Talk me out of paying off mortgage

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
w1337
Posts: 26
Joined: Mon Jul 06, 2020 1:57 pm

Re: Talk me out of paying off mortgage

Post by w1337 »

AerialWombat wrote: Mon Jul 13, 2020 5:17 pm While the abstract arguments are great, to make it actionable for you, additional information would be very helpful.

For example, you'll read many Bogleheads tell you that the money will earn a higher yield in the market than whatever your interest rate is. However, that depends heavily upon how your portfolio is constructed. My target AA is 30/70. I've intentionally chosen a conservative portfolio designed to maximize capital preservation and barely keep ahead of inflation. Planning around a 3% nominal return clearly impacts my own mortgage payoff consideration, since all of my mortgages are well above 3%. For me, mortgage paydown is a no-brainer. If you're at a more reasonable/common stock allocation, then you'll do better with the money in the stock market.
Average annual return over the lifetime of the stock market is 7.1% for 30/70. (Reference: https://personal.vanguard.com/us/insigh ... llocations)
PowderDay9
Posts: 92
Joined: Fri Oct 12, 2018 12:29 pm

Re: Talk me out of paying off mortgage

Post by PowderDay9 »

KlangFool wrote: Mon Jul 13, 2020 9:05 pm
I did not say that. It is highly dependent on your portfolio size versus the house's price. For example, if my portfolio is at 1.8 million, I would probably pay off the mortgage.
So you would pay off the $300k mortgage at $1.8M but not $1.4M portfolio size?

We don't know the portfolio size of the OP so why would people advise him not to pay off mortgage? It's not as simple as betting the market will outperform your mortgage interest rate and claiming cash is king.
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

PowderDay9 wrote: Mon Jul 13, 2020 9:50 pm
KlangFool wrote: Mon Jul 13, 2020 9:05 pm
I did not say that. It is highly dependent on your portfolio size versus the house's price. For example, if my portfolio is at 1.8 million, I would probably pay off the mortgage.
So you would pay off the $300k mortgage at $1.8M but not $1.4M portfolio size?

We don't know the portfolio size of the OP so why would people advise him not to pay off mortgage? It's not as simple as betting the market will outperform your mortgage interest rate and claiming cash is king.
PowderDay9,

<<So you would pay off the $300k mortgage at $1.8M but not $1.4M portfolio size? >>

Correct.

<<We don't know the portfolio size of the OP >>

We do. It should be obvious to you if you read between the lines.

In any case, OP is not here asking for any real advice. He just wants a "yes" answer in paying off the mortgage.

KlangFool
User avatar
AerialWombat
Posts: 1768
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Talk me out of paying off mortgage

Post by AerialWombat »

w1337 wrote: Mon Jul 13, 2020 9:11 pm Average annual return over the lifetime of the stock market is 7.1% for 30/70. (Reference: https://personal.vanguard.com/us/insigh ... llocations)
If my portfolio achieves that, then great. But past performance blah blah blah, and with much of my “70” being in cash... I aim for 3% nominal (0% real). This is the assumption that **I** plan from. OP may have different planning assumptions.
PowderDay9
Posts: 92
Joined: Fri Oct 12, 2018 12:29 pm

Re: Talk me out of paying off mortgage

Post by PowderDay9 »

KlangFool wrote: Mon Jul 13, 2020 9:55 pm
PowderDay9 wrote: Mon Jul 13, 2020 9:50 pm
KlangFool wrote: Mon Jul 13, 2020 9:05 pm
I did not say that. It is highly dependent on your portfolio size versus the house's price. For example, if my portfolio is at 1.8 million, I would probably pay off the mortgage.
So you would pay off the $300k mortgage at $1.8M but not $1.4M portfolio size?

We don't know the portfolio size of the OP so why would people advise him not to pay off mortgage? It's not as simple as betting the market will outperform your mortgage interest rate and claiming cash is king.
PowderDay9,

<<So you would pay off the $300k mortgage at $1.8M but not $1.4M portfolio size? >>

Correct.

<<We don't know the portfolio size of the OP >>

We do. It should be obvious to you if you read between the lines.

In any case, OP is not here asking for any real advice. He just wants a "yes" answer in paying off the mortgage.

KlangFool
Maybe I'm not good at reading between the lines to know the OP's portfolio size. Sounds like you think he's not asking for actionable advice. Fair enough.

I think we can agree that it does make sense to pay off the mortgage in certain circumstances. It's pretty rare that somebody pays off their mortgage but later regrets it and decides to take out a new mortgage to invest in the market. If those people are out there, I'd love to hear about it!
User avatar
JoeRetire
Posts: 5765
Joined: Tue Jan 16, 2018 2:44 pm

Re: Talk me out of paying off mortgage

Post by JoeRetire »

foo.c wrote: Mon Jul 13, 2020 12:24 am I have a little over 11 years left on a 15 year note @ 2.875%. ~300K left.

I'm a software engineer with 15 years at the same company. I wasn't furloughed and I think I'd be one of the last employees to be let go if things got worse. We've also started bringing people back.

My wife is an underpaid teacher, but I think with no mortgage we could get by on her salary and unemployment benefits would make it even easier. Also have some other hard assets that we could sell if we had to.

I'm not ecstatic about the stock market right now and feel like banking some returns and re-investing the mortgage payment each month.
So I assume you wouldn't be able to get by at all if you had a mortgage but was let go? If that's your concern, what's your hurry. If you are let go and can't get by, you could always choose to pay off your mortgage at that point in time.

