Pay Down Mortgage? Is Interest Really 4%

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dtag31
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Pay Down Mortgage? Is Interest Really 4%

Post by dtag31 » Tue Jan 14, 2020 9:07 pm

Hello Fellow Bogleheads, I'm a long time reader but first time poster. I find myself sitting here contemplating my mortgage when I have an unsettling realization, is my mortgage really only going to cost me 4% (actual rate is irrelevant), or far more?

The conventional wisdom you so often hear is, "Don't aggressively pay down your mortgage, considering historical data shows the market averages 7-10% and your mortgage costs 4%, your money is better spent investing in the market." This always seemed reasonable enough to me, and I never challenged it.

Until tonight I look at my yearly statement for my mortgage, and I see how much I paid in interest compared to principle (this is my third year in the house). So, I began thinking, how many of us really stay in the same house for 30 years? Yes, there will be many, but I suspect there are many more that move between 5-15 years. So, I ran a quick calculator for the $168,000 I have financed over a 30 year term at 3.75% and here is the amount of interest and principal accumulated between 5-10 years.
5 Years
Interest $31,500 Principal $17,000
7 Years
Interest $43,000 Principal $24,000
10 Years
Interest $59,000 Principal $37,000

When I look at this and realize I will certainly move within 10 years (starter home), I begin to feel like I am paying SIGNIFICANTLY more than 3.75%. I will pay $59,000 to only recover $37,000 in equity. Am I being stubborn as a door nail? This does not feel like my money is better spent in the market.

Here is the master answer I am chasing, yes a mortgage may provide a good rate to historical returns if you stay put for 30 years. But if you purchase a house and anticipate to move within 10 years, what is the best option? Aggressively pay down the house as fast as possible while sidelining other investments? Or, understand that this is the cost of financing a home?

Thank you,
Dillon

LittleMaggieMae
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by LittleMaggieMae » Tue Jan 14, 2020 9:49 pm

It's the cost of financing/owning a house.

I had a 15 year 85K mortgage on a 115K fixer upper house that I bought in 1997. I paid about 50K in interest on the mortgage (I prepaid a bit at the beginning ) My house is currently worth about 165K, So, even after 23 years of ownership I wouldn't really even break even if I sold the house right now after realtor fees and the other expenses of selling. If I include all the repairs (about 25k over 5 years) I'm even further in the hole. I like the house. It's nice and in good location for me, and I need someplace to live. So, I'll keep it.
Last edited by LittleMaggieMae on Tue Jan 14, 2020 9:51 pm, edited 1 time in total.

alex_686
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by alex_686 » Tue Jan 14, 2020 9:51 pm

Your mortgage is s 4% negative bond.

Yeah, it does not amortize much, but it is still a 4% negative bond. If you are going to move in 10 years... it is still a 4% negative bond.

Rationally under most market expectations/ risk tolerances the best choice is to keep the bond and don’t pay it down. Emotions are something different.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by grabiner » Tue Jan 14, 2020 11:20 pm

You are paying 4% every year. To see this, recalculate the amortization table if you paid $1000 extra principal. Next year, your principal will be $1040 lower. In ten years, your principal will be $1480 lower, so you will get $1480 back if you sell the house then. This is the same return you would get if you bought a ten-year bond with a 4% compounded return. (If you deduct the mortgage interest at 24%, then the 4% return would become 3.04% after tax.)

The problem with the conventional wisdom about the market returning more than your mortgage rate is that it ignores risk. Yes, you expect to get more money if you buy stocks than if you pay down your mortgage. However, you also expect to get more money if you sell bonds to buy stocks; in spite of that, you probably hold some bonds.

The fair comparison is between the mortgage rate and low-risk bonds. If you hold bonds and a mortgage, you have a guaranteed loss equal to the difference between the bond yield and the mortgage rate. Is it worth taking this guaranteed loss? It often is, if the loss isn't too great; you may get the benefit of keeping funds liquid, or (if you aren't maxing out your retirement accounts) get money growing tax-deferred and keep that tax deferral after the mortgage is gone.
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casualflower
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by casualflower » Tue Jan 14, 2020 11:40 pm

dtag31 wrote:
Tue Jan 14, 2020 9:07 pm
I will pay $59,000 to only recover $37,000 in equity. Am I being stubborn as a door nail? This does not feel like my money is better spent in the market.
There's a riddle called the Missing Dollar puzzle and the mistake you're making reminds me of that.

