Anyone regret paying off mortgage early?

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9-5 Suited
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Re: Anyone regret paying off mortgage early?

Post by 9-5 Suited » Wed Jun 13, 2018 12:52 pm

The quantity and length of mortgage payoff threads is causing me to consider this the best strategy:

Meditate on the subject for an hour, make a choice, and go for it. It's an endless loop of debate because the outcome can't be known, only the potential risks and rewards can be. This will cause a lot of unnecessary angst and striving for perfection as the enemy of good.

Since Bogleheads tend to prefer avoiding worst case scenarios, just make sure these conditions are met and then your choice on payoff hopefully won't matter all that much to your life:

(1) Don't borrow an unreasonable sum of money to begin with
(2) Keep sufficient liquidity such that you can meet basic cash flow requirements for servicing the debt or managing your monthly bills

WhiteMaxima
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Re: Anyone regret paying off mortgage early?

Post by WhiteMaxima » Wed Jun 13, 2018 12:58 pm

I regret pay off 4.5% mortgage. I should have invested in Total Stock Index to get the 11% return . BTW, the 4.5% effective rate for me is 4% after the mortgage tax deduction. Even during the 2008 crisis with every equity 40% off, if you stay in course for 2 more years, you will still ahead of paying mortgage.

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Re: Anyone regret paying off mortgage early?

Post by Agggm » Wed Jun 13, 2018 1:54 pm

LynnC wrote:
Sun Jun 03, 2012 10:34 am
Being debt free is the best feeling ever!

LynnC
I paid off my mortgage at 34. I haven't carried debt since. And I disagree that being debt free is the best feeling ever. In fact, to me, it has been surprisingly anticlimactic. Do I regret it? No. But that's because dwelling on the past is useless. Would I rush to pay it now if I had a mortgage? Probably not.

jhh9327
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Re: Anyone regret paying off mortgage early?

Post by jhh9327 » Wed Jun 13, 2018 2:25 pm

WhiteMaxima wrote:
Wed Jun 13, 2018 12:58 pm
I regret pay off 4.5% mortgage. I should have invested in Total Stock Index to get the 11% return . BTW, the 4.5% effective rate for me is 4% after the mortgage tax deduction. Even during the 2008 crisis with every equity 40% off, if you stay in course for 2 more years, you will still ahead of paying mortgage.
Is your AA 100% stocks? If not, what has been the return on your bonds these last couple years?

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nisiprius
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Re: Anyone regret paying off mortgage early?

Post by nisiprius » Wed Jun 13, 2018 2:41 pm

No, we've never regretted paying off our mortgage early. Housing security is worth a lot.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

WhiteMaxima
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Re: Anyone regret paying off mortgage early?

Post by WhiteMaxima » Wed Jun 13, 2018 2:42 pm

jhh9327 wrote:
Wed Jun 13, 2018 2:25 pm
WhiteMaxima wrote:
Wed Jun 13, 2018 12:58 pm
I regret pay off 4.5% mortgage. I should have invested in Total Stock Index to get the 11% return . BTW, the 4.5% effective rate for me is 4% after the mortgage tax deduction. Even during the 2008 crisis with every equity 40% off, if you stay in course for 2 more years, you will still ahead of paying mortgage.
Is your AA 100% stocks? If not, what has been the return on your bonds these last couple years?
I am always build on 100%. No need for bond. If I need bond, I just pay my mortgage.

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Tim_S
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Re: Anyone regret paying off mortgage early?

Post by Tim_S » Wed Jun 13, 2018 3:03 pm

Paid off our home last July. Best thing we have ever done financially. Zero regrets.

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Pranav
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Re: Anyone regret paying off mortgage early?

Post by Pranav » Wed Jun 13, 2018 3:17 pm

I regret that we initially payed extra towards mortgage while only contributing company match to 401(k).