It makes no sense to me - if you have the money to pay off your mortgage, then you clearly have the money to get by without paying off your mortgage. But if that helps you sleep at night, then just be comforted by the pay-off plan, without actually jumping the gun and doing it now.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
acegolfer
Posts: 2282
Joined: Tue Aug 25, 2009 9:40 am

Re: Talk me out of paying off mortgage

Post by acegolfer »

foo.c wrote: Mon Jul 13, 2020 4:21 pm For everyone that recommends leveraging the house for investing in the stock market, wouldn't selling the house and renting be even better? I could put 500k into the market if I did that. Stocks will probably even outpace rents (I made that up, but not impossible).
You should not compare market ROI against rent increase alone. You need to also look at the ROI on your house investment. Investing in house benefits from the leverage. Let me know if you don't understand my last statement.
acegolfer
Posts: 2282
Joined: Tue Aug 25, 2009 9:40 am

Re: Talk me out of paying off mortgage

Post by acegolfer »

PowderDay9 wrote: Tue Jul 14, 2020 12:15 am It's pretty rare that somebody pays off their mortgage but later regrets it and decides to take out a new mortgage to invest in the market. If those people are out there, I'd love to hear about it!
I was curious about this and asked BH a similar question before. Never seen anyone actually doing it.
User avatar
LiveSimple
Posts: 1773
Joined: Thu Jan 03, 2013 7:55 am

Re: Talk me out of paying off mortgage

Post by LiveSimple »

We paid off the mortgage, once when the kids education were completed (tuition paid) and we had money in taxable accounts.

just by pure math, keeping the low interest rate mortgage and invested makes sense, but for the sense of accomplishment and the thought that we own the home, without debt is priceless.

So do what you think will float your boat...
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

PowderDay9 wrote: Tue Jul 14, 2020 12:15 am
KlangFool wrote: Mon Jul 13, 2020 9:55 pm
PowderDay9 wrote: Mon Jul 13, 2020 9:50 pm
KlangFool wrote: Mon Jul 13, 2020 9:05 pm
I did not say that. It is highly dependent on your portfolio size versus the house's price. For example, if my portfolio is at 1.8 million, I would probably pay off the mortgage.
So you would pay off the $300k mortgage at $1.8M but not $1.4M portfolio size?

We don't know the portfolio size of the OP so why would people advise him not to pay off mortgage? It's not as simple as betting the market will outperform your mortgage interest rate and claiming cash is king.
PowderDay9,

<<So you would pay off the $300k mortgage at $1.8M but not $1.4M portfolio size? >>

Correct.

<<We don't know the portfolio size of the OP >>

We do. It should be obvious to you if you read between the lines.

In any case, OP is not here asking for any real advice. He just wants a "yes" answer in paying off the mortgage.

KlangFool
Maybe I'm not good at reading between the lines to know the OP's portfolio size. Sounds like you think he's not asking for actionable advice. Fair enough.

I think we can agree that it does make sense to pay off the mortgage in certain circumstances. It's pretty rare that somebody pays off their mortgage but later regrets it and decides to take out a new mortgage to invest in the market. If those people are out there, I'd love to hear about it!
1) It is called reverse mortgaging. When a person does not have enough money to retire, they took a mortgage on the house.

2) It is fairly common for someone to pay off the house and then took a student loan.

3) In the worst case, the person is unemployed and cannot sell the house and cannot get a new mortgage. Sell the house at a big loss. You will not heat it in the forum. They did not survive.

KlangFool
User avatar
StevieG72
Posts: 1144
Joined: Wed Feb 05, 2014 9:00 pm

Re: Talk me out of paying off mortgage

Post by StevieG72 »

Have your cake and eat it too!

Pay extra on you mortgage and invest as well.
Fools think their own way is right, but the wise listen to others.
Admiral
Posts: 3019
Joined: Mon Oct 27, 2014 12:35 pm

Re: Talk me out of paying off mortgage

Post by Admiral »

I guess I don't understand why OP will not post a full financial picture. W/o that we're throwing darts. Sometimes a payoff makes sense, other times not so much.

OP: this thread is three pages long. If you want actionable advice I'd encourage you to share details of your situation beyond "I can afford it" and "we'd probably be ok if I lost my job."
Topic Author
foo.c
Posts: 101
Joined: Sat Jul 15, 2017 4:55 pm

Re: Talk me out of paying off mortgage

Post by foo.c »

Admiral wrote: Tue Jul 14, 2020 7:40 am I guess I don't understand why OP will not post a full financial picture. W/o that we're throwing darts. Sometimes a payoff makes sense, other times not so much.

OP: this thread is three pages long. If you want actionable advice I'd encourage you to share details of your situation beyond "I can afford it" and "we'd probably be ok if I lost my job."
I did a poor job of starting this thread off. I didn't expect things to go that direction.

Responses were generally good, but you'd think paid off houses were a leading cause of death if you read this thread.
Admiral
Posts: 3019
Joined: Mon Oct 27, 2014 12:35 pm

Re: Talk me out of paying off mortgage

Post by Admiral »

foo.c wrote: Tue Jul 14, 2020 8:16 am
Admiral wrote: Tue Jul 14, 2020 7:40 am I guess I don't understand why OP will not post a full financial picture. W/o that we're throwing darts. Sometimes a payoff makes sense, other times not so much.

OP: this thread is three pages long. If you want actionable advice I'd encourage you to share details of your situation beyond "I can afford it" and "we'd probably be ok if I lost my job."
I did a poor job of starting this thread off. I didn't expect things to go that direction.

Responses were generally good, but you'd think paid off houses were a leading cause of death if you read this thread.
Bh's mortgage payoff threads are second only to "when should I claim social security?" in terms of their fractiousness. And both require some detailed information!
MindBogler
Posts: 1026
Joined: Wed Apr 17, 2013 12:05 pm

Re: Talk me out of paying off mortgage

Post by MindBogler »

foo.c wrote: Tue Jul 14, 2020 8:16 am I did a poor job of starting this thread off. I didn't expect things to go that direction.

Responses were generally good, but you'd think paid off houses were a leading cause of death if you read this thread.
I think you've had answers from both sides of this argument. KlangFool makes his point in a serious way but it doesn't make him wrong. I agree with him that liquidity is one of your most important resources. There is a big difference between tying up 10% vs 50% of your net worth in a house. That is why it is important to know how much of your net worth the mortgage represents.

Imagine if you had piled cash into the house in late 2006 and then lost your job in 2007? Not only did you lose liquidity but it probably took years to be in a position to sell and get it back. That is one possible outcome. With the rate you have and the present environment I would continue paying as-is while investing the rest to build a larger cushion. In a few years you can revisit this question and will hopefully have much more capital.
User avatar
JoeRetire
Posts: 5765
Joined: Tue Jan 16, 2018 2:44 pm

Re: Talk me out of paying off mortgage

Post by JoeRetire »

foo.c wrote: Tue Jul 14, 2020 8:16 am
Admiral wrote: Tue Jul 14, 2020 7:40 am I guess I don't understand why OP will not post a full financial picture. W/o that we're throwing darts. Sometimes a payoff makes sense, other times not so much.