You're comparing things that shouldn't be compared. You're not paying $59,000 to recover equity, you're paying that to keep the principal balance in your hands (or in the market).

Over the first 10 years of the mortgage, you're paying, on average roughly, $6,000 a year to borrow, roughly, $140,000 each year.

SovereignInvestor
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by SovereignInvestor » Wed Jan 15, 2020 12:26 am

It helps to focus on it one year at a time.

With 168K the first year you pay about 6.7K in interest. If you believe you can get 7% market returns then the same 168K owed allows you to invest 168K more at 7% which provides 11.8K of annuals investment return.

Yes if the interest is compounds overy many years it's substantial but so is opportunity cost assuming 7% market returns.

lotusflower
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by lotusflower » Wed Jan 15, 2020 12:53 am

Another way to think about it is that you are renting the money that your house costs. Since you don't have the $168k that the house costs, you have to rent the money. Renting $168,000 costs you about $6700 a year; that's just what it costs to rent that kind of money. If you pay back $17k over 5 years the rental price will come down a bit, but how much you pay back doesn't have any bearing on the cost to rent the remaining money, that's a 4% cost. So comparing the 17k of principal to the 31k of interest is apples to oranges.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by Financologist » Wed Jan 15, 2020 1:11 am

Whether or not to pay down a mortgage or invest the funds you would use for this is not a matter of conventional wisdom.

It's true, looking backwards the market has often been a better place to direct cash than your mortgage. However that doesn't mean it will continue to be. Either way, paying down a mortgage offers the guarantee of avoiding interest. The stock market offers a guarantee that you'll have something to chat about on the golf course. In other words, one investment provides a guaranteed return and the other doesn't.

Regarding the math question.. two words... opportunity cost. If you pay down a 4% mortgage, you save on 4% interest charges. But that money is no longer available for other opportunities. This past year, you would have saved 4% by paying your mortgage, but foregone a ~30% return that money would have yielded if invested in the S&P 500.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by bogglizer » Wed Jan 15, 2020 1:44 am

Yes, opportunity cost. If you pay off your mortgage, you have lost the opportunity to lose all of your money in a sudden stock market drop. So, if the market goes up, you can feel a little smart, and if it goes down, you can feel a lot stupid.
My intellectual superiority will shortly be demonstrated here by a pithy quotation.

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JoeRetire
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by JoeRetire » Wed Jan 15, 2020 7:27 am

dtag31 wrote:
Tue Jan 14, 2020 9:07 pm
But if you purchase a house and anticipate to move within 10 years, what is the best option?
If mortgage debt keeps you awake at night, you should pay cash for your house and avoid all mortgages.

Or rent.
Very Stable Genius

Norsky19
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by Norsky19 » Wed Jan 15, 2020 7:42 am

What about the tax write off savings of making mortgage payments? Doesn't this also factor in the equation?

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by 1130Super » Wed Jan 15, 2020 8:23 am

Norsky19 wrote:
Wed Jan 15, 2020 7:42 am
What about the tax write off savings of making mortgage payments? Doesn't this also factor in the equation?
It is only a factor if you itemize if you take standard deduction it doesn’t save you anything in taxes.
I don’t pay extra on my mortgage because I sleep better at night putting extra funds in a liquid taxable account vs illiquid equity

SovereignInvestor
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by SovereignInvestor » Wed Jan 15, 2020 8:39 am

bogglizer wrote:
Wed Jan 15, 2020 1:44 am
Yes, opportunity cost. If you pay off your mortgage, you have lost the opportunity to lose all of your money in a sudden stock market drop. So, if the market goes up, you can feel a little smart, and if it goes down, you can feel a lot stupid.
Not denying usimg the mortgage as leverage to invest doesn't increase risk but a sudden drop shouldn't matter when the mortgage is 30 years. Time frame of that decision should consider decades if one is comfortable wit the risk because it is riskiest in shorter term.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by Jack FFR1846 » Wed Jan 15, 2020 8:47 am

There's a lot of mis-information out there and the common theme of "keep your mortgage because the market will outperform it" can be one piece of it.

