Anyone regret paying off mortgage early?

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N.Y.Cab
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Re: anyone regret paying off mortgage early

Post by N.Y.Cab »

There used to be a tax angle to make it worthwhile but the standard deduction increase (with SALT deduction limit) after 2017 essentially eliminated the deductibility of mortgage interest payment.
Last edited by N.Y.Cab on Tue Jun 08, 2021 10:18 am, edited 1 time in total.
hnd
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Re: anyone regret paying off mortgage early

Post by hnd »

Its a pretty incredible conversation to have with people. I always find reasoning for this way or that is deeply psychological and fascinating.

The type of person to want and work to put extra on their home is likely not the person who would regret it. if that makes sense. Its

We refied a 30 yr fixed at 4.6% into another 30 year fixed at 2.9%. We calculated the 15 year mortgage payment, rounded up quite a bit to a nice easy number and auto deposit that into an account at fidelity. We use FFNOX as that savings vehicle. when that account post any taxes matches the balance on the mortgage, we'll be able to make a decision then. I imagine we'll pay it off.

at any point you have a paid off mortgage its pretty easy to go get one. often with very little cost.

I guess for me, Jack Bogles "Enough" rings in my head. do i need to do this? what is the benefit? I know a few guys who are very well off. they will leave a giant legacy behind as of now. yet they are still churning, still financing, continually playing the numbers games with stuff like credit card rewards and if it felt like it was just a hobby or a challenge to them, i'd just be like whatever. but to them its a necessity to always be winning.
investnoob
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Re: anyone regret paying off mortgage early

Post by investnoob »

lakpr wrote: Tue Jun 08, 2021 8:35 am
investnoob wrote: Tue Jun 08, 2021 8:21 am In Canada, we don't have 30 year fixed rate mortgages.

What is common are 1-5 year term mortgages where the interest rate is either variable or fixed, and then the mortgage is renewed when the term ends. Also, interest on mortgages is not tax deductible (I believe they may be in the U.S.?).

I bought my place in 2007. I had planned to pay it down in 20 years. During that time, I started saving and investing. I maxed out all of my tax advantaged investment vehicles. Each time I renewed my mortgage, the interest rate dropped, so the principle payment increased. I also increased my regularly scheduled mortgage payment by about 20% over the years.

After maxing out tax advantaged accounts, I still had some extra cash and needed to figure out what to do with it. I could invest it in taxable accounts or pre pay my mortgage. Last year, my mortgage interest rate was 3.3%.

I decided to pre pay the the mortgage and finally finished it this year. I felt that an after tax return of 3.3% would be tough to beat in any kind of "fixed income" type of investment.

It hasn't been very long, but I haven't regretted it.
Very similar to how the mortgages work in my home country too. Fixed for the 5 years, and there are annual resets thereafter. The debtor, not the creditor, takes the interest rate risk.

US is a very unique place where 30 year fixed mortgages exist, and the interest paid on that mortgage is technically tax-deductible.

But the passage of Tax Cuts and Jobs Act has made that point moot for more than 93% of mortgage holders. The standard deduction you get for a Married Filing Jointly couple would be $25,100 in 2021 (and indexed annually for inflation). You need to overcome this threshold through a combination of state taxes paid (but only to a limit of $10,000 and not indexed for inflation), mortgage interest, and charitable deductions.

For charitable deductions, there exists a way to bunch a number of years worth of contributions into a single year, open a "Donor Advised Fund" and get the tax deduction on it. That option is not available for mortgage interest.

Thus, to be able to get any tax benefit, the mortgage interest must be at least $15,100. With the current low rate mortgages around 3% for 30 years, that would require a mortgage balance to be at least $503k, and potentially higher if the interest rate is lower. A 2.5% 15-year mortgage, for example, would require a mortgage balance of $600k. 93% of the US population do not live in McMansions or VHCOL areas where these kinds of mortgage balances are common .... thus, effectively, not tax-deductible.

Coming to the main topic of this thread: I have paid off my home in Nov 2018 (11 years into a 15 year mortgage), and never regretted it.
Thanks for the info ;) I did not know that the law was changed and that it effected so many people.
TheDogFather
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Re: anyone regret paying off mortgage early

Post by TheDogFather »

I don't have any regrets about paying off our mortgage. At the time interest rates were low and the markets were producing excellent returns, and we had experienced a great run-up in our investments.

I felt the time was right to be a little more conservative and decided to get rid of our largest debt and monthly expense. Add of course step up monthly investments of the monthly payments we had eliminated.