OP: this thread is three pages long. If you want actionable advice I'd encourage you to share details of your situation beyond "I can afford it" and "we'd probably be ok if I lost my job."
I did a poor job of starting this thread off. I didn't expect things to go that direction.
That's an interesting response. Just curious - what did you expect to happen?
Responses were generally good, but you'd think paid off houses were a leading cause of death if you read this thread.
In general, people like to feel that the path they chose is optimal, and they always encourage others to do the same. Human nature, I guess.

I paid off my first house, and felt pretty good at the time. In retrospect, I wish I hadn't. Having retired in our third house, we still have a mortgage. I have plenty of money to pay it off, but so far have no plans to do so.

If I die, it won't be due to the mortgage I hold or any mortgage I have paid off. And I don't lose any sleep worrying about it. Apparently, some do. We all get to choose where to spend our money on things that are important to us.
Last edited by JoeRetire on Tue Jul 14, 2020 10:03 am, edited 1 time in total.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
User avatar
corn18
Posts: 1775
Joined: Fri May 22, 2015 6:24 am

Re: Talk me out of paying off mortgage

Post by corn18 »

OP, I appreciate the thread as I think about what we are going to do. I hadn't thought about the liquidity issue. We would like to retire next year and maybe we should go into that big event with max liquidity vs. paying off the mortgage. More to think about, I guess.
Don't do something, just stand there!
User avatar
gr7070
Posts: 1464
Joined: Fri Oct 28, 2011 10:39 am

Re: Talk me out of paying off mortgage

Post by gr7070 »

KlangFool wrote: Tue Jul 14, 2020 6:52 am
PowderDay9 wrote: Tue Jul 14, 2020 12:15 am it's pretty rare that somebody pays off their mortgage but later regrets it and decides to take out a new mortgage to invest in the market. If those people are out there, I'd love to hear about it!
1) It is called reverse mortgaging. When a person does not have enough money to retire, they took a mortgage on the house.

2) It is fairly common for someone to pay off the house and then took a student loan.

3) In the worst case, the person is unemployed and cannot sell the house and cannot get a new mortgage. Sell the house at a big loss. You will not heat it in the forum. They did not survive.

KlangFool
1. That (what powderday9 described) would generally not be done as a reverse mortgage. It would far more likely a cash-out refinance.

2. I can't fathom paying off the house and then taking a student loan is "fairly common".

For starters, less than 40% of homes are paid for. I suspect the vast majority of those are older folks not going back to school and probably many of which are not taking student loans in their names for their children. Couples start having children at age 26. first time home buyers are 32. By the time their kids start school their homes have likely not been paid off.

I'm sure #2 happens, but would hardly be characterised as fairly common.
User avatar
willthrill81
Posts: 20893
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Talk me out of paying off mortgage

Post by willthrill81 »

MindBogler wrote: Tue Jul 14, 2020 9:22 amKlangFool makes his point in a serious way but it doesn't make him wrong. I agree with him that liquidity is one of your most important resources. There is a big difference between tying up 10% vs 50% of your net worth in a house. That is why it is important to know how much of your net worth the mortgage represents.

Imagine if you had piled cash into the house in late 2006 and then lost your job in 2007? Not only did you lose liquidity but it probably took years to be in a position to sell and get it back. That is one possible outcome. With the rate you have and the present environment I would continue paying as-is while investing the rest to build a larger cushion. In a few years you can revisit this question and will hopefully have much more capital.
Even for those concerned about liquidity, there is more than one way to view it. Some focus only on accumulating assets, while others take on a more balanced approach and also try to reduce their liabilities.

An investor with a paid-off home has a lesser need for liquidity because there is no principal & interest payment to make. In our situation, paying off our mortgage resulted in our our essential spending needs dropping by one-third.

Those who are still concerned about depleting their assets can create a sinking fund for paying off their mortgage, investing it however they believe to be appropriate, and retain full control of that fund until they have accumulated enough to pay off their mortgage in one fail swoop.

That said, it's not 'wrong' to never want to pay down one's mortgage, but it's most certainly not definitively 'right' either, no matter how confidently anyone says that it is.
“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
Topic Author
foo.c
Posts: 101
Joined: Sat Jul 15, 2017 4:55 pm

Re: Talk me out of paying off mortgage

Post by foo.c »

MindBogler wrote: Tue Jul 14, 2020 9:22 am
foo.c wrote: Tue Jul 14, 2020 8:16 am I did a poor job of starting this thread off. I didn't expect things to go that direction.

Responses were generally good, but you'd think paid off houses were a leading cause of death if you read this thread.
I think you've had answers from both sides of this argument. KlangFool makes his point in a serious way but it doesn't make him wrong. I agree with him that liquidity is one of your most important resources. There is a big difference between tying up 10% vs 50% of your net worth in a house. That is why it is important to know how much of your net worth the mortgage represents.

Imagine if you had piled cash into the house in late 2006 and then lost your job in 2007? Not only did you lose liquidity but it probably took years to be in a position to sell and get it back. That is one possible outcome. With the rate you have and the present environment I would continue paying as-is while investing the rest to build a larger cushion. In a few years you can revisit this question and will hopefully have much more capital.
I think by including some sparse personal info it led the topic that way in some of the responses.

It's fair to prioritize liquidity, but that's going to be a personal choice for everyone to make. If I'm not worried about my liquidity, I don't know why anyone else should.
User avatar
1789
Posts: 1718
Joined: Fri Aug 16, 2019 3:31 pm

Re: Talk me out of paying off mortgage

Post by 1789 »

OP

Paying off a low interest rate mortgage only make sense if you buildup significant wealth and at which point it doesn't really matter you pay or not, then you can pay it off. With all the unknowns and less wealth you better take the time on your side and be aggressive and invest. There can be a day in the future when you are well off and don't have any worry about losing job, kids education and all that. That is a good point to pay off stuff as you build your dollars and you feel much safer.

