Pay off 3.125% 152k mortgage early?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
TarHeel2002
Posts: 118
Joined: Sun Jun 17, 2012 2:14 pm

Pay off 3.125% 152k mortgage early?

Post by TarHeel2002 » Fri Sep 14, 2018 7:34 am

I'm contemplating adding more to my mortgage payment beginning 2019. I know it's a low interest rate mortgage but it's still debt. Here is some background info.

38 yo married with 3 kids (7,5, and zero)
Income = 250-275k
Annual retirement contributions (401(k), Roth, HSA,) = 50k
Annual 529 contributions = 16.5k
Emergency fund = 30k (4-5 months)
Retirement assets = 567k
529 funds = 67k

Mortgage debt = 152k fixed 3.125% ($750/month payment)

I plan on working at least until mid 50s and then hopefully will have the option to sell off my small business for 500-600k if it all works out.

I receive some of my income at the end of the year so I could lump sum 8-10k on the mortgage at that time. Then I was thinking I could add another 1k every month to the mortgage payment. If I loosely follow this path, I could have my mortgage paid off in 5ish years. I know it's a low interest rate and I might be able to get better returns via compound interest long term in a taxable account. I have a small taxable account with Vanguard. I could also do a mix 50/50 pay off mortgage payment and add to taxable. I am maxing out all tax deferred investment options available to me at this time so any additional funds would go into the taxable account (VTSAX). My concern building up a sizable taxable account is that it's fungible. Maybe I'd get the inclination to buy a new car with cash, maybe a home improvement, maybe a fancy trip. I know I should be able to control myself better than that but there is some satisfaction to paying down the mortgage and watching it slowly shrink (and thinking of the 3.125% I'm saving on every thousand bucks at a time). This is how I motivated/visualized my student loan payoff a few years ago. The difference with that was that I halted all investments to knock it out fast. I don't plan on taking that approach with the mortgage debt. I'll pay it off as extra funds allow within the constraint that I max all tax deferred investing options. I try to have a Vulcan approach to investing but I must admit I am a little bit more like Spock (emotional component to paying off debt). Thanks! :sharebeer

User avatar
Toons
Posts: 12970
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Pay off 3.125% 152k mortgage early?

Post by Toons » Fri Sep 14, 2018 8:10 am

Pay it off as fast as you can,
Laser like focus.




:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

JoeRetire
Posts: 1599
Joined: Tue Jan 16, 2018 2:44 pm

Re: Pay off 3.125% 152k mortgage early?

Post by JoeRetire » Fri Sep 14, 2018 8:16 am

TarHeel2002 wrote:
Fri Sep 14, 2018 7:34 am
Mortgage debt = 152k fixed 3.125% ($750/month payment)
So it appears that you can easily afford the monthly mortgage payment.
And I'm guessing your investments currently return more than 3.125% right?
I know it's a low interest rate and I might be able to get better returns via compound interest long term in a taxable account.
Yup.
My concern building up a sizable taxable account is that it's fungible. Maybe I'd get the inclination to buy a new car with cash, maybe a home improvement, maybe a fancy trip.
You aren't able to control your spending? Does this happen now in other cases? That might be something you want to work on.
I try to have a Vulcan approach to investing but I must admit I am a little bit more like Spock (emotional component to paying off debt).
I'm not a Trek enthusiast, but wasn't Spock a Vulcan, and non-emotional?

I wouldn't rush to pay off such an inexpensive loan. I'd be investing more.

If you own a small business, you might want to have your CPA find a way for you to put more than just $50k/year into your retirement funds and/or set up an effective deferred compensation plan.

knowledge
Posts: 125
Joined: Wed Mar 02, 2011 5:44 pm

Re: Pay off 3.125% 152k mortgage early?