After reading Bogleheads and other resources, I realized we should prioritize contributions to tax-advantaged accounts (401k, IRA, HSA) and then target the mortgage.
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Riprap
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Re: Anyone regret paying off mortgage early?

Post by Riprap » Wed Jun 13, 2018 4:51 pm

acegolfer wrote:
Sat Jun 02, 2012 6:38 pm
If you have paid off mortgage early, have you ever regretted your decision and why?
No. I like the peace of mind that comes from being debt free.

fcf18
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Re: Anyone regret paying off mortgage early?

Post by fcf18 » Wed Jun 13, 2018 9:38 pm

I don't regret paying off my house early, but I do regret a bit on buying too much house. Although it did motivated me to work harder than I would otherwise.

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Re: Anyone regret paying off mortgage early?

Post by fcf18 » Wed Jun 13, 2018 9:40 pm

investorjunkie wrote:
Mon Jun 04, 2012 7:12 am
teacher wrote:We bought our current home in 1979 when mortgage interest was 13.5%. When rates dropped to 9.5%, we jumped at the chance to refinance to a 15 year loan.
This is a prefect point in time when individuals should have been paying off their mortgage as fast as possible. Why? because how easy is it to find long term (10 - 15 years) returns higher than 13.5% or 9.5%?

I'm making the point that a mortgage is like a long term bond. By prepaying you get a guaranteed rate of return. Right now 3.75% on a 30 year fixed (2.5%ish with tax deduction). Debt prepayment should be looked at like any other investment, can you get a better return elsewhere in the next 10-15+ years? I would say without question yes!
during that period, I believe bond paid something like 10%?

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teacher
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Re: Anyone regret paying off mortgage early?

Post by teacher » Wed Jun 13, 2018 10:11 pm

fcfa8 wrote:
during that period, I believe bond paid something like 10%?
To illustrate your point.....http://pages.stern.nyu.edu/~adamodar/Ne ... retSP.html

barberakb
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Re: Anyone regret paying off mortgage early?

Post by barberakb » Thu Jun 14, 2018 12:24 pm

I have 4 houses, but only 1 of them is paid off.

No regrets and I plan on paying the other 3 off in the next 5-7 years.

I don't like having debt, even "good debt"

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Re: Anyone regret paying off mortgage early?

Post by international001 » Thu Jun 14, 2018 1:34 pm

barberakb wrote:
Thu Jun 14, 2018 12:24 pm
I have 4 houses, but only 1 of them is paid off.

No regrets and I plan on paying the other 3 off in the next 5-7 years.

I don't like having debt, even "good debt"
I don't like mutual funds.. even good funds
that's why I keep all my money in the bank
I guess it's an improvement over my parents.. they kept it all under the mattress

FXDXontherun
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Re: Anyone regret paying off mortgage early?

Post by FXDXontherun » Thu Jun 14, 2018 2:41 pm

Wife and I paid off a 6.625% 30 yr mortgage in 11 years, was 42 y/o when it was paid off. Could we have made more with this $ in the market, probably so but don't care. Have been debt free for last 19 years...…..

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Meg77
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Re: Anyone regret paying off mortgage early?

Post by Meg77 » Thu Jun 14, 2018 3:41 pm

Our mortgage has been fixed at 2.75% for the last few years (15 year note). We debated paying extra on it monthly and have debated paying it off entirely more recently since we have nearly the liquidity to do so.

At present, I'm glad we chose to keep that loan in place and invest more in taxable instead (stocks and commercial RE partnerships). We can't deduct the mortgage interest anymore, but with inflation over 2% we still feel we are borrowing at fairly close to free money. It helps that the market has gone way up, but I understand our returns will be volatile. I do like having additional liquidity/flexibility.

But I also don't think I would regret it now if we had paid off the loan instead. We'd have less liquidity now, but I'd never know the difference. And we'd be socking away that much more each month. However we may buy more rental property, and we plan to rent out our townhome if/when we move. It would sting to have to borrow more at today's/tomorrow's higher rates because we'd paid off a 2.75% mortgage.
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JoeRetire
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Re: Anyone regret paying off mortgage early?