I will repeat again, you don't need a paid off house but you need money for all the unexpected events. A house is really a poor ballast against financial turmoil. People who recommended having CASH don't love CASH necessarily, it is just they feel the only sound way to survive. And i am in that camp.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

foo.c wrote: Tue Jul 14, 2020 11:51 am

It's fair to prioritize liquidity, but that's going to be a personal choice for everyone to make. If I'm not worried about my liquidity, I don't know why anyone else should.
foo.c,

Whether you are emotionally worried about your liquidity, it does not change the actual reality of your liquidity. The mere fact of why you are not calculating your actual worst-case number tell us something about your portfolio size.

The basic fact is you can only afford to pay off your mortgage as long as your wife is working. Your portfolio is not big enough to handle the worst-case situation of both of you unemployed for a long period of time.

My question to you is very simple.

If you cannot handle the worst-case outcome of paying off the mortgage, why is it safer for you to pay off the mortgage?

We have close to 50 million unemployed now. We are not in normal time. Why are you taking this unnecessary risk?

You have to survive in order to succeed.

<<It's fair to prioritize liquidity, but that's going to be a personal choice for everyone to make.>>

You can disagree with the probability of your wife being unemployed. But, that does not change the numbers of what will happen to you if both of you are unemployed.

KlangFool
User avatar
gr7070
Posts: 1464
Joined: Fri Oct 28, 2011 10:39 am

Re: Talk me out of paying off mortgage

Post by gr7070 »

Liquidity is the most overrated aspect discussed on Boglehead's.

For accumulators, liquidity beyond an EF is incredibly unimportant.

Even then, an EF doesn't have to be 100% liquid; e.g. a CD can have a place in an EF.

I'm not sure it's all that important for deccumulators, probably less; especially beyond ones near-term withdrawal strategy.

Even if one starts to look at dire situations, there is no need for immediate access to large amount of funds. The need is gradual, and the move to liquidity can be gradual.
Topic Author
foo.c
Posts: 101
Joined: Sat Jul 15, 2017 4:55 pm

Re: Talk me out of paying off mortgage

Post by foo.c »

KlangFool wrote: Tue Jul 14, 2020 12:25 pm
foo.c wrote: Tue Jul 14, 2020 11:51 am

It's fair to prioritize liquidity, but that's going to be a personal choice for everyone to make. If I'm not worried about my liquidity, I don't know why anyone else should.
foo.c,

Whether you are emotionally worried about your liquidity, it does not change the actual reality of your liquidity. The mere fact of why you are not calculating your actual worst-case number tell us something about your portfolio size.

The basic fact is you can only afford to pay off your mortgage as long as your wife is working. Your portfolio is not big enough to handle the worst-case situation of both of you unemployed for a long period of time.

My question to you is very simple.

If you cannot handle the worst-case outcome of paying off the mortgage, why is it safer for you to pay off the mortgage?

We have close to 50 million unemployed now. We are not in normal time. Why are you taking this unnecessary risk?

You have to survive in order to succeed.

<<It's fair to prioritize liquidity, but that's going to be a personal choice for everyone to make.>>

You can disagree with the probability of your wife being unemployed. But, that does not change the numbers of what will happen to you if both of you are unemployed.

KlangFool
I do try and look at everything, but there's an infinite number of outcomes and I am not concerned with the silly ones you brought up. Beyond that your assumptions are wrong.

I did use FIRECalc and run the 3 scenarios I am concerned with and assuming I survive the next 11 years it's not much of a difference.
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

foo.c wrote: Tue Jul 14, 2020 1:00 pm

I do try and look at everything, but there's an infinite number of outcomes and I am not concerned with the silly ones you brought up. Beyond that your assumptions are wrong.

I did use FIRECalc and run the 3 scenarios I am concerned with and assuming I survive the next 11 years it's not much of a difference.
foo.c,

Good luck!

KlangFool
abc132
Posts: 388
Joined: Thu Oct 18, 2018 1:11 am

Re: Talk me out of paying off mortgage

Post by abc132 »

I paid off a 20 year loan at year 7, with an interest rate in the low 4% range, and with the remaining debt of less than half of the purchase price. I had a 100% stock portfolio, so for me it was a way to take some risk off of the table. I continued to have a 100% stock portfolio after this move.

There were some taxes from pulling money from stocks in a taxable account, and stocks over-performed this ~4% rate. It was a "good-enough" financial decision, and it allowed me to up my investment rate. It was a de-risking move that happened not to pay off. It did allow me to increase my monthly investments, and my monthly stock purchases increased by more than the mortgage amount.

I think the move can make sense, especially if one has a heavy stock portfolio, significant enough assets of at least 10x expenses, and one is ready to start de-risking. The chief concern would be lifestyle creep as one sees more money coming in with each paycheck, and the pursuit of more moves to make one more comfortable, instead of whether they make financial sense. Ones assessment of the current environment is probably not a good way to make this decision, and I prefer people do things like increasing an emergency fund if they are uncomfortable with some short term aspect of the markets.

Factors to consider:
Mortgage Interest Rate
Stock vs Bond Asset Allocation
X Multiple of Expenses Saved
Admiral
Posts: 3019
Joined: Mon Oct 27, 2014 12:35 pm

Re: Talk me out of paying off mortgage

Post by Admiral »

gr7070 wrote: Tue Jul 14, 2020 12:51 pm Liquidity is the most overrated aspect discussed on Boglehead's.

For accumulators, liquidity beyond an EF is incredibly unimportant.

Even then, an EF doesn't have to be 100% liquid; e.g. a CD can have a place in an EF.

I'm not sure it's all that important for deccumulators, probably less; especially beyond ones near-term withdrawal strategy.

Even if one starts to look at dire situations, there is no need for immediate access to large amount of funds. The need is gradual, and the move to liquidity can be gradual.
Generally when those on the forum refer to "liquidity" it's not simply ready cash. It's stocks, bonds, CDs, etc. Marketable investments that are easy to sell. It's not home equity.