Post by knowledge » Fri Sep 14, 2018 8:27 am

TarHeel2002 wrote:
Fri Sep 14, 2018 7:34 am
My concern building up a sizable taxable account is that it's fungible. Maybe I'd get the inclination to buy a new car with cash, maybe a home improvement, maybe a fancy trip.
It's funny. Once you start having some meaningful gains in your account, you start to have an aversion to actually realizing any of the gains. There's materially more friction in dealing with the potential tax consequences than a typical savings account. And you get to enjoy TLH.

I say start building up your taxable.

Valuethinker
Posts: 36041
Joined: Fri May 11, 2007 11:07 am

Re: Pay off 3.125% 152k mortgage early?

Post by Valuethinker » Fri Sep 14, 2018 8:42 am

Paying off the debt is a reasonable alternative to fixed income investing.

The fact that you have your own business should make you more risk averse in your personal financial affairs - which leans towards repaying the debt early. (counterpoint: no "steady job" is safe, today, so in fact being self employed is potentially safer).

I am a fan of retaining liquidity (ie keep the mortgage). However if your alternative is taxable investing, then paying off the mortgage makes financial sense.

User avatar
midareff
Posts: 5745
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Pay off 3.125% 152k mortgage early?

Post by midareff » Fri Sep 14, 2018 8:56 am

Valuethinker wrote:
Fri Sep 14, 2018 8:42 am
Paying off the debt is a reasonable alternative to fixed income investing.
OTOH, I personally don't have an issue with a reasonable amount of low interest rate tax deductible debt. You could put the extra income into something like Vanguard's Intermediate Term Tax-Ex Bond Fund and generate some tax free income with it ... current distribution yield is near 3%. Between the tax consequences and the advantage of building additional liquidity I find that an very attractive option to paying off a mortgage that may never be available again in our lifetimes.

92irish
Posts: 196
Joined: Thu Mar 01, 2007 12:05 pm

Re: Pay off 3.125% 152k mortgage early?

Post by 92irish » Fri Sep 14, 2018 11:30 am

With the new tax change to the standard deduction ($24,000 for married couples), you may actually not be getting much if any value out of the tax deduction for mortgage interest. It depends on your other deductions (property taxes, state income taxes, etc.). We recently paid off our mortgage and I'm glad we did. Under the new tax regime in our circumstance, we'd be getting no mortgage interest tax deduction benefit if we still had our mortgage.

UncleBogle
Posts: 92
Joined: Sun Jul 15, 2018 7:53 pm

Re: Pay off 3.125% 152k mortgage early?

Post by UncleBogle » Fri Sep 14, 2018 11:37 am

JoeRetire wrote:
Fri Sep 14, 2018 8:16 am
TarHeel2002 wrote:
Fri Sep 14, 2018 7:34 am
Mortgage debt = 152k fixed 3.125% ($750/month payment)
I try to have a Vulcan approach to investing but I must admit I am a little bit more like Spock (emotional component to paying off debt).
I'm not a Trek enthusiast, but wasn't Spock a Vulcan, and non-emotional?
Well, if no one else will comment on this, as a Trekkie, I'll field that question.

Spock was both Vulcan(Father) and Terran (Earthling Mother).

Though he would do his best to outwardly show the logical, unemotional Vulcan side, every so often, the emotional human side would peek through. Kind of like a frosted mini-wheat....😊

Live long and Prosper, my son.

mortfree
Posts: 1280
Joined: Mon Sep 12, 2016 7:06 pm

Re: Pay off 3.125% 152k mortgage early?

Post by mortfree » Fri Sep 14, 2018 11:42 am

What will you do with the $750 mortgage payment after you pay it off? Also is that just the P&I?

Do you anticipate taking out student loans to cover college? Will those rates be less than your mortgage?

How much is your house worth? trying to determine if you will be house poor.

User avatar
Watty
Posts: 14134
Joined: Wed Oct 10, 2007 3:55 pm

Re: Pay off 3.125% 152k mortgage early?