While my instinct is that market returns have continued to be excellent, I'm not interested in going back to see 'what if' I'd kept the mortgage and a different investment strategy.

Living debt-free has felt very good and our investments have grown more than we needed anyway.
bs010101
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Re: anyone regret paying off mortgage early

Post by bs010101 »

Not me. Last year when the market crashed and we were worried about our income stability, it was a huge relief to have no debt.
Admiral
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Re: anyone regret paying off mortgage early

Post by Admiral »

TheDogFather wrote: Tue Jun 08, 2021 10:41 am I don't have any regrets about paying off our mortgage. At the time interest rates were low and the markets were producing excellent returns, and we had experienced a great run-up in our investments.

I felt the time was right to be a little more conservative and decided to get rid of our largest debt and monthly expense. Add of course step up monthly investments of the monthly payments we had eliminated.

While my instinct is that market returns have continued to be excellent, I'm not interested in going back to see 'what if' I'd kept the mortgage and a different investment strategy.

Living debt-free has felt very good and our investments have grown more than we needed anyway.
There's a difference between PAY OFF (your strategy) and PAY DOWN which is what the OP is doing. Paying OFF eliminates a payment while depleting savings. Paying down does not.

Additionally, once you have the money to pay OFF your mortgage, the cash flow issue should be a non-factor: you could free up your cash flow by using your savings to pay your mortgage each month. Same thing. It's mental accounting. The advantage is the interest savings, not the ability to invest. Therefore the only thing that matters is the math: can you hold your money and make more than the mortgage costs you? That's the same decision that people make when they hold a mortgage and invest instead of paying it down.
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Re: anyone regret paying off mortgage early

Post by mrsgoldilocks »

N.Y.Cab wrote: Tue Jun 08, 2021 10:13 am There used to be a tax angle to make it worthwhile but the standard deduction increase (with SALT deduction limit) after 2017 essentially eliminated the deductibility of mortgage interest payment.
Totally, it's painful. But I also read that the SALT deduction limit in Tax Cuts and Jobs Act (TCJA) is in fact only temporary. It expires by the end of 2025.
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JoeRetire
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Re: anyone regret paying off mortgage early

Post by JoeRetire »

mrsgoldilocks wrote: Mon Jun 07, 2021 9:29 pm I really hate myself always going back to revisit my decision. I just wonder if others' personal experience can help me settle the issue.
Many years ago, when I refinanced, I moved from a 30 year to a 15 year mortgage. In retrospect, it would have been better financially if I had refinanced to a 30 year mortgage instead.

But I never fret about past decisions. And I never hate myself no matter what.
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Re: anyone regret paying off mortgage early

Post by BogleFan510 »

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fire_2030
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Re: anyone regret paying off mortgage early

Post by fire_2030 »

Forced a half glass half full perspective by putting all extra money 50% into market and 50% into mortgage. If market went down I could pat myself on the back for hedging, if market went up I could pat myself on the back for hedging. Agreed with many previous posters, its very phycological.
runner3081
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Re: anyone regret paying off mortgage early

Post by runner3081 »

Comments about paying off our mortgage:

1) It did not bring the level of joy for us, that it does for most people.
2) Financially, when we paid it off (late 2018), we would have done MUCH better in the market, but one never knows that (Mortgage was at 3.49% at the time - was too small to qualify for any tax credits, pre or post IRS changes)
3) Rather then feeling "freedom" from paying it off, we actually feel very "stuck" in the house now. Mentally, it felt easier to sell and move with a mortgage, but now that we don't have one, we are more tied to the house. Seems weird, I know, but my wife and I feel the same.
pedalman701
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Re: anyone regret paying off mortgage early

Post by pedalman701 »

My in-laws made that decision for us years ago. They paid off the remainder of our mortgage for us, as the ultimate 'thank you' for taking care of them in their later years. Regret was never part of the equation.
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Wannaretireearly
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Re: anyone regret paying off mortgage early

Post by Wannaretireearly »

runner3081 wrote: Tue Jun 08, 2021 11:46 am Comments about paying off our mortgage:

1) It did not bring the level of joy for us, that it does for most people.
2) Financially, when we paid it off (late 2018), we would have done MUCH better in the market, but one never knows that (Mortgage was at 3.49% at the time - was too small to qualify for any tax credits, pre or post IRS changes)
3) Rather then feeling "freedom" from paying it off, we actually feel very "stuck" in the house now. Mentally, it felt easier to sell and move with a mortgage, but now that we don't have one, we are more tied to the house. Seems weird, I know, but my wife and I feel the same.
Interesting. I can see how #3 could surface. I just made the call and paid off our mortgage - first thoughts are of freedom! We probably could have managed with one income before, but now with the mortgage paid off and one kid transitioning from private to public, I'm now sure we can manage on one income. :sharebeer
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runner3081
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Re: anyone regret paying off mortgage early