Some things I've come to understand that is counter to much "accepted wisdom".

What you do with the money that you don't pay on your mortgage matters. If you're going to keep it in a CD at 2%, that's a known and can be calculated. It's easy to decide that paying a 4% mortgage gains far more than that CD. Putting the money in the market does not mean you're going to get 7%. You don't know that. You don't know if it's going to give you a minus 40% return. You don't know if it's going to double your money. It's unknown. To me, its a question of risk. Do you want he absolute guaranty that your extra money just saved you 4% or do you want to take on the risk that the money does whatever your investment does. Neither is a wrong answer. But neither is always the best answer.

Another common theme I see that is absolutely wrong is to not put extra money on a mortgage if you're only going to be in the house for 5 years....or 3 years....or pick your number. When you close on a sale, you get all that money back. And between the time of payment and closing, you're saving the percentage of the mortgage. Whether that's 5 years or 5 weeks, there's absolutely nothing wrong with paying extra into a house you're selling soon.

Don't be afraid to pay more towards the mortgage, despite what guys like Ric Edelman says. Remember that if you put that money in the market, Ric hopes its through his firm so he can siphon off some of the easy AUM fees. He gets nothing if you overpay the mortgage.
Bogle: Smart Beta is stupid

nolesrule
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by nolesrule » Wed Jan 15, 2020 8:57 am

Norsky19 wrote:
Wed Jan 15, 2020 7:42 am
What about the tax write off savings of making mortgage payments? Doesn't this also factor in the equation?
That will depend on if you can itemize, and how much of your interest is above the standard deduction.

GeoMetry
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by GeoMetry » Wed Jan 15, 2020 9:10 am

A fixed rate mortgage also acts as a hedge against inflation. Because your payment (principle and interest) is fixed for 30 years your house payment is reduced at the rate of inflation relative to other expenses.

rterickson
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by rterickson » Wed Jan 15, 2020 9:49 am

Using your numbers, over 5 years it costs you $808 per month for a place to live. Over 10 years it costs you $800 per month.

Beats renting.

Topic Author
dtag31
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by dtag31 » Wed Jan 15, 2020 9:52 am

I want to thank everyone for the excellent replies. I like to think of myself as someone who is quite competent when it comes to math, but wow did I end up down a rabbit hole last night. Thank you for getting me back on track, this thread is exactly what I needed to read to level set myself on the incorrect comparisons I was making.

wolf359
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by wolf359 » Wed Jan 15, 2020 10:07 am

If you pay OFF the house, your reduce expenses. If you merely pay it DOWN , you lose access to the money, but your monthly mortgage payments remain the same. So don't do it that way.

Don't pay DOWN your mortgage by sending the money into the bank. Pay down your mortgage by sending the money to a "sinking fund" that is fully invested. (It's just a fancy name for a regular taxable account that you designated for a specific purpose like accumulating the money for a new car or a mortgage payoff.) This allows you to accumulate the money for the pay-off, but retains your liquidity, allows the market returns to work for you, and keeps your options open (if you need to, you could redirect the sinking fund into a downpayment for a new house.)

When the sinking fund is large enough to pay off the house, pay off the house.

medic
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by medic » Wed Jan 15, 2020 10:41 am

wolf359 wrote:
Wed Jan 15, 2020 10:07 am
If you pay OFF the house, your reduce expenses. If you merely pay it DOWN , you lose access to the money, but your monthly mortgage payments remain the same. So don't do it that way.
While payment stays the same, portion of principal goes up so benefit to you increases. If expenses are the concern, reamortize the loan to lower your payment expenses or refinance with an ARM product.
Of course, if you pre-pay your mortgage you lose some flexibility if the house is underwater.

We paid off our home quickly. I'd like to think it was being smart and predicted the higher standard deduction, but really just a personal thing.
Since then, I've felt more comfortable with a more aggressive portfolio allocation and lower emergency fund because stability needs are lower.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by Golf maniac » Wed Jan 15, 2020 11:11 am

It is a risk decision for an individual. The facts are different for everyone, but my facts are my retirement funds have averaged between 6% to 8% return over the past 35 years. This was with a fairly conservative portfolio. I can see that in the numbers and know long term I am better keeping my funds in the market and using leverage to buy a house. Pulling funds from my retirement funds, paying taxes, and paying off the mortgage is not logical or based on any historical facts for me.