Post by Watty » Fri Sep 14, 2018 11:46 am

TarHeel2002 wrote:
Fri Sep 14, 2018 7:34 am
38 yo married with 3 kids (7,5, and zero)
Income = 250-275k
Annual retirement contributions (401(k), Roth, HSA,) = 50k
Annual 529 contributions = 16.5k
Emergency fund = 30k (4-5 months)
Retirement assets = 567k
529 funds = 67k

Mortgage debt = 152k fixed 3.125% ($750/month payment)

I plan on working at least until mid 50s and then hopefully will have the option to sell off my small business for 500-600k if it all works out.
I am usually very pro "pay it off" but you don't have a lot in taxable accounts and your own a small business. If there is a glitch with your business or you get disabled then you could be in a bind.

I would add invest that money in a taxable account and then pay off all at once.

Thegame14
Posts: 277
Joined: Mon May 07, 2018 11:53 am

Re: Pay off 3.125% 152k mortgage early?

Post by Thegame14 » Fri Sep 14, 2018 11:48 am

At your age, 38, you have a great income, you have 3 kids, god bless you, and more than half a million in retirement assets. You are absolutely killing it!!!! So if it makes you happy or happier to pay off the mortgage, then do it. Could you maybe get better returns in the market maybe, but either way you are killing it and you have to do what you feel best doing.

User avatar
Vulcan
Posts: 203
Joined: Sat Apr 05, 2014 11:43 pm

Re: Pay off 3.125% 152k mortgage early?

Post by Vulcan » Fri Sep 14, 2018 11:48 am

UncleBogle wrote:
Fri Sep 14, 2018 11:37 am
JoeRetire wrote:
Fri Sep 14, 2018 8:16 am
TarHeel2002 wrote:
Fri Sep 14, 2018 7:34 am
Mortgage debt = 152k fixed 3.125% ($750/month payment)
I try to have a Vulcan approach to investing but I must admit I am a little bit more like Spock (emotional component to paying off debt).
I'm not a Trek enthusiast, but wasn't Spock a Vulcan, and non-emotional?
Well, if no one else will comment on this, as a Trekkie, I'll field that question.

Spock was both Vulcan(Father) and Terran (Earthling Mother).

Though he would do his best to outwardly show the logical, unemotional Vulcan side, every so often, the emotional human side would peek through. Kind of like a frosted mini-wheat....😊

Live long and Prosper, my son.
If there are self-made purgatories, then we all have to live in them.

smitcat
Posts: 1877
Joined: Mon Nov 07, 2016 10:51 am

Re: Pay off 3.125% 152k mortgage early?

Post by smitcat » Fri Sep 14, 2018 11:49 am

Spock would not pay the loan off early unless he was having one of his emotional episodes.
Neither would we pay it off with those numbers. Prosper whatever you do.

User avatar
fishandgolf
Posts: 368
Joined: Fri Nov 25, 2016 2:50 pm

Re: Pay off 3.125% 152k mortgage early?

Post by fishandgolf » Fri Sep 14, 2018 12:05 pm

Toons wrote:
Fri Sep 14, 2018 8:10 am
Pay it off as fast as you can,
Laser like focus.
+1000......

You 're asking this question because you hate debt.....me too. We paid ours off early also......there is no better feeling than having zero debt....

Pay it off.......at WARP SPEED!!!

:sharebeer

JBTX
Posts: 4045
Joined: Wed Jul 26, 2017 12:46 pm

Re: Pay off 3.125% 152k mortgage early?

Post by JBTX » Fri Sep 14, 2018 12:48 pm

I would not pay off a 3.125% mortgage. We have a 3.25% mortgage and prefer to have the additional liquidity and invest part of it. Keep the rest in ibonds, cds, money markets etc.

If you really have the urge to pay it off perhaps pay off so thing like $250 additional per month.

aristotelian
Posts: 4693
Joined: Wed Jan 11, 2017 8:05 pm

Re: Pay off 3.125% 152k mortgage early?