Post by runner3081 »

Wannaretireearly wrote: Tue Jun 08, 2021 11:58 am
runner3081 wrote: Tue Jun 08, 2021 11:46 am Comments about paying off our mortgage:

1) It did not bring the level of joy for us, that it does for most people.
2) Financially, when we paid it off (late 2018), we would have done MUCH better in the market, but one never knows that (Mortgage was at 3.49% at the time - was too small to qualify for any tax credits, pre or post IRS changes)
3) Rather then feeling "freedom" from paying it off, we actually feel very "stuck" in the house now. Mentally, it felt easier to sell and move with a mortgage, but now that we don't have one, we are more tied to the house. Seems weird, I know, but my wife and I feel the same.
Interesting. I can see how #3 could surface. I just made the call and paid off our mortgage - first thoughts are of freedom! We probably could have managed with one income before, but now with the mortgage paid off and one kid transitioning from private to public, I'm now sure we can manage on one income. :sharebeer
Congrats! Sounds like cash flow will be up significantly.

We have been one income for 9+ years, haha. Also, all-in, w/HOA, prop tax and homeowners, we were just over $1k per month before payoff, so not a huge drain. We bought less than we could have afforded.
Hyperchicken
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Re: anyone regret paying off mortgage early

Post by Hyperchicken »

mrsgoldilocks wrote: Tue Jun 08, 2021 10:47 am
N.Y.Cab wrote: Tue Jun 08, 2021 10:13 am There used to be a tax angle to make it worthwhile but the standard deduction increase (with SALT deduction limit) after 2017 essentially eliminated the deductibility of mortgage interest payment.
Totally, it's painful. But I also read that the SALT deduction limit in Tax Cuts and Jobs Act (TCJA) is in fact only temporary. It expires by the end of 2025.
It's not painful, it's great - double standard deduction, so now you don't depend on having mortgage interest. Nothing has been taken away from you, and something has potentially been given to you.
mrsgoldilocks
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Re: anyone regret paying off mortgage early

Post by mrsgoldilocks »

Hyperchicken wrote: Tue Jun 08, 2021 12:08 pm
mrsgoldilocks wrote: Tue Jun 08, 2021 10:47 am
N.Y.Cab wrote: Tue Jun 08, 2021 10:13 am There used to be a tax angle to make it worthwhile but the standard deduction increase (with SALT deduction limit) after 2017 essentially eliminated the deductibility of mortgage interest payment.
Totally, it's painful. But I also read that the SALT deduction limit in Tax Cuts and Jobs Act (TCJA) is in fact only temporary. It expires by the end of 2025.
It's not painful, it's great - double standard deduction, so now you don't depend on having mortgage interest. Nothing has been taken away from you, and something has potentially been given to you.
Yes, i just looked over my tax. I think I still came out ~ 1% down in my effective tax rate from 2017 to 2020. I should have thought through it. it did have pro and con.
MarkBarb
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Re: anyone regret paying off mortgage early

Post by MarkBarb »

I don't regret it. I don't even think about it. It was a big deal for my wife for emotional reasons. With the majority of our mortgage going to property taxes, it just felt like a reduction in a monthly cashflow item to me.

When I paid off the house, I adjusted my AA by selling bonds. To me, the mortgage was like selling a bond to the bank. When I bought that bond back, I compensated by selling some bonds.
Wannaretireearly
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Re: anyone regret paying off mortgage early

Post by Wannaretireearly »

runner3081 wrote: Tue Jun 08, 2021 12:02 pm
Wannaretireearly wrote: Tue Jun 08, 2021 11:58 am
runner3081 wrote: Tue Jun 08, 2021 11:46 am Comments about paying off our mortgage:

1) It did not bring the level of joy for us, that it does for most people.
2) Financially, when we paid it off (late 2018), we would have done MUCH better in the market, but one never knows that (Mortgage was at 3.49% at the time - was too small to qualify for any tax credits, pre or post IRS changes)
3) Rather then feeling "freedom" from paying it off, we actually feel very "stuck" in the house now. Mentally, it felt easier to sell and move with a mortgage, but now that we don't have one, we are more tied to the house. Seems weird, I know, but my wife and I feel the same.
Interesting. I can see how #3 could surface. I just made the call and paid off our mortgage - first thoughts are of freedom! We probably could have managed with one income before, but now with the mortgage paid off and one kid transitioning from private to public, I'm now sure we can manage on one income. :sharebeer
Congrats! Sounds like cash flow will be up significantly.

