjoyed my 3rd month with no mortgage payment with zero regrets. I could get laid off tomorrow (I've been laid off 3 times in my career) and would have a lot less stress by not having a mortgage payment hanging over my head. I don't care what the math says...you can't put a price on that.

Totally agree and people continue to just look at the numbers and not factor in RISK. Nothing wrong with debt but make no mistake about it that debt is RISK and things can change quickly in ones life.
I can't and won't speak for the others. But personally I did factor in RISK. I strategically incurred debts with low interest rate so I can invest more capital in a MODERATE growth portfolio (70/30) with enough assets in fixed income. So when such RISK is manifested as market downturn, I have enough fixed income asset to continue to pay for my expenses while waiting for the market to recover. And at the end of it, I get an additional annual return of a few % and it's compound continuously. Of course if the market tanks and never recover in 30 years, then my strategy would not be prudent.

In other words, it's not all or nothing. You can do both, meaning factoring in risks while investing sensibly for better return not maximum but better.
Last edited by LeslieSmiley on Thu Jun 10, 2021 10:02 am, edited 3 times in total.
Admiral
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Re: anyone regret paying off mortgage early

Post by Admiral »

ttcbj wrote: Thu Jun 10, 2021 9:33 am I didn't purchase my first house until 35 (around the time I got married and had my first child). I paid cash for it. It's a house we plan to stay in forever. Around that same time I also paid off my wife's medical school debt (I think it was about $40k).

In retrospect, both of these decisions yielded lower long-term wealth. But, 10 years later I have plenty of wealth and I don't regret it at all. I like the psychological benefits and simplicity.

One thing that has really surprised me in life is how much my attitude towards money has changed as my wealth has changed. Up until my early 30s, I was super frugal, almost grumpy about spending. My spending didn't increase even as my income did. After getting married and having kids, our spending increased dramatically, but it was still conservative, saving ~30% of pretax income, 50% of after tax income. Post-COVID, its really sunk in for me that we have 'enough' and life is short, and I am starting to spend a bit more (just bought a Porsche for $100K, and a $6K small catamaran, for example, very supportive of any spending my wife wants to do).

I think the truth is that paying off, or not paying off, your house isn't likely to make a huge difference in your wealth. It is all the other decisions you make (living below your means early in life, saving a lot, making career decisions that increase your income, not buying too much house, etc) that will really add up to significant wealth.

I think the decision to pay off a mortgage feels big because of its psychological impact, but in terms of building wealth you'd be better off focusing your efforts elsewhere, because its pretty marginal. If it were not so marginal, this thread would have a more decisive outcome, instead of many good points on each side.

EDIT: Perhaps a rule of thumb would also be, if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it. If you can treat your house as just a place you live after paying it off, and your remaining liquid assets are still very sufficient for retirement etc, go for it if it pleases you, but it's not super important either way.
Real estate is the single largest asset most Americans have by far.
Not Bogleheads, probably, but there it is. It’s quite significant IRL.
coachd50
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Re: anyone regret paying off mortgage early

Post by coachd50 »

Admiral wrote: Thu Jun 10, 2021 10:02 am
ttcbj wrote: Thu Jun 10, 2021 9:33 am I didn't purchase my first house until 35 (around the time I got married and had my first child). I paid cash for it. It's a house we plan to stay in forever. Around that same time I also paid off my wife's medical school debt (I think it was about $40k).

In retrospect, both of these decisions yielded lower long-term wealth. But, 10 years later I have plenty of wealth and I don't regret it at all. I like the psychological benefits and simplicity.

One thing that has really surprised me in life is how much my attitude towards money has changed as my wealth has changed. Up until my early 30s, I was super frugal, almost grumpy about spending. My spending didn't increase even as my income did. After getting married and having kids, our spending increased dramatically, but it was still conservative, saving ~30% of pretax income, 50% of after tax income. Post-COVID, its really sunk in for me that we have 'enough' and life is short, and I am starting to spend a bit more (just bought a Porsche for $100K, and a $6K small catamaran, for example, very supportive of any spending my wife wants to do).

I think the truth is that paying off, or not paying off, your house isn't likely to make a huge difference in your wealth. It is all the other decisions you make (living below your means early in life, saving a lot, making career decisions that increase your income, not buying too much house, etc) that will really add up to significant wealth.

I think the decision to pay off a mortgage feels big because of its psychological impact, but in terms of building wealth you'd be better off focusing your efforts elsewhere, because its pretty marginal. If it were not so marginal, this thread would have a more decisive outcome, instead of many good points on each side.

EDIT: Perhaps a rule of thumb would also be, if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it. If you can treat your house as just a place you live after paying it off, and your remaining liquid assets are still very sufficient for retirement etc, go for it if it pleases you, but it's not super important either way.
Real estate is the single largest asset most Americans have by far.
Not Bogleheads, probably, but there it is. It’s quite significant IRL.
I don't really understand your post here. Yes, the home one lives in is probably the single largest asset that most Americans have, but that doesn't discredit the idea that "pay down/pay off early" vs pay as scheduled isn't really going to impact personal finance or wealth that much overall does it? Or am I missing something?
DoctorWu
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Re: anyone regret paying off mortgage early

Post by DoctorWu »

No regrets at all. Paid off in 17 years while funding Roths, 529B and non-IRA accounts. Slept well knowing it was ours and everything else was on track.
Hyperchicken
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Re: anyone regret paying off mortgage early

Post by Hyperchicken »

JoeRetire wrote: Thu Jun 10, 2021 6:03 am Never gamble. Only invest in guaranteed stocks.
Right. If a stock will not go up, don't invest in it.
LeslieSmiley
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Re: Anyone regret paying off mortgage early?

Post by LeslieSmiley »

Grt2bOutdoors wrote: Tue Mar 17, 2020 7:36 am
EdNorton wrote: Mon Mar 16, 2020 9:51 am
cherijoh wrote: Tue Aug 07, 2018 8:42 am
Hawaiishrimp wrote: Thu Jun 21, 2018 11:24 pm No, I will not pay off my mortgage early. I am at 2.5% fixed. I rather grow my portfolio than wasting the opportunity cost to build wealth. That "sense of security" is too costly.
Smart decision. I'm always amazed at the number of people who buy into the "guaranteed return" argument and then compare the return on a 2-year CD to their 30-yr mortgage. :oops:
That "guaranteed return" looks pretty good right now.
:sharebeer
Yup!
Not anymore with 8% DOW, 17% S&P and 44% Nasdaq return for 2020, plus my mortgage payment this month is lowered than last year and it will continue to get lower and lower due to inflation.