Post by aristotelian » Fri Sep 14, 2018 12:52 pm

Very close premium to paying off the mortgage vs 10 year treasury yield (3%). If you would buy bonds, there is no reason not to pay down the mortgage.

JoeRetire
Posts: 1599
Joined: Tue Jan 16, 2018 2:44 pm

Re: Pay off 3.125% 152k mortgage early?

Post by JoeRetire » Fri Sep 14, 2018 1:04 pm

Valuethinker wrote:
Fri Sep 14, 2018 8:42 am
The fact that you have your own business should make you more risk averse in your personal financial affairs
Why?

selters
Posts: 599
Joined: Thu Feb 27, 2014 9:26 am

Re: Pay off 3.125% 152k mortgage early?

Post by selters » Fri Sep 14, 2018 1:26 pm

If keeping the mortgage for as long as possible and investing in the stock market instead is a good idea, why not refinance the mortgage up to 80% loan to value ratio every five years or so? That must be an even better idea? The more leverage you use, the higher the returns, right?

janezoey
Posts: 4
Joined: Mon Aug 06, 2018 10:49 am

Re: Pay off 3.125% 152k mortgage early?

Post by janezoey » Fri Sep 14, 2018 2:04 pm

With three kids, you'll be paying for college for about 10 years, with two years where two are in college at the same time. I would not pay off a mortgage with a rate of 3.125% because it's barely above inflation and the payment is small compared to the rest of your annual income. I don't think we'll see a rate that low again in our lifetimes. Federal student loans right now are around 5% and Graduate/Parent Plus loans are around 7.5%. Your $16,500 annual contribution to the 529 indicates to me you are very serious about paying for most of college. So perhaps consider frontloading more into the 529s now, especially for your youngest one who has an 18-year time horizon. If you put more money in the early years, your money will have more time to compound tax-free. Unless you have some amazing 529 state deduction or credit, by the time your younger kids are entering high school, you might want to greatly reduce the $16,500 that you are annually contributing. Your money will only have a few years to grow or recover from an economic crisis, so why lock it up then if the main purpose of a 529 is to avoid capital gains taxes?

Given your income and tax bracket, your family is unlikely to get need-based aid. This article explains why the 529 is a big tax boon for upper-middle-class families who can fund large amounts early:
https://www.brookings.edu/research/a-ta ... ngs-plans/

You have a lot more possible chess moves than most other American families. So at the end of the day, you should do what is most comfortable for your family. But if I were in your shoes I would keep that enviable mortgage rate.

User avatar
car733
Posts: 132
Joined: Sun Feb 25, 2018 10:07 am
Location: Chicago, IL

Re: Pay off 3.125% 152k mortgage early?

Post by car733 » Fri Sep 14, 2018 3:05 pm

3.125% sounds amazing. I would keep it!

User avatar
Toons
Posts: 12970
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Pay off 3.125% 152k mortgage early?

Post by Toons » Fri Sep 14, 2018 3:13 pm

fishandgolf wrote:
Fri Sep 14, 2018 12:05 pm
Toons wrote:
Fri Sep 14, 2018 8:10 am
Pay it off as fast as you can,
Laser like focus.
+1000......

You 're asking this question because you hate debt.....me too. We paid ours off early also......there is no better feeling than having zero debt....

Pay it off.......at WARP SPEED!!!

:sharebeer
:sharebeer :sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

UncleBogle
Posts: 92
Joined: Sun Jul 15, 2018 7:53 pm

Re: Pay off 3.125% 152k mortgage early?

Post by UncleBogle » Fri Sep 14, 2018 4:42 pm

Vulcan wrote:
Fri Sep 14, 2018 11:48 am
UncleBogle wrote:
Fri Sep 14, 2018 11:37 am
JoeRetire wrote:
Fri Sep 14, 2018 8:16 am
TarHeel2002 wrote:
Fri Sep 14, 2018 7:34 am
Mortgage debt = 152k fixed 3.125% ($750/month payment)
I try to have a Vulcan approach to investing but I must admit I am a little bit more like Spock (emotional component to paying off debt).
I'm not a Trek enthusiast, but wasn't Spock a Vulcan, and non-emotional?
Well, if no one else will comment on this, as a Trekkie, I'll field that question.