We have been one income for 9+ years, haha. Also, all-in, w/HOA, prop tax and homeowners, we were just over $1k per month before payoff, so not a huge drain. We bought less than we could have afforded.
Thanks runner3081!
Very few people we can celebrate with! Really no one other than my wife & I. Can't even tell the kids, else expectations will skyrocket. lol.
You did really well to keep total housing costs that low. Nice job. For us, only ever having one mortgage was the main factor. A major reno a few years ago helped make the house 'ours'. One reason we'll never sell. (never say never...)
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Re: anyone regret paying off mortgage early

Post by Toons »

Who Me?




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todaysBob
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Re: anyone regret paying off mortgage early

Post by todaysBob »

oneleaf wrote: Tue Jun 08, 2021 3:20 am
todaysBob wrote: Tue Jun 08, 2021 1:00 am Is there a chance you might move from the current house in next 15 years? That would be another reason not to pay too much into current mortgage.
Why would that matter?
Let's say his house is $500k right now. In 5 years he moves to a $1M home, what good would be paying off $500k when you turn around and then create another big mortgage later? I would only payoff if that house is going to be my last one. I know life is uncertain and a lot can happen but atleast thats how I would plan it.
Admiral
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Re: anyone regret paying off mortgage early

Post by Admiral »

todaysBob wrote: Tue Jun 08, 2021 1:29 pm
oneleaf wrote: Tue Jun 08, 2021 3:20 am
todaysBob wrote: Tue Jun 08, 2021 1:00 am Is there a chance you might move from the current house in next 15 years? That would be another reason not to pay too much into current mortgage.
Why would that matter?
Let's say his house is $500k right now. In 5 years he moves to a $1M home, what good would be paying off $500k when you turn around and then create another big mortgage later? I would only payoff if that house is going to be my last one. I know life is uncertain and a lot can happen but atleast thats how I would plan it.
It also ties up liquidity (read: downpayment) that might be needed for the new house. Not everyone is able to sell one house before buying another.
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Re: anyone regret paying off mortgage early

Post by lakpr »

Admiral wrote: Tue Jun 08, 2021 1:37 pm It also ties up liquidity (read: downpayment) that might be needed for the new house. Not everyone is able to sell one house before buying another.
The home equity can be tapped through a HELOC or HEL. Of course, that does implicitly assume that the HEL / HELOC would have been opened at least 6 months prior to selling the home, to meet the seasoning requirements.
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familythriftmd
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Re: anyone regret paying off mortgage early

Post by familythriftmd »

We got a 30 year mortgage just about a year ago. Due to living in a VLCOL area (besides everything wanting to break in the winter) and the fact that the house is smallish and older, we already own 50% equity and getting close to 50% of the mortgage. So I haven't paid it off, but the goal is to be done by end of 2022. So far, so good! It gives peace of mind. But since the HHI exceeds the value of the house, I can still be very aggressive in putting money into things that actually have better return, as well. Have cake and eat it, too type of thing.
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Re: anyone regret paying off mortgage early

Post by TheDDC »

This is where the "behavioral" part of finance enters in. It just feels really good not to have to make payments to a bank anymore, even at 2-3%, and it frees up cash flow for other pursuits. If you disagree, would you honestly tell us you would borrow against your home to invest? Especially for those of you with your crazy high bond AAs that are paying you crap diddly. When I invest new funds it is 100/0 anyway, so not only am I getting better-than-bond returns over a 15 or 30 year period, I am adding positions and reinvesting the dividends instead of paying some bank the compounded interest.

I can now put that money toward many other excursions than paying mortgage interest to a bank by a deadline, which is typically the largest pile of money people have tied up in debt servicing. There was also the aspect of "windfall management" to negotiate in my case. When I suddenly found myself with an inheritance, I was that focused on getting rid of debt so as to get a "cash on cash" return by lump summing that amount into paying off the mortgage.

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Re: anyone regret paying off mortgage early

Post by smitcat »

TheDDC wrote: Tue Jun 08, 2021 1:56 pm This is where the "behavioral" part of finance enters in. It just feels really good not to have to make payments to a bank anymore, even at 2-3%, and it frees up cash flow for other pursuits. If you disagree, would you honestly tell us you would borrow against your home to invest? Especially for those of you with your crazy high bond AAs that are paying you crap diddly. When I invest new funds it is 100/0 anyway, so not only am I getting better-than-bond returns over a 15 or 30 year period, I am adding positions and reinvesting the dividends instead of paying some bank the compounded interest.