Since folks were coming back here 2 years later to post comments on the “guarantee return”, i feel that it’s a fair game to participate in the same spirit.
manuvns
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Re: Anyone regret paying off mortgage early?

Post by manuvns »

i plan to keep all my mortgages under 3.25% rates till i die , i guess i can beat that rate long term most years, when i got my first home the payment was 767$ now it's 540$ after 14 years . i am able to rent that house for over 1350$ .
Thanks!
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Re: Anyone regret paying off mortgage early?

Post by LadyGeek »

I merged mrsgoldilocks's thread into the ongoing discussion. The combined thread is in the Personal Finance (Not Investing) forum (mortgage).

(Thanks to the member who reported the post and provided a link to this thread.)
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michaeljc70
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Re: Anyone regret paying off mortgage early?

Post by michaeljc70 »

ThePrince wrote: Tue Aug 07, 2018 8:09 pm
acegolfer wrote: Tue Aug 07, 2018 8:02 am
wolf359 wrote: Wed Jun 13, 2018 5:32 am This thread started in 2012. I wonder if anybody who responded back then now regrets having put all that money into their home equity instead of having that several hundred thousand dollars invested into the stock market at the beginning of a multi year bull run?

The returns in the market have greatly exceeded the 3-4% that they saved in interest.
I'm one of them and will answer honestly. Starting 2012, I aggressively made extra payments and paid mortgage off fully ($200k) in 2013. TBH, I regret now (2018) for the reasons you stated.

If a similar financial option were to given today (= I can borrow $200k at 3-4% so that I can invest in TSM), I'd still prefer no debt because I'm more risk averse than the market. Who knows I may regret again in 5 yrs.

If one won’t secure a new mortgage today and invest the proceeds in the stock market, I struggle to be convinced that one truly regretted paying off the mortgage.
Some people are unable to get a mortgage for various reasons (early retiree, unemployed, income dropped and don't qualify anymore, self employed now, etc.)
Admiral
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Re: anyone regret paying off mortgage early

Post by Admiral »

coachd50 wrote: Thu Jun 10, 2021 10:11 am
Admiral wrote: Thu Jun 10, 2021 10:02 am
ttcbj wrote: Thu Jun 10, 2021 9:33 am I didn't purchase my first house until 35 (around the time I got married and had my first child). I paid cash for it. It's a house we plan to stay in forever. Around that same time I also paid off my wife's medical school debt (I think it was about $40k).

In retrospect, both of these decisions yielded lower long-term wealth. But, 10 years later I have plenty of wealth and I don't regret it at all. I like the psychological benefits and simplicity.

One thing that has really surprised me in life is how much my attitude towards money has changed as my wealth has changed. Up until my early 30s, I was super frugal, almost grumpy about spending. My spending didn't increase even as my income did. After getting married and having kids, our spending increased dramatically, but it was still conservative, saving ~30% of pretax income, 50% of after tax income. Post-COVID, its really sunk in for me that we have 'enough' and life is short, and I am starting to spend a bit more (just bought a Porsche for $100K, and a $6K small catamaran, for example, very supportive of any spending my wife wants to do).

I think the truth is that paying off, or not paying off, your house isn't likely to make a huge difference in your wealth. It is all the other decisions you make (living below your means early in life, saving a lot, making career decisions that increase your income, not buying too much house, etc) that will really add up to significant wealth.

I think the decision to pay off a mortgage feels big because of its psychological impact, but in terms of building wealth you'd be better off focusing your efforts elsewhere, because its pretty marginal. If it were not so marginal, this thread would have a more decisive outcome, instead of many good points on each side.

EDIT: Perhaps a rule of thumb would also be, if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it. If you can treat your house as just a place you live after paying it off, and your remaining liquid assets are still very sufficient for retirement etc, go for it if it pleases you, but it's not super important either way.
Real estate is the single largest asset most Americans have by far.
Not Bogleheads, probably, but there it is. It’s quite significant IRL.
I don't really understand your post here. Yes, the home one lives in is probably the single largest asset that most Americans have, but that doesn't discredit the idea that "pay down/pay off early" vs pay as scheduled isn't really going to impact personal finance or wealth that much overall does it? Or am I missing something?
This poster wrote that "your house isn't likely to make a huge difference in your wealth" as well as "if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it."

I am simply pointing out the fact that the house IS, in fact, the majority of the average person's wealth. There are many ways to recapture this wealth, in particular via imputed rent or by selling, taking profit, and downsizing. In effect, homeownership is a very important aspect of wealth creation, esp b/c most academic research shows that those who rent for less than a mortgage costs tend not to invest the difference (Bogleheads aside).

I do agree that in the long run buying a bond at 1% and paying a 2% mortgage may not make a huge difference. But I do feel strongly that keeping a 2% mortgage and investing in a balanced portfolio instead of pre-paying is the best of both worlds: you get a cheap house payment AND the return given by the markets.
Last edited by Admiral on Thu Jun 10, 2021 12:18 pm, edited 1 time in total.
MikeG62
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Re: Anyone regret paying off mortgage early?

Post by MikeG62 »

Paid off early many years ago and zero regrets.
Real Knowledge Comes Only From Experience
Ron Ronnerson
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Re: Anyone regret paying off mortgage early?

Post by Ron Ronnerson »

It may not be for everyone, but we’re sort of taking the opposite approach to paying it off early. In 2010, at age 35, we got a 30-year mortgage at a rate of 5.25%. We restarted the 30-year clock in 2012 when we refinanced at 3.25%. Then we refinanced for 30 years again in 2020 at 2.875%. The most recent refi, for 30 years one more time, was earlier this year. The rate is now at 2.375% and we took out $150k in cash this time as well. All the refinances were no-cost. I don’t know if I’ll be able to refinance to another 30-year loan at a better rate but would do so happily if the chance came up.

The original purchase price on our home was $500k and we put down $15k, or 3%, but didn’t have to pay PMI. After 11.5 years, we owe $492k on the house – more than we did when we first bought our home.

This approach has worked out well so far. Due to the low mortgage payments, we’ve been able to invest the money over the years and my wife has been able to be a stay-at-home parent. Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now. I’m a public-school teacher.

A couple of important factors to this approach for us include that we need to keep our AGI low in order to get some nice tax credits (worth over $20k this year) and I’m expecting a six-figure pension so having a mortgage into retirement is less of a concern than it may be to others (though I doubt we’ll continue to live in our current home during retirement).
Grt2bOutdoors
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Re: Anyone regret paying off mortgage early?