On owning vs renting. If I was not married I would sell the house and rent. Home ownership is a pain and costly IMHO. I have people tell me all the time how much they made on their home but it never includes upgrades, maintenance, and taxes. I track those and I have never made much on any home I have owned. Also, you never have anyone bragging how much they lost on a home in 2008. But somebody out there had large losses in 2008. Home ownership is about a lifestyle and shouldn’t be confused with an investment asset. Can you be in a hot market and make money, absolutely. But it is more luck than great financial wisdom.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by bogglizer » Wed Jan 15, 2020 8:25 pm

Golf maniac wrote:
Wed Jan 15, 2020 11:11 am
It is a risk decision for an individual. The facts are different for everyone, but my facts are my retirement funds have averaged between 6% to 8% return over the past 35 years. This was with a fairly conservative portfolio. I can see that in the numbers and know long term I am better keeping my funds in the market and using leverage to buy a house. Pulling funds from my retirement funds, paying taxes, and paying off the mortgage is not logical or based on any historical facts for me.
Being on the opposite side of the coin, I am wiring a payoff of my mortgage at 9:00 tonight after the last mutual funds sell. Since I have achieved FI, I don't need the return, only the risk reduction.
My intellectual superiority will shortly be demonstrated here by a pithy quotation.

SovereignInvestor
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by SovereignInvestor » Thu Jan 16, 2020 8:14 am

It also doesn't have to be an all or nothing.

There's the camp that says long term the market should outperform 4%, especially of the 4% gets a deduction. Concern over a 40% crash within a year isn't really a factor because that is short term and a 30 year mortgage should be viewed against 30 year returns. Now if one thinks they will sell sooner then the relevant investment horizon shrinks. But if one prepay they are more vulnerable since if they lose their job they lose all the capital they have paying down their mortgage..and save maybe 6% of it annually by not having to pay mortgage but in market...even after 40% drop they have 60% of capital left for liquidity.

But if one wants to reduce risk then locking in 4% is helpful.

IMO best can be combination of both...some payoff of mortgage early and leave some to have leverage for equity investment and share in each category can be depending on one's situation. Not sure why it has to be all payoff early...or nothing and keep entire mortgage?

But if one keeps a lot of liquidity to payoff mortgage any time...ARM can be great.option since it saves on interest and has little risk if one can pay it off anytime.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by azurik » Thu Jan 16, 2020 1:32 pm

Jack FFR1846 wrote:
Wed Jan 15, 2020 8:47 am
There's a lot of mis-information out there and the common theme of "keep your mortgage because the market will outperform it" can be one piece of it.

Some things I've come to understand that is counter to much "accepted wisdom".

What you do with the money that you don't pay on your mortgage matters. If you're going to keep it in a CD at 2%, that's a known and can be calculated. It's easy to decide that paying a 4% mortgage gains far more than that CD. Putting the money in the market does not mean you're going to get 7%. You don't know that. You don't know if it's going to give you a minus 40% return. You don't know if it's going to double your money. It's unknown. To me, its a question of risk. Do you want he absolute guaranty that your extra money just saved you 4% or do you want to take on the risk that the money does whatever your investment does. Neither is a wrong answer. But neither is always the best answer.

Another common theme I see that is absolutely wrong is to not put extra money on a mortgage if you're only going to be in the house for 5 years....or 3 years....or pick your number. When you close on a sale, you get all that money back. And between the time of payment and closing, you're saving the percentage of the mortgage. Whether that's 5 years or 5 weeks, there's absolutely nothing wrong with paying extra into a house you're selling soon.

Don't be afraid to pay more towards the mortgage, despite what guys like Ric Edelman says. Remember that if you put that money in the market, Ric hopes its through his firm so he can siphon off some of the easy AUM fees. He gets nothing if you overpay the mortgage.
While what you say isn't wrong, I would say it's against accepted and historically accurate wisdom.

The most popular and generally recommended mortgages are the 15-year and 30-year fixed. There are people who can afford the 15-year fixed, but decide on the 30-year anyway and pay the 15-year principle.