I can now put that money toward many other excursions than paying mortgage interest to a bank by a deadline, which is typically the largest pile of money people have tied up in debt servicing. There was also the aspect of "windfall management" to negotiate in my case. When I suddenly found myself with an inheritance, I was that focused on getting rid of debt so as to get a "cash on cash" return by lump summing that amount into paying off the mortgage.

-TheDDC
"It just feels really good not to have to make payments to a bank anymore, even at 2-3%, and it frees up cash flow for other pursuits."
Financial decsions we do with the best math we have available - other activities we do when it feels good.

"If you disagree, would you honestly tell us you would borrow against your home to invest?"
If the math works - then yes.
Hyperchicken
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Re: anyone regret paying off mortgage early

Post by Hyperchicken »

Mortgage pay-off threads are always such a good reading for learning about cognitive biases.

My favorite is mental accounting in "I paid off my mortgage so that now I have cash flow to fund X and Y and Z".
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Re: anyone regret paying off mortgage early

Post by lakpr »

Hyperchicken wrote: Tue Jun 08, 2021 2:59 pm My favorite is mental accounting in "I paid off my mortgage so that now I have cash flow to fund X and Y and Z".
I am not sure what is so "mental accounting" in this? A mortgage is a fixed obligation that must be met by the end of the month, so X and Y and Z would have had to take a back seat if there isn't sufficient cashflow to meet both mortgage + X + Y + Z.
Hyperchicken
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Re: anyone regret paying off mortgage early

Post by Hyperchicken »

lakpr wrote: Tue Jun 08, 2021 3:05 pm
Hyperchicken wrote: Tue Jun 08, 2021 2:59 pm My favorite is mental accounting in "I paid off my mortgage so that now I have cash flow to fund X and Y and Z".
I am not sure what is so "mental accounting" in this? A mortgage is a fixed obligation that must be met by the end of the month, so X and Y and Z would have had to take a back seat if there isn't sufficient cashflow to meet both mortgage + X + Y + Z.
Let me answer this question in a roundabout way. If I were to offer you the following deal, would you agree? This deal is this: you pay me $100,000 now, and I pay you $10,000 a year for the following 10 years. That would improve your cash flow, would it not? We can assume my credit risk to be zero, since this is a thought experiment, after all.
sc9182
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Re: anyone regret paying off mortgage early

Post by sc9182 »

Where we live - P + I amount at current rates is going to be smaller than rather-high Property taxes, higher Insurance costs. Ie., escrow portion of payment is lesser than mortgage payment (P + I).

So for all mortgage paid-off happy folks around here - don’t party yet as Property taxes + Insurance still have to be accounted and paid for — and these amounts are not small !!

Should one be happy they paid off mortgage or be concerned that more than 50% of amount still owed (annually, it monthly) !?
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MrBobcat
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Re: anyone regret paying off mortgage early

Post by MrBobcat »

sc9182 wrote: Tue Jun 08, 2021 3:17 pm
So for all mortgage paid-off happy folks around here - don’t party yet as Property taxes + Insurance still have to be accounted and paid for — and these amounts are not small !!

Should one be happy they paid off mortgage or be concerned that more than 50% of amount still owed (annually, it monthly) !?
Well they don't have to be large either. $2,200/year for property taxes and $1,200/year for home insurance... so less than $300/month.
lakpr
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Re: anyone regret paying off mortgage early

Post by lakpr »

Hyperchicken wrote: Tue Jun 08, 2021 3:09 pm
lakpr wrote: Tue Jun 08, 2021 3:05 pm
Hyperchicken wrote: Tue Jun 08, 2021 2:59 pm My favorite is mental accounting in "I paid off my mortgage so that now I have cash flow to fund X and Y and Z".
I am not sure what is so "mental accounting" in this? A mortgage is a fixed obligation that must be met by the end of the month, so X and Y and Z would have had to take a back seat if there isn't sufficient cashflow to meet both mortgage + X + Y + Z.
Let me answer this question in a roundabout way. If I were to offer you the following deal, would you agree? This deal is this: you pay me $100,000 now, and I pay you $10,000 a year for the following 10 years. That would improve your cash flow, would it not? We can assume my credit risk to be zero, since this is a thought experiment, after all.
Sorry still do not see where you are leading me here. In the deal that you propose, I would not agree, because I am giving up $100k right now and getting back $10k over 10 years ... the time value of money alone would make me reject the deal, nothing about the credit risk. You could be the US government itself, but I would still reject the deal. Now, if you were to offer me $10,100 or $10,200 per year in return for 10 years, I might take up the deal
sc9182
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Re: anyone regret paying off mortgage early