Post by Grt2bOutdoors »

LeslieSmiley wrote: Thu Jun 10, 2021 11:27 am
Grt2bOutdoors wrote: Tue Mar 17, 2020 7:36 am
EdNorton wrote: Mon Mar 16, 2020 9:51 am
cherijoh wrote: Tue Aug 07, 2018 8:42 am
Hawaiishrimp wrote: Thu Jun 21, 2018 11:24 pm No, I will not pay off my mortgage early. I am at 2.5% fixed. I rather grow my portfolio than wasting the opportunity cost to build wealth. That "sense of security" is too costly.
Smart decision. I'm always amazed at the number of people who buy into the "guaranteed return" argument and then compare the return on a 2-year CD to their 30-yr mortgage. :oops:
That "guaranteed return" looks pretty good right now.
:sharebeer
Yup!
Not anymore with 8% DOW, 17% S&P and 44% Nasdaq return for 2020, plus my mortgage payment this month is lowered than last year and it will continue to get lower and lower due to inflation.

Since folks were coming back here 2 years later to post comments on the “guarantee return”, i feel that it’s a fair game to participate in the same spirit.
Sure, pile on, it’s fun playing Monday morning quarterback isn’t it? Only your statement is one of comparing apples to oranges.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
LeslieSmiley
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Joined: Fri May 08, 2015 7:43 pm

Re: Anyone regret paying off mortgage early?

Post by LeslieSmiley »

Grt2bOutdoors wrote: Thu Jun 10, 2021 12:41 pm
LeslieSmiley wrote: Thu Jun 10, 2021 11:27 am
Grt2bOutdoors wrote: Tue Mar 17, 2020 7:36 am
EdNorton wrote: Mon Mar 16, 2020 9:51 am
cherijoh wrote: Tue Aug 07, 2018 8:42 am

Smart decision. I'm always amazed at the number of people who buy into the "guaranteed return" argument and then compare the return on a 2-year CD to their 30-yr mortgage. :oops:
That "guaranteed return" looks pretty good right now.
:sharebeer
Yup!
Not anymore with 8% DOW, 17% S&P and 44% Nasdaq return for 2020, plus my mortgage payment this month is lowered than last year and it will continue to get lower and lower due to inflation.

Since folks were coming back here 2 years later to post comments on the “guarantee return”, i feel that it’s a fair game to participate in the same spirit.
Sure, pile on, it’s fun playing Monday morning quarterback isn’t it? Only your statement is one of comparing apples to oranges.
Not really. Those folks including yourself came back here during the covid-19 market downturn which is two years after the previous post to pile on. So it's only fair that a comment is made post covid-19 with the market recovery and further growth with respect to the effect of such "guarantee return".
Grt2bOutdoors
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Re: Anyone regret paying off mortgage early?

Post by Grt2bOutdoors »

LeslieSmiley wrote: Thu Jun 10, 2021 12:49 pm
Grt2bOutdoors wrote: Thu Jun 10, 2021 12:41 pm
LeslieSmiley wrote: Thu Jun 10, 2021 11:27 am
Grt2bOutdoors wrote: Tue Mar 17, 2020 7:36 am
EdNorton wrote: Mon Mar 16, 2020 9:51 am

That "guaranteed return" looks pretty good right now.
:sharebeer
Yup!
Not anymore with 8% DOW, 17% S&P and 44% Nasdaq return for 2020, plus my mortgage payment this month is lowered than last year and it will continue to get lower and lower due to inflation.

Since folks were coming back here 2 years later to post comments on the “guarantee return”, i feel that it’s a fair game to participate in the same spirit.
Sure, pile on, it’s fun playing Monday morning quarterback isn’t it? Only your statement is one of comparing apples to oranges.
Not really. Those folks including yourself came back here during the covid-19 market downturn which is two years after the previous post to pile on. So it's only fair that a comment is made post covid-19 with the market recovery and further growth with respect to the effect of such "guarantee return".
You should take a closer look at your screen - the thread you are posting on is merged by the board moderator to the original thread I posted on. You are the one who’s making the comments post Covid, not I. You are the one who is piling on.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
LeslieSmiley
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Joined: Fri May 08, 2015 7:43 pm

Re: Anyone regret paying off mortgage early?

Post by LeslieSmiley »

Grt2bOutdoors wrote: Thu Jun 10, 2021 12:54 pm
LeslieSmiley wrote: Thu Jun 10, 2021 12:49 pm
Grt2bOutdoors wrote: Thu Jun 10, 2021 12:41 pm
LeslieSmiley wrote: Thu Jun 10, 2021 11:27 am
Grt2bOutdoors wrote: Tue Mar 17, 2020 7:36 am

Yup!
Not anymore with 8% DOW, 17% S&P and 44% Nasdaq return for 2020, plus my mortgage payment this month is lowered than last year and it will continue to get lower and lower due to inflation.

Since folks were coming back here 2 years later to post comments on the “guarantee return”, i feel that it’s a fair game to participate in the same spirit.
Sure, pile on, it’s fun playing Monday morning quarterback isn’t it? Only your statement is one of comparing apples to oranges.
Not really. Those folks including yourself came back here during the covid-19 market downturn which is two years after the previous post to pile on. So it's only fair that a comment is made post covid-19 with the market recovery and further growth with respect to the effect of such "guarantee return".
You should take a closer look at your screen - the thread you are posting on is merged by the board moderator to the original thread I posted on. You are the one who’s making the comments post Covid, not I. You are the one who is piling on.
I did take a look at my screen.

I know that i am posting on an older thread that’s been merged to a more current thread.

Yes i am the one who’s making the comments post covid.

But what i said is that, in the old thread, someone commented about “not paying off mortgage” worked for them as they felt that the “guaranteed return” was not worth it to them in 2018.

Then, during the COVID-19 market downturn in 2020 which is 2 years later, someone resurrected the thread and made a comment in the effect of the “guarantee return” sure looks good now at the time and you concurred.

So i feel it’s only fair for someone to participate by making a comment in regards to the “guarantee return” now because apparently, you along with another poster were making an assertion that such “guarantee return” was great because the market tanked. So what i am doing is no different than what you did, that is, making comment on such “guarantee return” is not so great when the market is up.
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Re: Anyone regret paying off mortgage early?