Everyone has different opinions on how much liquidity they need. It may be "incredibly unimportant" to you and very important to someone with memories of a recent job loss. As always, it depends on circumstances.
User avatar
gr7070
Posts: 1464
Joined: Fri Oct 28, 2011 10:39 am

Re: Talk me out of paying off mortgage

Post by gr7070 »

Admiral wrote: Tue Jul 14, 2020 3:32 pm
gr7070 wrote: Tue Jul 14, 2020 12:51 pm Liquidity is the most overrated aspect discussed on Boglehead's.

For accumulators, liquidity beyond an EF is incredibly unimportant.

Even then, an EF doesn't have to be 100% liquid; e.g. a CD can have a place in an EF.

I'm not sure it's all that important for deccumulators, probably less; especially beyond ones near-term withdrawal strategy.

Even if one starts to look at dire situations, there is no need for immediate access to large amount of funds. The need is gradual, and the move to liquidity can be gradual.
Generally when those on the forum refer to "liquidity" it's not simply ready cash. It's stocks, bonds, CDs, etc. Marketable investments that are easy to sell. It's not home equity.

Everyone has different opinions on how much liquidity they need. It may be "incredibly unimportant" to you and very important to someone with memories of a recent job loss. As always, it depends on circumstances.
I'm aware of the appropriate definition of liquidity.

I have some semblance of the importance to others, which, as stated is greatly overrated by many. It's not just unimportant to me; it should be far less important to others.
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

abc132 wrote: Tue Jul 14, 2020 1:07 pm I paid off a 20 year loan at year 7, with an interest rate in the low 4% range, and with the remaining debt of less than half of the purchase price. I had a 100% stock portfolio, so for me it was a way to take some risk off of the table. I continued to have a 100% stock portfolio after this move.

There were some taxes from pulling money from stocks in a taxable account, and stocks over-performed this ~4% rate. It was a "good-enough" financial decision, and it allowed me to up my investment rate. It was a de-risking move that happened not to pay off. It did allow me to increase my monthly investments, and my monthly stock purchases increased by more than the mortgage amount.

I think the move can make sense, especially if one has a heavy stock portfolio, significant enough assets of at least 10x expenses, and one is ready to start de-risking. The chief concern would be lifestyle creep as one sees more money coming in with each paycheck, and the pursuit of more moves to make one more comfortable, instead of whether they make financial sense. Ones assessment of the current environment is probably not a good way to make this decision, and I prefer people do things like increasing an emergency fund if they are uncomfortable with some short term aspect of the markets.

Factors to consider:
Mortgage Interest Rate
Stock vs Bond Asset Allocation
X Multiple of Expenses Saved
abc132,

Please clarify whether the portfolio size is 10 times the annual expense

A) Before paying off the mortgage

or

B) After paying off the mortgage

Let's assume the annual expense before paying off the mortgage is 80K and 60K after paying off the mortgage and the mortgage is 300K.

For (A), it would be 800K.

For (B), it would be 60K x 10 + 300K = 900K.

Do you mean (A) or (B)?

Thanks.

KlangFool
mnnice
Posts: 492
Joined: Sat Aug 11, 2012 5:48 pm

Re: Talk me out of paying off mortgage

Post by mnnice »

It’s never going to be 100% clear.

DH and I decided to be debt free in 2005. For two years we lived very conservatively and paid off our mortgage from cash flow plus some help from the liquidation of taxable investments. Then we started rebuilding taxable and saved even more in tax deferred than we had previously.

Then the Great Recession happened we ended up with a paid for house that was worth less than we had bought it for in 2001, taxable and retirement funds that had taken huge ~50% hit, and a the loss of the higher grossing of our two jobs (with no real local jobs of similar skill set/pay available). It was reassuring to have a paid for house but it was also an unsellable boat anchor. I don’t regret any of our decisions but there were lots of ways to play it (some better, some worse.).
My real take away was that modest lifestyle and high savings rate is going to trump being over leveraged and living as fancy as you can pull off at any given moment. I think Hedgeiefund’s interest only mortgage idea has merit too. Also we picked our current house in part because it would make a good rental (despite not wanting to be landlords) if we got stuck in another highly illiquid housing market.
User avatar
willthrill81
Posts: 20893
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Talk me out of paying off mortgage

Post by willthrill81 »

gr7070 wrote: Tue Jul 14, 2020 12:51 pm Liquidity is the most overrated aspect discussed on Boglehead's.

For accumulators, liquidity beyond an EF is incredibly unimportant.

Even then, an EF doesn't have to be 100% liquid; e.g. a CD can have a place in an EF.

I'm not sure it's all that important for deccumulators, probably less; especially beyond ones near-term withdrawal strategy.

Even if one starts to look at dire situations, there is no need for immediate access to large amount of funds. The need is gradual, and the move to liquidity can be gradual.
After obsessing about reducing expense ratios by single digit basis points, I'm inclined to agree that liquidity is too much of a worry for many.

If your house burns down, you shouldn't lose much more than your insurance deductible, often $1k. The same goes for destroying an insured vehicle. Out-of-pocket maximums with healthcare insurance can be steep, but they still aren't unmanageable for most on this forum.

Job loss is a legitimate concern for many, but few job losses among BHs are going to last more than six months, maybe a year on the outside. They might not be able to get a job paying the same amount as before, but they won't be living under a bridge eating from garbage cans either. One poster in this thread often talks about 'survival' in this context, which is utterly ridiculous for this crowd. There's no need for us to plan for Great Depression 2.0 coinciding with our being suddenly unemployed for years on end, our homes losing 90% of their value, incurring seven figure healthcare costs, etc. etc. Just because an event is theoretically possible, even if it's actually happened to a few people, it doesn't mean that it's prudent for us to mitigate that risk, especially if doing so will result in significant expense.
“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
User avatar
nps
Posts: 1045
Joined: Thu Dec 04, 2014 10:18 am

Re: Talk me out of paying off mortgage

Post by nps »

willthrill81 wrote: Tue Jul 14, 2020 5:15 pm Job loss is a legitimate concern for many, but few job losses among BHs are going to last more than six months, maybe a year on the outside. They might not be able to get a job paying the same amount as before, but they won't be living under a bridge eating from garbage cans either. One poster in this thread often talks about 'survival' in this context, which is utterly ridiculous for this crowd. There's no need for us to plan for Great Depression 2.0 coinciding with our being suddenly unemployed for years on end, our homes losing 90% of their value, incurring seven figure healthcare costs, etc. etc. Just because an event is theoretically possible, even if it's actually happened to a few people, it doesn't mean that it's prudent for us to mitigate that risk, especially if doing so will result in significant expense.
Agree with this. Survival means staying alive. It does not mean maintaining a particular standard of living.
User avatar
LadyGeek
Site Admin
Posts: 66352
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Talk me out of paying off mortgage

Post by LadyGeek »

I removed an interchange regarding job loss and racial minorities. The discussion was derailing the thread.