Spock was both Vulcan(Father) and Terran (Earthling Mother).

Though he would do his best to outwardly show the logical, unemotional Vulcan side, every so often, the emotional human side would peek through. Kind of like a frosted mini-wheat....😊

Live long and Prosper, my son.
If there are self-made purgatories, then we all have to live in them.
Five thousand quatloos that the mortgage will have to be destroyed. Sorry, couldn't resist.

But I too would agree that it is more prudent to use those funds for future Investments rather than pay off such a small percentage mortgage.

User avatar
jriding
Posts: 118
Joined: Tue Jan 15, 2013 2:06 pm
Location: CO

Re: Pay off 3.125% 152k mortgage early?

Post by jriding » Fri Sep 14, 2018 5:17 pm

After maxing out all of our tax-advantaged space we split the difference with leftover money each month: 50% to extra mortgage payments and 50% to taxable accounts.

User avatar
randomizer
Posts: 1523
Joined: Sun Jul 06, 2014 3:46 pm

Re: Pay off 3.125% 152k mortgage early?

Post by randomizer » Fri Sep 14, 2018 5:19 pm

At 3.125% I'd be tempted (emotionally) to pay it off and get it off the balance sheet. But my head tells me that the optimal path is to pay it off as slowly as possible. Either way, I don't think it will make a huge difference to your retirement, so just do what feels right.
87.5:12.5, EM tilt — HODL the course!

User avatar
Vulcan
Posts: 203
Joined: Sat Apr 05, 2014 11:43 pm

Re: Pay off 3.125% 152k mortgage early?

Post by Vulcan » Fri Sep 14, 2018 5:20 pm

One good reason to pay mortgage off early vs leaving funds in taxable accounts is to take assets off (most) college financial aid formulas.

User avatar
whodidntante
Posts: 4066
Joined: Thu Jan 21, 2016 11:11 pm

Re: Pay off 3.125% 152k mortgage early?

Post by whodidntante » Fri Sep 14, 2018 5:21 pm

I have exactly the same interest rate and I don't send a dime extra.

hookemhorns
Posts: 69
Joined: Sat Jul 09, 2016 11:16 pm

Re: Pay off 3.125% 152k mortgage early?

Post by hookemhorns » Fri Sep 14, 2018 5:53 pm

We could easily be in a situation soon where a money market or CD pay >3%, so you could generate a risk-free net gain on your mortgage. The people saying to pay it off are not looking at the facts. Your bank will be laughing their rear off if you pay it off now.

JoeRetire
Posts: 1599
Joined: Tue Jan 16, 2018 2:44 pm

Re: Pay off 3.125% 152k mortgage early?

Post by JoeRetire » Fri Sep 14, 2018 6:46 pm

selters wrote:
Fri Sep 14, 2018 1:26 pm
If keeping the mortgage for as long as possible and investing in the stock market instead is a good idea, why not refinance the mortgage up to 80% loan to value ratio every five years or so? That must be an even better idea? The more leverage you use, the higher the returns, right?
Bingo!

As long as the mortgage rate is so favorable compared to the expected investment returns, max leverage makes complete financial sense.

m@ver1ck
Posts: 56
Joined: Fri Sep 14, 2018 2:18 pm

Re: Pay off 3.125% 152k mortgage early?

Post by m@ver1ck » Fri Sep 14, 2018 7:11 pm

JoeRetire wrote:
Fri Sep 14, 2018 6:46 pm
selters wrote:
Fri Sep 14, 2018 1:26 pm
If keeping the mortgage for as long as possible and investing in the stock market instead is a good idea, why not refinance the mortgage up to 80% loan to value ratio every five years or so? That must be an even better idea? The more leverage you use, the higher the returns, right?
Bingo!