Post by Grt2bOutdoors »

LeslieSmiley wrote: Thu Jun 10, 2021 1:11 pm
Grt2bOutdoors wrote: Thu Jun 10, 2021 12:54 pm
LeslieSmiley wrote: Thu Jun 10, 2021 12:49 pm
Grt2bOutdoors wrote: Thu Jun 10, 2021 12:41 pm
LeslieSmiley wrote: Thu Jun 10, 2021 11:27 am

Not anymore with 8% DOW, 17% S&P and 44% Nasdaq return for 2020, plus my mortgage payment this month is lowered than last year and it will continue to get lower and lower due to inflation.

Since folks were coming back here 2 years later to post comments on the “guarantee return”, i feel that it’s a fair game to participate in the same spirit.
Sure, pile on, it’s fun playing Monday morning quarterback isn’t it? Only your statement is one of comparing apples to oranges.
Not really. Those folks including yourself came back here during the covid-19 market downturn which is two years after the previous post to pile on. So it's only fair that a comment is made post covid-19 with the market recovery and further growth with respect to the effect of such "guarantee return".
You should take a closer look at your screen - the thread you are posting on is merged by the board moderator to the original thread I posted on. You are the one who’s making the comments post Covid, not I. You are the one who is piling on.
I did take a look at my screen.

I know that i am posting on an older thread that’s been merged to a more current thread.

Yes i am the one who’s making the comments post covid.

But what i said is that, in the old thread, someone commented about “not paying off mortgage” worked for them as they felt that the “guaranteed return” was not worth it to them in 2018.

Then, during the COVID-19 market downturn in 2020 which is 2 years later, someone resurrected the thread and made a comment in the effect of the “guarantee return” sure looks good now at the time and you concurred.

So i feel it’s only fair for someone to participate by making a comment in regards to the “guarantee return” now because apparently, you along with another poster were making an assertion that such “guarantee return” was great because the market tanked. So what i am doing is no different than what you did, that is, making comment on such “guarantee return” is not so great when the market is up.
To each their own. Have a nice day.
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PowderDay9
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Re: Anyone regret paying off mortgage early?

Post by PowderDay9 »

No regrets whatsoever. It was the right decision at the time to reduce leverage by taking low earning bonds and cash and paying off a higher interest rate mortgage. I have no desire, even at these low interest rates, to take out a new mortgage.

This is my favorite quote from the April thread on this topic.
eye.surgeon wrote: Wed Apr 14, 2021 11:08 pm Because my kids don't sleep in my taxable account.

Maybe the mods should merge this thread as well...
viewtopic.php?p=5946436
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Re: Anyone regret paying off mortgage early?

Post by LadyGeek »

^^^ Done, thanks.
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Re: Anyone regret paying off mortgage early?

Post by jay22 »

PowderDay9 wrote: Thu Jun 10, 2021 2:00 pm No regrets whatsoever. It was the right decision at the time to reduce leverage by taking low earning bonds and cash and paying off a higher interest rate mortgage. I have no desire, even at these low interest rates, to take out a new mortgage.

This is my favorite quote from the April thread on this topic.
eye.surgeon wrote: Wed Apr 14, 2021 11:08 pm Because my kids don't sleep in my taxable account.

Maybe the mods should merge this thread as well...
viewtopic.php?p=5946436
Love that quote. :sharebeer
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Re: anyone regret paying off mortgage early

Post by coachd50 »

Admiral wrote: Thu Jun 10, 2021 11:56 am
coachd50 wrote: Thu Jun 10, 2021 10:11 am
Admiral wrote: Thu Jun 10, 2021 10:02 am
ttcbj wrote: Thu Jun 10, 2021 9:33 am I didn't purchase my first house until 35 (around the time I got married and had my first child). I paid cash for it. It's a house we plan to stay in forever. Around that same time I also paid off my wife's medical school debt (I think it was about $40k).

In retrospect, both of these decisions yielded lower long-term wealth. But, 10 years later I have plenty of wealth and I don't regret it at all. I like the psychological benefits and simplicity.

One thing that has really surprised me in life is how much my attitude towards money has changed as my wealth has changed. Up until my early 30s, I was super frugal, almost grumpy about spending. My spending didn't increase even as my income did. After getting married and having kids, our spending increased dramatically, but it was still conservative, saving ~30% of pretax income, 50% of after tax income. Post-COVID, its really sunk in for me that we have 'enough' and life is short, and I am starting to spend a bit more (just bought a Porsche for $100K, and a $6K small catamaran, for example, very supportive of any spending my wife wants to do).

I think the truth is that paying off, or not paying off, your house isn't likely to make a huge difference in your wealth. It is all the other decisions you make (living below your means early in life, saving a lot, making career decisions that increase your income, not buying too much house, etc) that will really add up to significant wealth.

I think the decision to pay off a mortgage feels big because of its psychological impact, but in terms of building wealth you'd be better off focusing your efforts elsewhere, because its pretty marginal. If it were not so marginal, this thread would have a more decisive outcome, instead of many good points on each side.

EDIT: Perhaps a rule of thumb would also be, if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it. If you can treat your house as just a place you live after paying it off, and your remaining liquid assets are still very sufficient for retirement etc, go for it if it pleases you, but it's not super important either way.
Real estate is the single largest asset most Americans have by far.
Not Bogleheads, probably, but there it is. It’s quite significant IRL.
I don't really understand your post here. Yes, the home one lives in is probably the single largest asset that most Americans have, but that doesn't discredit the idea that "pay down/pay off early" vs pay as scheduled isn't really going to impact personal finance or wealth that much overall does it? Or am I missing something?
This poster wrote that "your house isn't likely to make a huge difference in your wealth" as well as "if paying off your mortgage would make you want to put your house in your financial calculations as an asset, because it would constitute a significant portion of your net worth, don't do it."

I am simply pointing out the fact that the house IS, in fact, the majority of the average person's wealth. There are many ways to recapture this wealth, in particular via imputed rent or by selling, taking profit, and downsizing. In effect, homeownership is a very important aspect of wealth creation, esp b/c most academic research shows that those who rent for less than a mortgage costs tend not to invest the difference (Bogleheads aside).

I do agree that in the long run buying a bond at 1% and paying a 2% mortgage may not make a huge difference. But I do feel strongly that keeping a 2% mortgage and investing in a balanced portfolio instead of pre-paying is the best of both worlds: you get a cheap house payment AND the return given by the markets.
Thank for the clarification and explanation. I understand now.
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Re: Anyone regret paying off mortgage early?