Please stay on-topic, which is helping the OP:

foo.c wrote: Mon Jul 13, 2020 12:24 am I have a little over 11 years left on a 15 year note @ 2.875%. ~300K left.

I'm a software engineer with 15 years at the same company. I wasn't furloughed and I think I'd be one of the last employees to be let go if things got worse. We've also started bringing people back.

My wife is an underpaid teacher, but I think with no mortgage we could get by on her salary and unemployment benefits would make it even easier. Also have some other hard assets that we could sell if we had to.

I'm not ecstatic about the stock market right now and feel like banking some returns and re-investing the mortgage payment each month.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
w1337
Posts: 26
Joined: Mon Jul 06, 2020 1:57 pm

Re: Talk me out of paying off mortgage

Post by w1337 »

acegolfer wrote: Tue Jul 14, 2020 6:46 am
PowderDay9 wrote: Tue Jul 14, 2020 12:15 am It's pretty rare that somebody pays off their mortgage but later regrets it and decides to take out a new mortgage to invest in the market. If those people are out there, I'd love to hear about it!
I was curious about this and asked BH a similar question before. Never seen anyone actually doing it.
I can name a couple people off of the top of my head but they're not on this forum. They didn't "regret it" but they did decide to invest the money instead of having it locked up in a home they're living in.
PowderDay9
Posts: 92
Joined: Fri Oct 12, 2018 12:29 pm

Re: Talk me out of paying off mortgage

Post by PowderDay9 »

KlangFool wrote: Tue Jul 14, 2020 12:25 pm
If you cannot handle the worst-case outcome of paying off the mortgage, why is it safer for you to pay off the mortgage?

We have close to 50 million unemployed now. We are not in normal time. Why are you taking this unnecessary risk?

You have to survive in order to succeed.

KlangFool
The OP should consider some bad scenarios but basing his decision on if he can survive the worst case outcome doesn't make sense. That's like deciding if you should ever travel in a car based on the worst case outcome. Well that outcome is death by car accident so I guess you aren't getting in a car.

The point is you have to take some risk in life and weigh that against the benefits. Having more liquidity when you already have 10x expenses liquid, have employable skills,
a working spouse, unemployment benefits, retirement accounts & social security seems unnecessary and not worth the cost of borrowing to have it.

Also, you keep talking about 50M unemployed. If you're claiming that's a current US number, please provide a source. The unemployment numbers I'm seeing are much less worse than the very negative picture you are trying to portray.
abc132
Posts: 388
Joined: Thu Oct 18, 2018 1:11 am

Re: Talk me out of paying off mortgage

Post by abc132 »

KlangFool wrote: Tue Jul 14, 2020 3:57 pm
abc132 wrote: Tue Jul 14, 2020 1:07 pm I paid off a 20 year loan at year 7, with an interest rate in the low 4% range, and with the remaining debt of less than half of the purchase price. I had a 100% stock portfolio, so for me it was a way to take some risk off of the table. I continued to have a 100% stock portfolio after this move.

There were some taxes from pulling money from stocks in a taxable account, and stocks over-performed this ~4% rate. It was a "good-enough" financial decision, and it allowed me to up my investment rate. It was a de-risking move that happened not to pay off. It did allow me to increase my monthly investments, and my monthly stock purchases increased by more than the mortgage amount.

I think the move can make sense, especially if one has a heavy stock portfolio, significant enough assets of at least 10x expenses, and one is ready to start de-risking. The chief concern would be lifestyle creep as one sees more money coming in with each paycheck, and the pursuit of more moves to make one more comfortable, instead of whether they make financial sense. Ones assessment of the current environment is probably not a good way to make this decision, and I prefer people do things like increasing an emergency fund if they are uncomfortable with some short term aspect of the markets.

Factors to consider:
Mortgage Interest Rate
Stock vs Bond Asset Allocation
X Multiple of Expenses Saved
abc132,

Please clarify [when] the portfolio size is 10 times the annual expense...

KlangFool
If the house balance is 10x expenses, paying off the house would empty your portfolio and not be a good choice. A better method would be something like Firecalc to see how changes affect likely outcomes. Having at least 10x expenses after paying off the house would be safer as general advice. The goal would be for the choice not to disturb expected outcomes by too much - decisions to de-risk should not reduce the chance of meeting goals, as things that seem safer can actually increase risk.

It made sense for me as part of risk reduction for a 100% stock portfolio. I captured all those gains and took some of the stock risk off the table. I re-invested the additional usable income back into stocks, knowing that any job loss would now be much easier for me to absorb. I continued a 100/0 portfolio (with emergency fund), and moved to 80/20 in 2018. I think of this as two de-risking moves as financial milestones were met. I plan to jump to 70/30 at retirement in 5-15 years, and I plan to re-evaluate once retirement expenses, health, and portfolio size are better known.
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

PowderDay9 wrote: Wed Jul 15, 2020 12:51 am
KlangFool wrote: Tue Jul 14, 2020 12:25 pm
If you cannot handle the worst-case outcome of paying off the mortgage, why is it safer for you to pay off the mortgage?

We have close to 50 million unemployed now. We are not in normal time. Why are you taking this unnecessary risk?

You have to survive in order to succeed.

KlangFool
The OP should consider some bad scenarios but basing his decision on if he can survive the worst case outcome doesn't make sense. That's like deciding if you should ever travel in a car based on the worst case outcome. Well that outcome is death by car accident so I guess you aren't getting in a car.