Post by JoeRetire » Thu Jun 14, 2018 6:09 pm

international001 wrote:
Thu Jun 14, 2018 1:34 pm
I don't like mutual funds.. even good funds
that's why I keep all my money in the bank
I guess it's an improvement over my parents.. they kept it all under the mattress
Was it a good mattress? :wink:

md&pharmacist
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Re: Anyone regret paying off mortgage early?

Post by md&pharmacist » Thu Jun 14, 2018 9:31 pm

Paid mine off within 5 years of building. I do the same thing with my commercial real estate.

For the life of me, I can't see any reason why one would regret paying off early.

If you think investing in the markets is best because returns are generally higher than mortgage interest, the reality is anything can happen in the markets, or you can lose your job or become ill and the manageable monthly payment is suddenly no longer manageable. If you pass away, you leave your kids a costly liability, who knows if they will be able to afford to service the debt or the property will go into foreclosure.

You can never be underwater.

You'll sleep better at night.

hawkfan55
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Re: Anyone regret paying off mortgage early?

Post by hawkfan55 » Fri Jun 15, 2018 1:00 pm

Paid off home early that we raised our family in... felt great and enjoyed not having a payment for about six years. Then, after living in that home for 24 years, decided to build a new home. Took sale proceeds from our paid off home and applied them towards our newly built home. Also took out a 15 year mortgage at 2.75% for our new home. After five years of living in new home, still owe about 125k with 9.5 years to go. Both retired now and, although it would be nice to not have a mortgage payment, we will not be paying off early. Although we enjoy living in our present home, we don't plan to stay in the home more than another year or two and 2.75% is just too good of a rate, especially since our mortgage interest will not be deductible any more... we'll be taking standard deduction of 24k. That being said, since we are now retired, we'll be paying cash for our next home.

Everyone should pay off at least one mortgage early... it's a nice accomplishment and, depending on your loan interest rate, can be a wise financial move. :D
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Re: Anyone regret paying off mortgage early?

Post by lostdog » Sat Jun 16, 2018 3:06 pm

When we paid off our mortgage, seeing our cash flow increase was awesome. Then reouting the mortgage payment to the brokerage account.
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epicahab
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Re: Anyone regret paying off mortgage early?

Post by epicahab » Sat Jun 16, 2018 6:13 pm

Yep and if you are like me, you have a couple grand or ten extra to put towards riskier investments.

Hockey10
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Re: Anyone regret paying off mortgage early?

Post by Hockey10 » Sat Jun 16, 2018 6:18 pm

Nope. There is no substitute for a good night's sleep.

Prior to paying off the mortgage, I spent many nights asking myself if I should pay it off or not. After the mortgage balance was zero, I never thought about it again. :sharebeer

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Re: Anyone regret paying off mortgage early?

Post by bloom2708 » Sat Jun 16, 2018 6:43 pm

WhiteMaxima wrote:
Wed Jun 13, 2018 12:58 pm
I regret pay off 4.5% mortgage. I should have invested in Total Stock Index to get the 11% return . BTW, the 4.5% effective rate for me is 4% after the mortgage tax deduction. Even during the 2008 crisis with every equity 40% off, if you stay in course for 2 more years, you will still ahead of paying mortgage.
Go get a new mortgage!
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Re: Anyone regret paying off mortgage early?