Post by AlwaysLearningMore »

According to Moshe Milevsky, MIT economics Professor Paul Samuelson had a "mortgage burning party" when he retired the note on his home. Chapter 5, Paul Samuelson's Life and Impact, The 7 Most Important Equations for Your Retirement.
Retirement is best when you have a lot to live on, and a lot to live for.
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Re: Anyone regret paying off mortgage early?

Post by SteadyOne »

Low rate fixed mortgage with prepayment option and pretax 401k working together is an ordinary citizens’ leveraged hedge fund that actually works if one does not over leverage.
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Re: Anyone regret paying off mortgage early?

Post by Tingting1013 »

AlwaysLearningMore wrote: Sun Jun 13, 2021 9:12 am According to Moshe Milevsky, MIT economics Professor Paul Samuelson had a "mortgage burning party" when he retired the note on his home. Chapter 5, Paul Samuelson's Life and Impact, The 7 Most Important Equations for Your Retirement.
Professors generally aren’t driven by maximizing personal wealth; otherwise they wouldn’t have gone into academia.
KlangFool
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Re: Anyone regret paying off mortgage early?

Post by KlangFool »

AlwaysLearningMore wrote: Sun Jun 13, 2021 9:12 am According to Moshe Milevsky, MIT economics Professor Paul Samuelson had a "mortgage burning party" when he retired the note on his home. Chapter 5, Paul Samuelson's Life and Impact, The 7 Most Important Equations for Your Retirement.
AlwaysLearningMore,

If someone buys an easily affordable house as per their income and net worth, why should that matters? What is the point of the celebration? I could pay off my mortgage at any time as soon as I bought my house.

A contrasting point of view from millionaires.

https://themillionairenextdoor.com/2011 ... rule-1-49/
Millionaire Rule 1.49

<<The original title of The Millionaire Next Door was That’s Why They’re Wealthy. One of the main reasons that they are wealthy is that they live in an easily affordable home. I have found that when millionaires made their first home purchase, the ratio of the purchase price over their annual household income was just 1.49 [median]. And today they have seven times more wealth [median] than their non millionaire neighbors. In Stop Acting Rich I mentioned that:>>

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AlwaysLearningMore
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Re: Anyone regret paying off mortgage early?

Post by AlwaysLearningMore »

Tingting1013 wrote: Sun Jun 13, 2021 9:23 am
AlwaysLearningMore wrote: Sun Jun 13, 2021 9:12 am According to Moshe Milevsky, MIT economics Professor Paul Samuelson had a "mortgage burning party" when he retired the note on his home. Chapter 5, Paul Samuelson's Life and Impact, The 7 Most Important Equations for Your Retirement.
Professors generally aren’t driven by maximizing personal wealth; otherwise they wouldn’t have gone into academia.
According to Milevsky, he used the proceeds from royalties from his widely-read (and purchased) Economics (now in its at least 19th edition) to pay off the note. https://tinyurl.com/yeelooqy
According to Milevsky, Prof. Samuelson was quite financially successful -- likely on par with (or perhaps ahead) most BH's.
Last edited by AlwaysLearningMore on Sun Jun 13, 2021 4:02 pm, edited 1 time in total.
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KlangFool
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Re: Anyone regret paying off mortgage early?

Post by KlangFool »

Tingting1013 wrote: Sun Jun 13, 2021 9:23 am
AlwaysLearningMore wrote: Sun Jun 13, 2021 9:12 am According to Moshe Milevsky, MIT economics Professor Paul Samuelson had a "mortgage burning party" when he retired the note on his home. Chapter 5, Paul Samuelson's Life and Impact, The 7 Most Important Equations for Your Retirement.
Professors generally aren’t driven by maximizing personal wealth; otherwise they wouldn’t have gone into academia.
Tingting1013,

As per the millionaire next door, the teaching professional and engineer are the top two professions have highest accumulated wealth versus their income. The lowest two professions are lawyers and doctors.

So, the professors may not be driven by maximizing personal wealth. But, statistically, they accumulate wealth much better than many other professions.

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AlwaysLearningMore
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Re: Anyone regret paying off mortgage early?

Post by AlwaysLearningMore »

KlangFool wrote: Sun Jun 13, 2021 9:34 am
AlwaysLearningMore wrote: Sun Jun 13, 2021 9:12 am According to Moshe Milevsky, MIT economics Professor Paul Samuelson had a "mortgage burning party" when he retired the note on his home. Chapter 5, Paul Samuelson's Life and Impact, The 7 Most Important Equations for Your Retirement.
AlwaysLearningMore,

If someone buys an easily affordable house as per their income and net worth, why should that matters? What is the point of the celebration?
Obviously Prof. Samuelson experienced enough joy with the retirement of the note to host a party. It's also possible the attendees at the party shared vicariously in that joy.

The first edition of Economics was published in 1948. According to Milevsky, Prof. Samuelson used the first royalty check to pay off the note on his home. Of course we don't know what his interest rate was, but here were the prevailing rates of the time (source: https://tinyurl.com/a246w2tb )
Image

As the first American winner of the Prize in Economic Sciences in Memory of Alfred Nobel (there is no "Nobel Prize in Economics") and economics tutor to President John Kennedy, I assume he was as well-versed in economics as any Boglehead.
Retirement is best when you have a lot to live on, and a lot to live for.
PKD
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Re: Anyone regret paying off mortgage early?

Post by PKD »

I paid off our mortgage last year, and haven’t regretted it for a second. The S&P 500 could double in the next year, and I still wouldn’t regret it. For me, the psychological benefit overrides the small (and potential) math benefit. It’s simply one less thing to worry about.

That said, I waited until our liquid assets were significantly higher than the value of the house. So the potential lost gains of that money won’t make a big impact to our net worth.
capran
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Re: Anyone regret paying off mortgage early?

Post by capran »

Pranav wrote: Wed Jun 13, 2018 3:17 pm I regret that we initially payed extra towards mortgage while only contributing company match to 401(k).

After reading Bogleheads and other resources, I realized we should prioritize contributions to tax-advantaged accounts (401k, IRA, HSA) and then target the mortgage.
I agree it is important to contribute to tax deferred/"tax advantaged" accounts, but I wish I would have had thought more about NOT trying to maximize tax deferred accounts. Our income in retirement is substantially more than our income when working, leaving us paying substantially more in income tax. (By maximizing deferred while working, we always kept our combined income low enough to use the tax tables to compute our tax. ie under 99,999. Now it's a struggle to keep our income below the IRMAA surcharge threshold.)
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Re: Anyone regret paying off mortgage early?