Post by sc9182 »

MrBobcat wrote: Tue Jun 08, 2021 3:20 pm
sc9182 wrote: Tue Jun 08, 2021 3:17 pm
So for all mortgage paid-off happy folks around here - don’t party yet as Property taxes + Insurance still have to be accounted and paid for — and these amounts are not small !!

Should one be happy they paid off mortgage or be concerned that more than 50% of amount still owed (annually, it monthly) !?
Well they don't have to be large either. $2,200/year for property taxes and $1,200/year for home insurance... so less than $300/month.
How about approx 2.8% prop tax on appraised value (on full almost-market price !!) and $3000/year insurance. It be about $1600-$2000 a month — and this is without any mortgage payment !! Plus mandatory HoA fees ..

I know folks say you get out of there - easier said than done - especially with no state income tax !!
novemberrain
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Re: anyone regret paying off mortgage early

Post by novemberrain »

I regret paying off my mortgage. I should have invested instead.

The much touted peace of mind is not really much. I should instead have thought about cost of residence. I mean even if I pay off my mortgage, there is a cost to owning a home in the sense of lost investment gains etc. So a better way to model a mortgage is to think of the cost of rent vs the cost of investment gains. If I have say 1M, should that 1M be used to pay off a mortgage costing 3% or should it be invested. I think investing is the more optimal way.
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Re: anyone regret paying off mortgage early

Post by arsenalfan »

Much depends on subjective value of emotional "peace of mind" of having mortgage paid off.

I split the difference and paid 1/3 of all excess funds/windfalls to mortgage, and 2/3 to an aftertax account.

Now the aftertax account after cap gains tax exceeds the mortgage payoff. The mortgage is 15 years 2.125%

I did not liquidate the aftertax amount, but did slightly more conservative allocation - it still is growing annually quite a bit. If we have a depression, then I'll be a little sad I didn't pay off the house - but not really.

YMMV
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MrBobcat
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Re: anyone regret paying off mortgage early

Post by MrBobcat »

sc9182 wrote: Tue Jun 08, 2021 3:25 pm
MrBobcat wrote: Tue Jun 08, 2021 3:20 pm
sc9182 wrote: Tue Jun 08, 2021 3:17 pm
So for all mortgage paid-off happy folks around here - don’t party yet as Property taxes + Insurance still have to be accounted and paid for — and these amounts are not small !!

Should one be happy they paid off mortgage or be concerned that more than 50% of amount still owed (annually, it monthly) !?
Well they don't have to be large either. $2,200/year for property taxes and $1,200/year for home insurance... so less than $300/month.
How about approx 2.8% prop tax on appraised value (on full almost-market price !!) and $3000/year insurance. It be about $1600-$2000 a month — and this is without any mortgage payment !! Plus mandatory HoA fees ..

I know folks say you get out of there - easier said than done - especially with no state income tax !!
Yeah, RE taxes vary wildly by local, I'm just saying in some places they aren't all that bad.
SethJane42
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Re: anyone regret paying off mortgage early

Post by SethJane42 »

No regrets. Only peace of mind. The math says I shouldn't have paid it off, but I'm not a fan of paying anyone interest and being beholden to them just to get maybe get a few points extra in the end. I don't carry a credit card balance ever. One can't predict the economy, and stock and bond markets, but I can predict that if they all crash badly, I won't have a mortgage, and I'll have a home, and I won't owe anyone a cent, except for the 1600.00 property tax.
MathWizard
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Re: anyone regret paying off mortgage early

Post by MathWizard »

No regrets.

Yes, I could have put more into retirement accounts and kept the mortgage, and
been better off now, but I that is in retrospect.

We started with a 30 year note at 7% we refinanced 3 times, and paid it off in 17 years.
My wife wanted to pay it off even sooner, but that would have reduced liquid cash
too much for my taste while we still had kids in college.