Post by grabiner » Sat Jun 16, 2018 8:40 pm

bloom2708 wrote:
Sat Jun 16, 2018 6:43 pm
WhiteMaxima wrote:
Wed Jun 13, 2018 12:58 pm
I regret pay off 4.5% mortgage. I should have invested in Total Stock Index to get the 11% return . BTW, the 4.5% effective rate for me is 4% after the mortgage tax deduction. Even during the 2008 crisis with every equity 40% off, if you stay in course for 2 more years, you will still ahead of paying mortgage.
Go get a new mortgage!
But this is the reason not to pay the mortgage off. If you don't pay off the mortgage now, you have the option of paying it off later, or keeping it if appropriate. if you pay off the mortgage, you don't have that option, as you may not be able to borrow again on the same terms. Home-equity loan rates tend to be higher than purchase mortgages, and if rates have risen, you won't be able to borrow at the old rate.
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Peter Foley
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Re: Anyone regret paying off mortgage early?

Post by Peter Foley » Sat Jun 16, 2018 10:42 pm

No regrets. At the time we paid off the mortgage CD rates were in the 4% to 5% range and our mortgage was about 8%. Our long term plan was to pay off the mortgage before our youngest (2nd) daughter entered college. We were a year or so ahead of that schedule.

Serie1926
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Re: Anyone regret paying off mortgage early?

Post by Serie1926 » Sun Jun 17, 2018 5:33 am

No regrets here either. We paid off our new home a bit over a year ago. The awesome part is the money we withdrew from our savings to payoff was replenished in 14 months 👍🏿

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Re: Anyone regret paying off mortgage early?

Post by goodenyou » Sun Jun 17, 2018 9:33 am

The discipline to pay off your home “early” has value in establishing sound investment structure and routine. From a pure financial standpoint (retrospectively in the bull market over the past years), staying leveraged in a mortgage would have been the better choice. I do not regret leaving money on the table by paying off my house. I ended up investing the mortgage equivalent in the kids’ 529 Plans for the past several years. It worked out well and they are fully funded for college.
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Re: Anyone regret paying off mortgage early?

Post by goodenyou » Sun Jun 17, 2018 9:47 am

Let me add another spin on the “pay the mortgage off” debate. I recently had a conversation with my wife about our experience of building our last home. We were relatively young and naive at the time. We spent on items in the house that were regretfully unnecessary. They were financed and “hidden” from the true cost of the home. When we wrote the check to payoff the house, we said to each other “we really paid for that xyz $5,000 item that we never used or was unnecessary “. We will be much more discerning and aware of expenses in our next home. Lesson learned.
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Re: Anyone regret paying off mortgage early?

Post by thx1138 » Sun Jun 17, 2018 10:01 am

grabiner wrote:
Sat Jun 16, 2018 8:40 pm
But this is the reason not to pay the mortgage off. If you don't pay off the mortgage now, you have the option of paying it off later, or keeping it if appropriate. if you pay off the mortgage, you don't have that option, as you may not be able to borrow again on the same terms. Home-equity loan rates tend to be higher than purchase mortgages, and if rates have risen, you won't be able to borrow at the old rate.
Yes, this exactly. It isn't a perfectly reversible decision so it is one worth considering carefully.

The flip side is that typically you effectively pay for that option to decide later in the difference between your mortgage rate and the equivalent risk free return. That delta between the mortgage rate and the *correct* risk free return rate (people commonly make the wrong comparison) varies quite a bit depending on the person and the mortgage. In addition the value of that option is different for different people. So there isn't a universally right answer.

A worthwhile exercise is to at least try to compute what that option is costing you so you can make an informed decision. For many folks it may add clarity. For example some might discover hey I'm paying a pretty steep premium compared to my FI investments and maybe I should switch those to paying off the mortgage (assuming the usual liquidity caveats). For someone else interested in maximum equity exposure they might reach an opposite conclusion and discover wow this is pretty cheap leverage for increasing my equity allocation without the risk of margin calls.

For us we are in a position of increasing FI allocation and so paying off made lots of sense like the first example above. Some years ago we were in the opposite position and had no interest in paying down quickly at all as we wanted a maximum equity allocation and the mortgage was cheap and low risk compared to any other method of increasing equity allocation.

chattyanne
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Re: Anyone regret paying off mortgage early?