The point is you have to take some risk in life and weigh that against the benefits. Having more liquidity when you already have 10x expenses liquid, have employable skills,
a working spouse, unemployment benefits, retirement accounts & social security seems unnecessary and not worth the cost of borrowing to have it.

Also, you keep talking about 50M unemployed. If you're claiming that's a current US number, please provide a source. The unemployment numbers I'm seeing are much less worse than the very negative picture you are trying to portray.
In summary, you don't believe having both OP and his wife unemployed at the same time in a recession is possible. I disagreed.

OP portfolio size is not at 10 years of expenses after paying off the mortgage.

KlangFool
Topic Author
foo.c
Posts: 101
Joined: Sat Jul 15, 2017 4:55 pm

Re: Talk me out of paying off mortgage

Post by foo.c »

KlangFool wrote: Wed Jul 15, 2020 6:50 am
In summary, you don't believe having both OP and his wife unemployed at the same time in a recession is possible. I disagreed.

OP portfolio size is not at 10 years of expenses after paying off the mortgage.

KlangFool
It's possible, not likely.

You don't know that. In addition 10 years of expenses will be 300k less after paying of the house, thus paying off the house is neutral in that regard.
Admiral
Posts: 3019
Joined: Mon Oct 27, 2014 12:35 pm

Re: Talk me out of paying off mortgage

Post by Admiral »

foo.c wrote: Wed Jul 15, 2020 7:39 am
KlangFool wrote: Wed Jul 15, 2020 6:50 am
In summary, you don't believe having both OP and his wife unemployed at the same time in a recession is possible. I disagreed.

OP portfolio size is not at 10 years of expenses after paying off the mortgage.

KlangFool
It's possible, not likely.

You don't know that. In addition 10 years of expenses will be 300k less after paying of the house, thus paying off the house is neutral in that regard.
I say again: Why do you refuse to post your portfolio and expenses? So you can get some HELPFUL advice? Nobody knows who you are here. Why are you so reluctant to post details so we can actually make educated responses. If you have $5m in cash, I don't think many would tell you that keeping the mortgage is necessary.

Does this make sense to you?
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

foo.c wrote: Wed Jul 15, 2020 7:39 am
KlangFool wrote: Wed Jul 15, 2020 6:50 am
In summary, you don't believe having both OP and his wife unemployed at the same time in a recession is possible. I disagreed.

OP portfolio size is not at 10 years of expenses after paying off the mortgage.

KlangFool
It's possible, not likely.

You don't know that. In addition 10 years of expenses will be 300k less after paying of the house, thus paying off the house is neutral in that regard.
foo.c,

<<It's possible, not likely. >>

And, if it happened, how will you handle it? Taking all these risks in order to save 2.875% interest? How does this make any sense?

<<OP portfolio size is not at 10 years of expenses after paying off the mortgage.>>
<<You don't know that. In addition 10 years of expenses will be 300k less after paying of the house, thus paying off the house is neutral in that regard.>>

I do. It is obvious from your post.

In any case, good luck to you! I had done my part to warn you. There will be a fair amount of capitulation in the current recession. Let's hope that you are not one of those capitulated.

KlangFool
User avatar
AerialWombat
Posts: 1768
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Talk me out of paying off mortgage

Post by AerialWombat »

willthrill81 wrote: Tue Jul 14, 2020 5:15 pm Job loss is a legitimate concern for many, but few job losses among BHs are going to last more than six months, maybe a year on the outside. They might not be able to get a job paying the same amount as before, but they won't be living under a bridge eating from garbage cans either. One poster in this thread often talks about 'survival' in this context, which is utterly ridiculous for this crowd. There's no need for us to plan for Great Depression 2.0 coinciding with our being suddenly unemployed for years on end, our homes losing 90% of their value, incurring seven figure healthcare costs, etc. etc. Just because an event is theoretically possible, even if it's actually happened to a few people, it doesn't mean that it's prudent for us to mitigate that risk, especially if doing so will result in significant expense.
Not sure if you’re talking about me or not, but for some of us, it’s difficult to separate our own life experiences from logic when it comes to planning. I intellectually know that I’m unlikely to ever live under a bridge again, but because I have had that experience, my planning process will forever be anchored in preventing a recurrence— even when doing so results in mathematically sub-optimal investing decisions. I’ve spent a grand total of four years of my adult life homeless, with the single longest stretch being a full year. The memory of damn near freezing to death on many a cold winter night will never leave me.

Forget whatever the math says. I want a paid off mortgage because it drastically minimizes the probability of going through that ever again.

If OP wants a similar sense of security, they should pay it off.
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

Admiral wrote: Wed Jul 15, 2020 7:49 am
foo.c wrote: Wed Jul 15, 2020 7:39 am
KlangFool wrote: Wed Jul 15, 2020 6:50 am
In summary, you don't believe having both OP and his wife unemployed at the same time in a recession is possible. I disagreed.

OP portfolio size is not at 10 years of expenses after paying off the mortgage.

KlangFool
It's possible, not likely.

You don't know that. In addition 10 years of expenses will be 300k less after paying of the house, thus paying off the house is neutral in that regard.
I say again: Why do you refuse to post your portfolio and expenses? So you can get some HELPFUL advice? Nobody knows who you are here. Why are you so reluctant to post details so we can actually make educated responses. If you have $5m in cash, I don't think many would tell you that keeping the mortgage is necessary.

Does this make sense to you?
Admiral,

The answer is obvious. OP is not looking for actionable advice. OP only wants the endorsement of his decision.

KlangFool
KlangFool
Posts: 17723
Joined: Sat Oct 11, 2008 12:35 pm

Re: Talk me out of paying off mortgage

Post by KlangFool »

AerialWombat wrote: Wed Jul 15, 2020 7:55 am
willthrill81 wrote: Tue Jul 14, 2020 5:15 pm Job loss is a legitimate concern for many, but few job losses among BHs are going to last more than six months, maybe a year on the outside. They might not be able to get a job paying the same amount as before, but they won't be living under a bridge eating from garbage cans either. One poster in this thread often talks about 'survival' in this context, which is utterly ridiculous for this crowd. There's no need for us to plan for Great Depression 2.0 coinciding with our being suddenly unemployed for years on end, our homes losing 90% of their value, incurring seven figure healthcare costs, etc. etc. Just because an event is theoretically possible, even if it's actually happened to a few people, it doesn't mean that it's prudent for us to mitigate that risk, especially if doing so will result in significant expense.
Not sure if you’re talking about me or not, but for some of us, it’s difficult to separate our own life experiences from logic when it comes to planning. I intellectually know that I’m unlikely to ever live under a bridge again, but because I have had that experience, my planning process will forever be anchored in preventing a recurrence— even when doing so results in mathematically sub-optimal investing decisions. I’ve spent a grand total of four years of my adult life homeless, with the single longest stretch being a full year. The memory of damn near freezing to death on many a cold winter night will never leave me.