To me the biggest plus was reducing the cast outflow required each month.
This just seemed to simplify planning for retirement. With zero debt, I know what we
need to live on, and the associated taxes for that.
Hyperchicken
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Re: anyone regret paying off mortgage early

Post by Hyperchicken »

lakpr wrote: Tue Jun 08, 2021 3:21 pm Sorry still do not see where you are leading me here. In the deal that you propose, I would not agree, because I am giving up $100k right now and getting back $10k over 10 years ... the time value of money alone would make me reject the deal, nothing about the credit risk. You could be the US government itself, but I would still reject the deal. Now, if you were to offer me $10,100 or $10,200 per year in return for 10 years, I might take up the deal
That was it - that's the rational way of looking at this.

On the contrary, there are examples in the threads on the subject, even in this thread, of people focusing on the "I now have extra $10,000 per year cash flow", and completely ignoring the "I just paid $100,000" side of the equation. And that is where the bias lies.
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Yesterdaysnews
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Re: anyone regret paying off mortgage early

Post by Yesterdaysnews »

I paid off a 4.5% jumbo 15 yr note very early in 2012. I viewed it as a risk free return and without the debt felt comfortable going heavy into equities nearly 100%. In the end I do wonder if keeping the note (a mortgage is probably the safest and best way us regular folk can leverage) would have been better but I also know I would probably would not have felt comfortable with heavy equity AA in that scenario. Maybe it is all more or less a wash and at the time nobody was predicting an epic bull market like this one.
ensign
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Re: anyone regret paying off mortgage early

Post by ensign »

KlangFool wrote: Tue Jun 08, 2021 8:36 am
mrsgoldilocks wrote: Mon Jun 07, 2021 9:29 pm
I really hate myself always going back to revisit my decision. I just wonder if others' personal experience can help me settle the issue.
mrsgoldilocks,

A) It is common for some of my income peers to either pay down or pay off their mortgage and assuming that they will be fully-employed continuously until retirement age. Then, they were permanently unemployed or under-employed in their 40s and 50s when their kids go to college. They have to take a more expensive student loan for their kids' college education.

KlangFool
If one is underemployed or unemployed in their 40s and 50s the last thing he or she needs is a mortgage.
ensign
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Re: anyone regret paying off mortgage early

Post by ensign »

Admiral wrote: Tue Jun 08, 2021 10:47 am
TheDogFather wrote: Tue Jun 08, 2021 10:41 am I don't have any regrets about paying off our mortgage. At the time interest rates were low and the markets were producing excellent returns, and we had experienced a great run-up in our investments.

I felt the time was right to be a little more conservative and decided to get rid of our largest debt and monthly expense. Add of course step up monthly investments of the monthly payments we had eliminated.

While my instinct is that market returns have continued to be excellent, I'm not interested in going back to see 'what if' I'd kept the mortgage and a different investment strategy.

Living debt-free has felt very good and our investments have grown more than we needed anyway.
Therefore the only thing that matters is the math: can you hold your money and make more than the mortgage costs you? That's the same decision that people make when they hold a mortgage and invest instead of paying it down.
There is no “math” to it because no one knows what the future holds. Holding debt in order to invest those funds is speculative. Markets are not risk-free, despite the “sure thing” so many here seem to espouse. Getting rid of debt is ALWAYS wise.
MarkBarb
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Re: anyone regret paying off mortgage early

Post by MarkBarb »

Admiral wrote: Tue Jun 08, 2021 1:37 pm
todaysBob wrote: Tue Jun 08, 2021 1:29 pm
oneleaf wrote: Tue Jun 08, 2021 3:20 am
todaysBob wrote: Tue Jun 08, 2021 1:00 am Is there a chance you might move from the current house in next 15 years? That would be another reason not to pay too much into current mortgage.
Why would that matter?
Let's say his house is $500k right now. In 5 years he moves to a $1M home, what good would be paying off $500k when you turn around and then create another big mortgage later? I would only payoff if that house is going to be my last one. I know life is uncertain and a lot can happen but atleast thats how I would plan it.
It also ties up liquidity (read: downpayment) that might be needed for the new house. Not everyone is able to sell one house before buying another.
This raises and important point. I wouldn't think of paying off my house if doing so would meaningfully hurt my liquidity. What constitute "meaningful" will vary greatly from person to person.
coachd50
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Re: anyone regret paying off mortgage early

Post by coachd50 »

ensign wrote: Tue Jun 08, 2021 4:42 pm
KlangFool wrote: Tue Jun 08, 2021 8:36 am
mrsgoldilocks wrote: Mon Jun 07, 2021 9:29 pm
I really hate myself always going back to revisit my decision. I just wonder if others' personal experience can help me settle the issue.
mrsgoldilocks,

A) It is common for some of my income peers to either pay down or pay off their mortgage and assuming that they will be fully-employed continuously until retirement age. Then, they were permanently unemployed or under-employed in their 40s and 50s when their kids go to college. They have to take a more expensive student loan for their kids' college education.