As long as the mortgage rate is so favorable compared to the expected investment returns, max leverage makes complete financial sense.
Except when the stock market drops 50%. At which point you would have been better off not having that leverage.

User avatar
grabiner
Advisory Board
Posts: 22728
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Pay off 3.125% 152k mortgage early?

Post by grabiner » Fri Sep 14, 2018 7:19 pm

hookemhorns wrote:
Fri Sep 14, 2018 5:53 pm
We could easily be in a situation soon where a money market or CD pay >3%, so you could generate a risk-free net gain on your mortgage.
This would be the case only if the mortgage is deductible, which it likely isn't for the OP. A 4% taxable return would be only 3.04% after tax in the 24% tax bracket, so it is inferior to paying off a non-deductible mortgage.

The proper way to deal with the "We could easily be in the situation soon" is to compare alternatives of the same duration; the yield on long-duration bonds takes into account the possibility that short-term rates may rise. Making an extra payment on a 10-year mortgage gives you a guaranteed return 10 years from now, so the fair comparison is to a 10-year bond. If 10-year bonds yield more than the mortgage rate (after any tax comparison), then you come out ahead by buying such a bond.

The OP's rate and payment imply that there are about 24 years left on the mortgage, so any additional payment made now gives no benefit until 24 years from now, or until the house is sold. Therefore, at 3.125%, it's probably not worth paying off the loan even if it is non-deductible; 7-year municipal bonds (Admiral shares of Vanguard Long-Term Tax-Exempt) yield 2.95% for a significantly shorter duration.

And if rates fall, investing in municipal bonds instead of paying down the mortgage gives you the right to pay down the mortgage later. If it happens that munis yield 2% three years from now, then selling munis to pay down the mortgage will be a good deal.
Wiki David Grabiner

dknightd
Posts: 862
Joined: Wed Mar 07, 2018 11:57 am

Re: Pay off 3.125% 152k mortgage early?

Post by dknightd » Fri Sep 14, 2018 7:20 pm

There is no right answer to this. Nobody knows what future returns might be. I have $50k (and 8 years) left on my 3.25% mortgage. I'm in no rush to pay it off early. I might decide to pay it in full one day. Reducing the amount owned does not make me feel better. Having it paid off in full likely would. YMMV

JoeRetire
Posts: 1599
Joined: Tue Jan 16, 2018 2:44 pm

Re: Pay off 3.125% 152k mortgage early?

Post by JoeRetire » Fri Sep 14, 2018 7:28 pm

m@ver1ck wrote:
Fri Sep 14, 2018 7:11 pm
JoeRetire wrote:
Fri Sep 14, 2018 6:46 pm
selters wrote:
Fri Sep 14, 2018 1:26 pm
If keeping the mortgage for as long as possible and investing in the stock market instead is a good idea, why not refinance the mortgage up to 80% loan to value ratio every five years or so? That must be an even better idea? The more leverage you use, the higher the returns, right?
Bingo!

As long as the mortgage rate is so favorable compared to the expected investment returns, max leverage makes complete financial sense.
Except when the stock market drops 50%. At which point you would have been better off not having that leverage.
I'm happy with my asset allocation. It doesn't keep me awake at night.
My assets have never dropped by 50%. I don't expect they will in my lifetime.

jimmynohome
Posts: 1
Joined: Fri Sep 14, 2018 8:15 pm

Re: Pay off 3.125% 152k mortgage early?

Post by jimmynohome » Fri Sep 14, 2018 8:31 pm

A couple thoughts:

1. By way of qualifications, I'm in a similar boat as far as age/income/situation. I suppose one difference is that I have a considerably higher amount of non-retirement funds, but that really doesn't make that much of a difference, so it may be meaningful to hear from someone who is walking your walk. I have a 7 yr ARM that runs out in the next 6 months, so my days of 2.5% before tax borrowed money are numbered and this is a situation I find myself pondering a lot these days.