Post by sc9182 »

capran wrote: Mon Jun 14, 2021 9:56 am
Pranav wrote: Wed Jun 13, 2018 3:17 pm I regret that we initially payed extra towards mortgage while only contributing company match to 401(k).

After reading Bogleheads and other resources, I realized we should prioritize contributions to tax-advantaged accounts (401k, IRA, HSA) and then target the mortgage.
I agree it is important to contribute to tax deferred/"tax advantaged" accounts, but I wish I would have had thought more about NOT trying to maximize tax deferred accounts. Our income in retirement is substantially more than our income when working, leaving us paying substantially more in income tax. (By maximizing deferred while working, we always kept our combined income low enough to use the tax tables to compute our tax. ie under 99,999. Now it's a struggle to keep our income below the IRMAA surcharge threshold.)
LOL - this may be young Vs mature accounts at play. For a long successful career of capran, with ample savings/investing., the investments are expected to grow to larger sums. This is good problem to have. Roth's weren't as freely available until last decade or two. What else you going to do -- if you intend to save for retirement -- mostly left with Pre-Tax and/or Brokerage (Pre-Roth days). Or you could have invested in direct/indirect real-estate, if you were willing to manage it (besides - it would have bestowed better depreciation and/or returns., as you mentioned you throttled your income ..).

For younger folks - their human/career capital would assist towards account growth. For mature folks - their investments/savings inherent growth (due to markets) would cause lot of "mo money" issues (good problem to have)

Was IRMAA (2007 !?) even around during most of your working career !? Likely Roth/MBR , Roth-Convert (2012 blessed !?) wasn’t around there during good chunk of your career. How one plans for unknowns — other than try to diversify, adapt, and be flexible !?
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Re: Anyone regret paying off mortgage early?

Post by FireSekr »

Ron Ronnerson wrote: Thu Jun 10, 2021 12:10 pm It may not be for everyone, but we’re sort of taking the opposite approach to paying it off early. In 2010, at age 35, we got a 30-year mortgage at a rate of 5.25%. We restarted the 30-year clock in 2012 when we refinanced at 3.25%. Then we refinanced for 30 years again in 2020 at 2.875%. The most recent refi, for 30 years one more time, was earlier this year. The rate is now at 2.375% and we took out $150k in cash this time as well. All the refinances were no-cost. I don’t know if I’ll be able to refinance to another 30-year loan at a better rate but would do so happily if the chance came up.

The original purchase price on our home was $500k and we put down $15k, or 3%, but didn’t have to pay PMI. After 11.5 years, we owe $492k on the house – more than we did when we first bought our home.

This approach has worked out well so far. Due to the low mortgage payments, we’ve been able to invest the money over the years and my wife has been able to be a stay-at-home parent. Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now. I’m a public-school teacher.

A couple of important factors to this approach for us include that we need to keep our AGI low in order to get some nice tax credits (worth over $20k this year) and I’m expecting a six-figure pension so having a mortgage into retirement is less of a concern than it may be to others (though I doubt we’ll continue to live in our current home during retirement).
I’m of the same mindset. My 30yr is at 2.75% and I’d extend it indefinitely if I could keep it under 3%. At some point rates will go up and that won’t be possible but I’ll enjoy it while I can.
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queso
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Re: Anyone regret paying off mortgage early?

Post by queso »

FireSekr wrote: Mon Jun 14, 2021 10:30 am
Ron Ronnerson wrote: Thu Jun 10, 2021 12:10 pm It may not be for everyone, but we’re sort of taking the opposite approach to paying it off early. In 2010, at age 35, we got a 30-year mortgage at a rate of 5.25%. We restarted the 30-year clock in 2012 when we refinanced at 3.25%. Then we refinanced for 30 years again in 2020 at 2.875%. The most recent refi, for 30 years one more time, was earlier this year. The rate is now at 2.375% and we took out $150k in cash this time as well. All the refinances were no-cost. I don’t know if I’ll be able to refinance to another 30-year loan at a better rate but would do so happily if the chance came up.

The original purchase price on our home was $500k and we put down $15k, or 3%, but didn’t have to pay PMI. After 11.5 years, we owe $492k on the house – more than we did when we first bought our home.

This approach has worked out well so far. Due to the low mortgage payments, we’ve been able to invest the money over the years and my wife has been able to be a stay-at-home parent. Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now. I’m a public-school teacher.

A couple of important factors to this approach for us include that we need to keep our AGI low in order to get some nice tax credits (worth over $20k this year) and I’m expecting a six-figure pension so having a mortgage into retirement is less of a concern than it may be to others (though I doubt we’ll continue to live in our current home during retirement).
I’m of the same mindset. My 30yr is at 2.75% and I’d extend it indefinitely if I could keep it under 3%. At some point rates will go up and that won’t be possible but I’ll enjoy it while I can.
Same. I used to pay $1k extra per month, but refinanced into a 15 year @ 2% and redirected all the extra contributions into taxable. Paying it off at this point would purely be an emotional well being play and I try not to get too emotional about money. :happy
randomguy
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Re: Anyone regret paying off mortgage early?

Post by randomguy »

KlangFool wrote: Sun Jun 13, 2021 9:39 am
Tingting1013 wrote: Sun Jun 13, 2021 9:23 am
AlwaysLearningMore wrote: Sun Jun 13, 2021 9:12 am According to Moshe Milevsky, MIT economics Professor Paul Samuelson had a "mortgage burning party" when he retired the note on his home. Chapter 5, Paul Samuelson's Life and Impact, The 7 Most Important Equations for Your Retirement.
Professors generally aren’t driven by maximizing personal wealth; otherwise they wouldn’t have gone into academia.
Tingting1013,

As per the millionaire next door, the teaching professional and engineer are the top two professions have highest accumulated wealth versus their income. The lowest two professions are lawyers and doctors.

So, the professors may not be driven by maximizing personal wealth. But, statistically, they accumulate wealth much better than many other professions.

KlangFool
We have two people
a) Person A with 1 million dollars and a wealth to income ratio of 4:1
b) Person B with 5 million dollars and a wealth to income ratio of 1:1

Would you really rather be A who has made the choices in life to maximize their wealth to income ratio or would your rather be B who has chosen to maximize their wealth. I know which camp I am in. Keep your eyes on the stats that matter and not the ones that people make up to try and makes themselves feel better.

I am sure he enjoyed paying off his mortgage. But for a person who is willing to defer gratification rather than go for short term rewards, it doesn't answer the question of it was the right thing to do or not.
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Re: Anyone regret paying off mortgage early?