Forget whatever the math says. I want a paid off mortgage because it drastically minimizes the probability of going through that ever again.

If OP wants a similar sense of security, they should pay it off.
AerialWombat,

Just to complete your post/story.

What was the size of your emergency fund and portfolio in terms of annual expense after paying off the mortgage?

KlangFool
User avatar
AerialWombat
Posts: 1768
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Talk me out of paying off mortgage

Post by AerialWombat »

KlangFool wrote: Wed Jul 15, 2020 7:58 am
AerialWombat wrote: Wed Jul 15, 2020 7:55 am
willthrill81 wrote: Tue Jul 14, 2020 5:15 pm Job loss is a legitimate concern for many, but few job losses among BHs are going to last more than six months, maybe a year on the outside. They might not be able to get a job paying the same amount as before, but they won't be living under a bridge eating from garbage cans either. One poster in this thread often talks about 'survival' in this context, which is utterly ridiculous for this crowd. There's no need for us to plan for Great Depression 2.0 coinciding with our being suddenly unemployed for years on end, our homes losing 90% of their value, incurring seven figure healthcare costs, etc. etc. Just because an event is theoretically possible, even if it's actually happened to a few people, it doesn't mean that it's prudent for us to mitigate that risk, especially if doing so will result in significant expense.
Not sure if you’re talking about me or not, but for some of us, it’s difficult to separate our own life experiences from logic when it comes to planning. I intellectually know that I’m unlikely to ever live under a bridge again, but because I have had that experience, my planning process will forever be anchored in preventing a recurrence— even when doing so results in mathematically sub-optimal investing decisions. I’ve spent a grand total of four years of my adult life homeless, with the single longest stretch being a full year. The memory of damn near freezing to death on many a cold winter night will never leave me.

Forget whatever the math says. I want a paid off mortgage because it drastically minimizes the probability of going through that ever again.

If OP wants a similar sense of security, they should pay it off.
AerialWombat,

Just to complete your post/story.

What was the size of your emergency fund and portfolio in terms of annual expense after paying off the mortgage?

KlangFool
I have not yet paid off the mortgage. I am doing so from new monthly cash, instead of putting that cash in CDs or muni bond funds. It will take 1-2 years to pay off the loan. I made the first $10k payment yesterday.

In cash/securities, I have over 10 years of annual expenses. In rental property equity, I have 15 years of living expenses. I could occasionally sell a property to replenish cash if I had to. Current cash flow from rentals also equals my barebones personal monthly expenses.

I fully acknowledge that my fears are illogical and drive me to make sub-optimal financial decisions. I’m OK with that.

As you have pointed out, it’s impossible to make a comparable assessment for the OP without additional information on their portfolio.
Topic Author
foo.c
Posts: 101
Joined: Sat Jul 15, 2017 4:55 pm

Re: Talk me out of paying off mortgage

Post by foo.c »

Admiral wrote: Wed Jul 15, 2020 7:49 am
I say again: Why do you refuse to post your portfolio and expenses? So you can get some HELPFUL advice? Nobody knows who you are here. Why are you so reluctant to post details so we can actually make educated responses. If you have $5m in cash, I don't think many would tell you that keeping the mortgage is necessary.

Does this make sense to you?
Because I don't want to. Just not in my personality to do that.

I'm comfortable in saying I don't have 5m in cash, and I would have already paid it off I did.
User avatar
willthrill81
Posts: 20893
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Talk me out of paying off mortgage

Post by willthrill81 »

AerialWombat wrote: Wed Jul 15, 2020 7:55 am
willthrill81 wrote: Tue Jul 14, 2020 5:15 pm Job loss is a legitimate concern for many, but few job losses among BHs are going to last more than six months, maybe a year on the outside. They might not be able to get a job paying the same amount as before, but they won't be living under a bridge eating from garbage cans either. One poster in this thread often talks about 'survival' in this context, which is utterly ridiculous for this crowd. There's no need for us to plan for Great Depression 2.0 coinciding with our being suddenly unemployed for years on end, our homes losing 90% of their value, incurring seven figure healthcare costs, etc. etc. Just because an event is theoretically possible, even if it's actually happened to a few people, it doesn't mean that it's prudent for us to mitigate that risk, especially if doing so will result in significant expense.
Not sure if you’re talking about me or not, but for some of us, it’s difficult to separate our own life experiences from logic when it comes to planning. I intellectually know that I’m unlikely to ever live under a bridge again, but because I have had that experience, my planning process will forever be anchored in preventing a recurrence— even when doing so results in mathematically sub-optimal investing decisions. I’ve spent a grand total of four years of my adult life homeless, with the single longest stretch being a full year. The memory of damn near freezing to death on many a cold winter night will never leave me.

Forget whatever the math says. I want a paid off mortgage because it drastically minimizes the probability of going through that ever again.

If OP wants a similar sense of security, they should pay it off.
I was not referring to you.

I wholeheartedly agree that paying off a mortgage often reduces the probability of really negative outcomes because you at least own the roof over your head. Yes, you have to pay property taxes, but those are usually a pittance compared to principal and interest payments.
“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
Topic Author
foo.c
Posts: 101
Joined: Sat Jul 15, 2017 4:55 pm

Re: Talk me out of paying off mortgage

Post by foo.c »

I chose option C.

Locking in 2.375% 30 year. Approximately 2.52% APR.

I'll be paying less interest from the first payment and will probably keep paying at my current level. So I would actually pay it off 7 months quicker. Still running the scenarios on that.
Post Reply