2. One point I haven't seen anyone make that I think is important is that your mortgage is "in the money". You could not go out and get a 15 year for 3.125% right now. I think that pretty much gives you your answer right there.

3. Your assets appear a little tilted towards retirement, which certainly isn't a bad thing but it is worth noting. You seem to be counting on the sale of your business to bridge the gap between expected retirement in your mid 50's until you can reasonable pull from your retirement funds. As they say in golf, there is a lot of green there. I think that is a dangerous expectation.

4. If the debt is just too burdensome for you to sleep at night, then by all means pay it down a bit quicker, but I would recommend more toward the extra hundred or couple hundred a month vs. laser like focus and eliminating it totally within a few years.

5. Life is uncertain, but that low rate is not uncertain. As stated in #2 above that is effectively an asset of yours.

6. I agree with the notion that the expectation of achieving historic 8-10% returns over the next 10-15 years will be challenging, and there will certainly be some down years, but realistically speaking it would be a complete anomaly for you to not achieve the after tax cost of your mortgage, which is likely close to about 2.5%. That's not to say it can't or won't happen, but it just isn't likely. If you can control the urge to spend it, and invest it in a prudent manner, then a down year is just an opportunity. It really doesn't make any difference until you sell.

Best of luck

User avatar
willthrill81
Posts: 5845
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Pay off 3.125% 152k mortgage early?

Post by willthrill81 » Fri Sep 14, 2018 9:39 pm

We don't have as much in the way of retirement assets as you and we're aggressively paying off our 3.375% mortgage (about 18-20 months left). I think an argument can be made in favor of paying it off in lieu of buying bonds as well as just letting it ride and investing in something more aggressive. It's a matter of opinion and what makes you feel comfortable, hence the term 'personal finance'.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Erwin007
Posts: 248
Joined: Tue Aug 19, 2008 8:29 am
Location: Intermountain West

Re: Pay off 3.125% 152k mortgage early?

Post by Erwin007 » Fri Sep 14, 2018 9:44 pm

fishandgolf wrote:
Fri Sep 14, 2018 12:05 pm
Toons wrote:
Fri Sep 14, 2018 8:10 am
Pay it off as fast as you can,
Laser like focus.
+1000......

You 're asking this question because you hate debt.....me too. We paid ours off early also......there is no better feeling than having zero debt....

Pay it off.......at WARP SPEED!!!

:sharebeer
The better feeling is having more money than you would have had if you had made the mathematically poor decision to pay extra to your low interest rate mortgage.

jnet2000
Posts: 298
Joined: Tue Mar 19, 2013 4:22 pm

Re: Pay off 3.125% 152k mortgage early?

Post by jnet2000 » Fri Sep 14, 2018 11:20 pm

I'd pay it off. It's a great feeling being debt free and having cash and assets to boot. We paid off our mortgage in our mid 30s and have vowed never to use debt again.
"You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing" Warren Buffet

NextMil
Posts: 481
Joined: Wed Dec 13, 2017 12:33 pm

Re: Pay off 3.125% 152k mortgage early?

Post by NextMil » Sat Sep 15, 2018 5:04 am

I have a 2.9% rate on my mortgage and I max retirement and invest in 529s. Anything leftover gets applied to mortgage and taxable on a 60/40% split respectively. Truthfully my taxable account is also my mortgage payoff investment account. I just spread the risk a little.

We chase(d) interest rates to pay less interest on our mortgages. Hate paying interest. That’s why I love paying extra on the mortgage and seeing the amount I owe to the bank decrease monthly.

So tired of this monthly payment, cannot wait for it to be gone.

m@ver1ck
Posts: 56
Joined: Fri Sep 14, 2018 2:18 pm

Re: Pay off 3.125% 152k mortgage early?

Post by m@ver1ck » Sun Sep 16, 2018 3:06 pm

I like the idea of paying off the giuse early rather than invest in bonds...

Post Reply