Post by KlangFool »

randomguy wrote: Mon Jun 14, 2021 11:06 am
We have two people
a) Person A with 1 million dollars and a wealth to income ratio of 4:1
b) Person B with 5 million dollars and a wealth to income ratio of 1:1

Would you really rather be A who has made the choices in life to maximize their wealth to income ratio or would your rather be B who has chosen to maximize their wealth. I know which camp I am in. Keep your eyes on the stats that matter and not the ones that people make up to try and makes themselves feel better.

I am sure he enjoyed paying off his mortgage. But for a person who is willing to defer gratification rather than go for short term rewards, it doesn't answer the question of it was the right thing to do or not.
randomguy,

I would rather be (A). (A) could early retire. (B) could not.

<<B who has chosen to maximize their wealth.>>

Which is not my goal in life. My goal in life is to maximize my enjoyment of my life. In order to do that, I need more time. Not greater wealth.

<<Keep your eyes on the stats that matter>>

Correct! Money is a good tool. It is a lousy master. Making and having more money should not be THE GOAL of someone's life.

To each its own.

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ElJefeDelQueso
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Re: Anyone regret paying off mortgage early?

Post by ElJefeDelQueso »

KlangFool wrote: Mon Jun 14, 2021 11:13 am
randomguy wrote: Mon Jun 14, 2021 11:06 am
We have two people
a) Person A with 1 million dollars and a wealth to income ratio of 4:1
b) Person B with 5 million dollars and a wealth to income ratio of 1:1

Would you really rather be A who has made the choices in life to maximize their wealth to income ratio or would your rather be B who has chosen to maximize their wealth. I know which camp I am in. Keep your eyes on the stats that matter and not the ones that people make up to try and makes themselves feel better.

I am sure he enjoyed paying off his mortgage. But for a person who is willing to defer gratification rather than go for short term rewards, it doesn't answer the question of it was the right thing to do or not.
randomguy,

I would rather be (A). (A) could early retire. (B) could not.

<<B who has chosen to maximize their wealth.>>

Which is not my goal in life. My goal in life is to maximize my enjoyment of my life. In order to do that, I need more time. Not greater wealth.

<<Keep your eyes on the stats that matter>>

Correct! Money is a good tool. It is a lousy master. Making and having more money should not be THE GOAL of someone's life.

To each its own.

KlangFool
This is a little more complicated.

Most of the engineers I know got a good job at 22 for BS, maybe a year or two later for masters, and 26-27 for PhDs tuition free, some stragglers later but often paid for by employer. Docs I know got started much later, for example one with MD/PhD was early 40s before hitting earning potential. Others early to mid 30s with big debts to pay off.

So income, wealth accumulation but also spending (and on what), age/income trajectory, and associated life circumstances (older people more likely to have families and larger expenses).

Person B with 5 million may have started late and may have the same retirement living expenses as Person A in which case would have 5x the current resources as Person A.
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vanbogle59
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Re: Anyone regret paying off mortgage early?

Post by vanbogle59 »

Ron Ronnerson wrote: Thu Jun 10, 2021 12:10 pm It may not be for everyone, but we’re sort of taking the opposite approach to paying it off early. In 2010, at age 35, we got a 30-year mortgage at a rate of 5.25%. We restarted the 30-year clock in 2012 when we refinanced at 3.25%. Then we refinanced for 30 years again in 2020 at 2.875%. The most recent refi, for 30 years one more time, was earlier this year. The rate is now at 2.375% and we took out $150k in cash this time as well. All the refinances were no-cost. I don’t know if I’ll be able to refinance to another 30-year loan at a better rate but would do so happily if the chance came up.

The original purchase price on our home was $500k and we put down $15k, or 3%, but didn’t have to pay PMI. After 11.5 years, we owe $492k on the house – more than we did when we first bought our home.

This approach has worked out well so far. Due to the low mortgage payments, we’ve been able to invest the money over the years and my wife has been able to be a stay-at-home parent. Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now. I’m a public-school teacher.

A couple of important factors to this approach for us include that we need to keep our AGI low in order to get some nice tax credits (worth over $20k this year) and I’m expecting a six-figure pension so having a mortgage into retirement is less of a concern than it may be to others (though I doubt we’ll continue to live in our current home during retirement).
$500K - $15K = $485K at 5.25% = monthly 2.7K mortgage. $32 per year.
2010, credit must have been reasonably tight, so something like a conforming loan. I'm guessing your income had to be around 485/3 ??? $160???

1) "I’m expecting a six-figure pension" - Of course
2) "Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now" - Of course
3) "I’m a public-school teacher."

Moral of the story for me is to move to where public-school teachers make $160K+ in 2010.
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Re: Anyone regret paying off mortgage early?

Post by Ron Ronnerson »

vanbogle59 wrote: Mon Jun 14, 2021 1:05 pm
Ron Ronnerson wrote: Thu Jun 10, 2021 12:10 pm It may not be for everyone, but we’re sort of taking the opposite approach to paying it off early. In 2010, at age 35, we got a 30-year mortgage at a rate of 5.25%. We restarted the 30-year clock in 2012 when we refinanced at 3.25%. Then we refinanced for 30 years again in 2020 at 2.875%. The most recent refi, for 30 years one more time, was earlier this year. The rate is now at 2.375% and we took out $150k in cash this time as well. All the refinances were no-cost. I don’t know if I’ll be able to refinance to another 30-year loan at a better rate but would do so happily if the chance came up.

The original purchase price on our home was $500k and we put down $15k, or 3%, but didn’t have to pay PMI. After 11.5 years, we owe $492k on the house – more than we did when we first bought our home.

This approach has worked out well so far. Due to the low mortgage payments, we’ve been able to invest the money over the years and my wife has been able to be a stay-at-home parent. Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now. I’m a public-school teacher.

A couple of important factors to this approach for us include that we need to keep our AGI low in order to get some nice tax credits (worth over $20k this year) and I’m expecting a six-figure pension so having a mortgage into retirement is less of a concern than it may be to others (though I doubt we’ll continue to live in our current home during retirement).
$500K - $15K = $485K at 5.25% = monthly 2.7K mortgage. $32 per year.
2010, credit must have been reasonably tight, so something like a conforming loan. I'm guessing your income had to be around 485/3 ??? $160???

1) "I’m expecting a six-figure pension" - Of course
2) "Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now" - Of course
3) "I’m a public-school teacher."

Moral of the story for me is to move to where public-school teachers make $160K+ in 2010.
My income at the time was around $75k. My wife used to work and made around $50k in those days. She hasn’t worked for the past three years.