KlangFool
If one is underemployed or unemployed in their 40s and 50s the last thing he or she needs is a mortgage.
That obviously would not be a great situation, BUT also keep in mind that if one is under or unemployed in their 40s and 50s, a GREAT thing to have might be a the cash he/she had accumulated by not rushing to pay off the mortgage.

As with all of these threads, ignoring large interest rate issues then the "correct" optimal answer can only be found in hindsight, and much of a poster's feelings on the matter are just that- feelings.
grettman
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Re: anyone regret paying off mortgage early

Post by grettman »

No regrets.
wordsmith11
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Re: anyone regret paying off mortgage early

Post by wordsmith11 »

Hyperchicken wrote: Tue Jun 08, 2021 2:59 pm Mortgage pay-off threads are always such a good reading for learning about cognitive biases.

My favorite is mental accounting in "I paid off my mortgage so that now I have cash flow to fund X and Y and Z".
Mine is "I now own it 'free and clear'," well actually your local taxing authority begs to differ...
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JS-Elcano
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Re: anyone regret paying off mortgage early

Post by JS-Elcano »

Not paid off yet, but I am working on being done early. I refi'd a 30-year to a 15-year @3.5% in 2011 and have been making extra payments ever since to shorten it to about 12. So, I'll be done in 2023 instead of 2038! :) The early pay-off also coincides fairly nicely with me being able to start catch-up contributions to my pre-tax (403b, 457) and RothIRA accounts. I probably would have found a way to somehow squeeze out this extra money, but $13k pretax and $1k for my RothIRA is pretty big chunk of my salary, so with my mortgage paid off I can do it and continue to check a few things off my pre-FIRE travel bucket list :mrgreen:

I did not even calculate how much I might or might not have left on the table by accelerating payments instead of investing it -- because I don't care. I am on track to reach my number by my desired FIRE age. That's all that counts for me. It's enough. Until then, living life to the fullest while I am healthy and fit and full of energy and excitement and not worrying about debt is priceless to me.
Last edited by JS-Elcano on Tue Jun 08, 2021 5:43 pm, edited 4 times in total.
lakpr
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Re: anyone regret paying off mortgage early

Post by lakpr »

wordsmith11 wrote: Tue Jun 08, 2021 5:32 pm
Hyperchicken wrote: Tue Jun 08, 2021 2:59 pm Mortgage pay-off threads are always such a good reading for learning about cognitive biases.

My favorite is mental accounting in "I paid off my mortgage so that now I have cash flow to fund X and Y and Z".
Mine is "I now own it 'free and clear'," well actually your local taxing authority begs to differ...
It is always implicitly understood that "free and clear" meant exclusive of property taxes, and no existing lien. Try not paying property taxes when you do have the mortgage, the reaction from the local taxing authority is going to be identical. Having mortgage or not does not change that, bringing that argument up is a strawman. With the mortgage you have an existing lien on the house, without the mortgage you don't.
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JoeRetire
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Re: anyone regret paying off mortgage early

Post by JoeRetire »

Hyperchicken wrote: Tue Jun 08, 2021 2:59 pm Mortgage pay-off threads are always such a good reading for learning about cognitive biases.

My favorite is mental accounting in "I paid off my mortgage so that now I have cash flow to fund X and Y and Z".
It would be a reasonable argument if paying off the mortgage didn't actually involve spending any money.

"I paid off my mortgage so that now I have cash flow that I could have had with the money I used to pay off the mortgage."

:oops:
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JoeRetire
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Re: anyone regret paying off mortgage early

Post by JoeRetire »

lakpr wrote: Tue Jun 08, 2021 3:21 pmNow, if you were to offer me $10,100 or $10,200 per year in return for 10 years, I might take up the deal
I would offer you $10,100 per year for 10 year in a minute!
You give me $100,000 now and I'll make that promise. Deal?
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andypanda
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Re: anyone regret paying off mortgage early

Post by andypanda »

I bought my home in 1980 and paid it off in 1997. It was wonderful.

""I paid off my mortgage so that now I have cash flow to fund X and Y and Z"."

In my case it did turn the amount of the monthly P&I into spending money. If I had kept the payoff money in the bank and not paid off the mortgage I would not have spent it. I would have kept it invested.

I sold the house last year and used a little to pay off my new wife's home and we're currently looking for ways to spend the rest. Talk about lucking out on needing to sell at the right time.
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