Post by chattyanne » Sun Jun 17, 2018 5:28 pm

Paid mine off this time last year. No regrets what-so-ever and I no longer feel the banker is my landlord (who doesn't have to do any upkeep). It's nice to pull into the drive knowing it really is my home.

bhsince87
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Re: Anyone regret paying off mortgage early?

Post by bhsince87 » Sun Jun 17, 2018 6:05 pm

Ask again in 5-10 years.

With the low and decreasing inflation of the past 20-30 years, it was a sensible thing to do.

If inflation heats back up, folks holding a 3.5-4% fixed rate 30 year mortgages will look like geniuses.

And no, that's not me. I paid ours off 4-5 years ago and don't regret it.
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ThankYouJack
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Re: Anyone regret paying off mortgage early?

Post by ThankYouJack » Sun Jun 17, 2018 6:13 pm

No regrets either. It's a better feeling than I anticipated and comfort knowing we can drop expenses way down if needed.

A similar question would be do you regret holding bonds. I'm guessing most Bogleheads don't even though stocks have been on a tear for almost the last decade.

DavidW
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Re: Anyone regret paying off mortgage early?

Post by DavidW » Sun Jun 17, 2018 6:17 pm

Agggm wrote:
Wed Jun 13, 2018 1:54 pm
LynnC wrote:
Sun Jun 03, 2012 10:34 am
Being debt free is the best feeling ever!

LynnC
I paid off my mortgage at 34. I haven't carried debt since. And I disagree that being debt free is the best feeling ever. In fact, to me, it has been surprisingly anticlimactic. Do I regret it? No. But that's because dwelling on the past is useless. Would I rush to pay it now if I had a mortgage? Probably not.
+1

Somewhat overrated but it is a good feeling to go to work and know that if hate my job or got a crazy boss, I don't have to worry about a mortgage....

There is always a better way to get a better return but if we can invest and get a greater return, we would never have bought a home and invested everything....

Pinotage
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Re: Anyone regret paying off mortgage early?

Post by Pinotage » Sun Jun 17, 2018 6:35 pm

Kinda yes, but kinda no.

We had one of those once-in-a-lifetime 2.75% 15 year mortgages. Issued 10/2012, paid off 4/2017. I am now 39 and my spouse is 35.

Looking back, yes it would have been optimal to keep the mortgage and invest in our 70:30 AA instead.

But how much difference would it really have made? Our home purchase price was $350K, we took out a $215K loan.

In the big picture of our current NW, our paid-off home represents maybe 20% of total assets. If anything I regret not moving to a higher COL area and buying a more-rapidly appreciating property at 2.75%.

It is really nice having low monthly housing costs, though. No mortgage made it easier for me to make a career pivot last year that reduced my salary about 10%.

JoeRetire
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Re: Anyone regret paying off mortgage early?

Post by JoeRetire » Sun Jun 17, 2018 7:09 pm

DavidW wrote:
Sun Jun 17, 2018 6:17 pm
There is always a better way to get a better return but if we can invest and get a greater return, we would never have bought a home and invested everything....
???

I don't understand this sentence.
If you could have invested and got a greater return than your mortgage rate, you wouldn't have purchased your home?

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Re: Anyone regret paying off mortgage early?

Post by SGM » Mon Jun 18, 2018 8:12 am

No regrets paying off my mortgage early. When mortgage rates were 8% years ago, I considered my mortgage to be a yoke. Earlier I had a mortgage that was bought down from 13% for a few years by the builder. I have since paid cash for any large purchases and never carried a credit card balance. The feeling is great and the extra money open to investing monthly while working greatly increased my portfolio. I also felt I could take greater risks with my portfolio given that I had job security and no house payment thus a high stock allocation was safe from the need to pull out anything from it if the market crashed or if I was off work temporarily.


25 years later looking in the rear view mirror it was a good decision. Now that I am retired it is one less bill I have to pay. Nattering nabobs not withstanding I am very pleased and have no regrets. :)

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