The loan was for teachers and required a 3% down payment without the option to put down a bigger down payment. Of course, one could pay extra toward the mortgage after getting the loan. There was no PMI.

By keeping our non-housing expenses low, we have more room in the budget for housing cost.
KlangFool
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Re: Anyone regret paying off mortgage early?

Post by KlangFool »

ElJefeDelQueso wrote: Mon Jun 14, 2021 12:54 pm
Person B with 5 million may have started late and may have the same retirement living expenses as Person A in which case would have 5x the current resources as Person A.
ElJefeDelQueso,

But, in the real world, someone that has only 1X gross income saved versus someone with 5X gross income saved at the same age has about 5X difference in current annual expense. We have plenty of examples with lawyers and doctors.

<<for example one with MD/PhD was early 40s before hitting earning potential. Others early to mid 30s with big debts to pay off.>>

And, it is very common for the doctors to buy big expensive houses before they pay off their student loans.

<<same retirement living expenses >>

This is assuming that the person is fully-employed continuously until retirement age. Someone with 5X gross income saved can be Financially Independence. Aka, retired early with the current annual expense.

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lazynovice
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Re: Anyone regret paying off mortgage early?

Post by lazynovice »

25 pages with the majority of non-mortgage holders saying they have no regrets and other people telling them they are wrong.
“I didn’t want my sailboat to be in the driveway when I died.” Nomadland
LeslieSmiley
Posts: 329
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Re: Anyone regret paying off mortgage early?

Post by LeslieSmiley »

lazynovice wrote: Mon Jun 14, 2021 1:38 pm 25 pages with the majority of non-mortgage holders saying they have no regrets and other people telling them they are wrong.
I don't think that's what happened.

I absolutely believe and acknowledge those who have no regret of paying off or paying down their mortgage for various reasons.

But when people make an assertion and comments about the financial prudence of paying off/down a "low fixed rate" mortgage does not mean that they say those who paid off/down are wrong. It only means that they are making a factual assertion based on objective information.

Nobody is arguing about one sleeps better at night for not having mortgage as that's the emotional/psychological factor and it cannot be objectively gauged. But the discussion and debate that I have seen are about the financial prudence.

You can do both. Just because someone challenges the validity of something financially does not mean that the person cannot acknowledge the validity of something psychologically and emotionally. The two factors are NOT mutually exclusive.
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vanbogle59
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Re: Anyone regret paying off mortgage early?

Post by vanbogle59 »

Ron Ronnerson wrote: Mon Jun 14, 2021 1:29 pm
vanbogle59 wrote: Mon Jun 14, 2021 1:05 pm
Ron Ronnerson wrote: Thu Jun 10, 2021 12:10 pm It may not be for everyone, but we’re sort of taking the opposite approach to paying it off early. In 2010, at age 35, we got a 30-year mortgage at a rate of 5.25%. We restarted the 30-year clock in 2012 when we refinanced at 3.25%. Then we refinanced for 30 years again in 2020 at 2.875%. The most recent refi, for 30 years one more time, was earlier this year. The rate is now at 2.375% and we took out $150k in cash this time as well. All the refinances were no-cost. I don’t know if I’ll be able to refinance to another 30-year loan at a better rate but would do so happily if the chance came up.

The original purchase price on our home was $500k and we put down $15k, or 3%, but didn’t have to pay PMI. After 11.5 years, we owe $492k on the house – more than we did when we first bought our home.

This approach has worked out well so far. Due to the low mortgage payments, we’ve been able to invest the money over the years and my wife has been able to be a stay-at-home parent. Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now. I’m a public-school teacher.

A couple of important factors to this approach for us include that we need to keep our AGI low in order to get some nice tax credits (worth over $20k this year) and I’m expecting a six-figure pension so having a mortgage into retirement is less of a concern than it may be to others (though I doubt we’ll continue to live in our current home during retirement).
$500K - $15K = $485K at 5.25% = monthly 2.7K mortgage. $32 per year.
2010, credit must have been reasonably tight, so something like a conforming loan. I'm guessing your income had to be around 485/3 ??? $160???

1) "I’m expecting a six-figure pension" - Of course
2) "Our net worth in 2010, when we bought the house, was $100k and it is $1.6M now" - Of course
3) "I’m a public-school teacher."

Moral of the story for me is to move to where public-school teachers make $160K+ in 2010.
My income at the time was around $75k. My wife used to work and made around $50k in those days. She hasn’t worked for the past three years.

The loan was for teachers and required a 3% down payment without the option to put down a bigger down payment. Of course, one could pay extra toward the mortgage after getting the loan. There was no PMI.

By keeping our non-housing expenses low, we have more room in the budget for housing cost.
$75K income, $400K debt, roll the debt, bet on equities(?), rinse repeat for 10 years.
ok, new moral to the story:
1) Start this in 2010 (Not in 200x)
2) be lucky

I mean, god bless y'all. But you do realize this could have gone very differently, right?
lazynovice
Posts: 1870
Joined: Mon Apr 16, 2012 10:48 pm

Re: Anyone regret paying off mortgage early?

Post by lazynovice »

LeslieSmiley wrote: Mon Jun 14, 2021 1:52 pm
lazynovice wrote: Mon Jun 14, 2021 1:38 pm 25 pages with the majority of non-mortgage holders saying they have no regrets and other people telling them they are wrong.
I don't think that's what happened.

I absolutely believe and acknowledge those who have no regret of paying off or paying down their mortgage for various reasons.

But when people make an assertion and comments about the financial prudence of paying off/down a "low fixed rate" mortgage does not mean that they say those who paid off/down are wrong. It only means that they are making a factual assertion based on objective information.

Nobody is arguing about one sleeps better at night for not having mortgage as that's the emotional/psychological factor and it cannot be objectively gauged. But the discussion and debate that I have seen are about the financial prudence.

You can do both. Just because someone challenges the validity of something financially does not mean that the person cannot acknowledge the validity of something psychologically and emotionally. The two factors are NOT mutually exclusive.
I see a lot of looking at mortgages in a vacuum. Absolutely impossible to separate one deck on from others. Do people who pay off their mortgages take on more risk? Do they invest more because they have smaller EFs? Are they better at staying the course? And we have survivorship bias in that people who suffered foreclosure and loss of equity don’t post here. Most who are posting against paying it off are NOT acknowledging the validity of any of those factors. I’ve read the entire thread.
“I didn’t want my sailboat to be in the driveway when I died.” Nomadland
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