With today's mortgage rates hovering around 4%, putting your money in an S&P index fund vs paying down your mortgage makes absolute sense. Yes, you're right, you don't know if the stock market is going to give you subpar returns one year or even negative returns. But, equities have NEVER returned less than 4% in any rolling 30-year period (the period of the mortgage).

Even taking away the long-tailed 30 year period, using a 20-year period will produce the same result.

The worst 20-year return would be the time period ending in May 1979 @ 6.4%/year and the best 20-year return was the period ending in March 2000 @ a whopping 18%/year.

15-year returns have never produced a negative rate either.

Naturally, if one's time period is shorter than this (the 3-5 year time frame you wrote about), then sure, I wouldn't put it in the market unless you understood the short-term risks.

One last item to consider is inflation-hedging. By keeping your mortgage at 4%, you're protecting against any spikes in inflation with your mortgage (hello 1980's).

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by MDfan » Thu Jan 16, 2020 2:49 pm

wolf359 wrote:
Wed Jan 15, 2020 10:07 am
If you pay OFF the house, your reduce expenses. If you merely pay it DOWN , you lose access to the money, but your monthly mortgage payments remain the same. So don't do it that way.

Don't pay DOWN your mortgage by sending the money into the bank. Pay down your mortgage by sending the money to a "sinking fund" that is fully invested. (It's just a fancy name for a regular taxable account that you designated for a specific purpose like accumulating the money for a new car or a mortgage payoff.) This allows you to accumulate the money for the pay-off, but retains your liquidity, allows the market returns to work for you, and keeps your options open (if you need to, you could redirect the sinking fund into a downpayment for a new house.)

When the sinking fund is large enough to pay off the house, pay off the house.
This is exactly what we are doing. Putting an extra large amount every month in a taxable account instead of paying down our 3.375% mortgage. At some point, the money will be there if I want to pay it off. But I certainly lose no sleep over the thought of having a mortgage payment even well into retirement.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by BtGoo » Thu Jan 16, 2020 3:04 pm

On pay down vs. pay off, you should check if it is possible to re-cast your mortgage. Then when you pay down, it gives you an immediate cash flow benefit that mitigates the issues related to liquidity.

In my case, I was able to re-cast at no cost, and lowered my required monthly mortgage payment by $500. I still pay off at the "old" monthly payment, but I can always dial back if I have financial emergency or want to "invest" the difference in something besides the loan.

JGoneRiding
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by JGoneRiding » Thu Jan 16, 2020 3:17 pm

Plan moves actually decrease the benefit of paying down the mortgage. You are almost always better off saving for the next down payment rather than trying to get it out of the current house.

michaeljc70
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by michaeljc70 » Thu Jan 16, 2020 5:44 pm

dtag31 wrote:
Tue Jan 14, 2020 9:07 pm
Hello Fellow Bogleheads, I'm a long time reader but first time poster. I find myself sitting here contemplating my mortgage when I have an unsettling realization, is my mortgage really only going to cost me 4% (actual rate is irrelevant), or far more?

The conventional wisdom you so often hear is, "Don't aggressively pay down your mortgage, considering historical data shows the market averages 7-10% and your mortgage costs 4%, your money is better spent investing in the market." This always seemed reasonable enough to me, and I never challenged it.

Until tonight I look at my yearly statement for my mortgage, and I see how much I paid in interest compared to principle (this is my third year in the house). So, I began thinking, how many of us really stay in the same house for 30 years? Yes, there will be many, but I suspect there are many more that move between 5-15 years. So, I ran a quick calculator for the $168,000 I have financed over a 30 year term at 3.75% and here is the amount of interest and principal accumulated between 5-10 years.
5 Years
Interest $31,500 Principal $17,000
7 Years
Interest $43,000 Principal $24,000
10 Years
Interest $59,000 Principal $37,000

When I look at this and realize I will certainly move within 10 years (starter home), I begin to feel like I am paying SIGNIFICANTLY more than 3.75%. I will pay $59,000 to only recover $37,000 in equity. Am I being stubborn as a door nail? This does not feel like my money is better spent in the market.

Here is the master answer I am chasing, yes a mortgage may provide a good rate to historical returns if you stay put for 30 years. But if you purchase a house and anticipate to move within 10 years, what is the best option? Aggressively pay down the house as fast as possible while sidelining other investments? Or, understand that this is the cost of financing a home?

Thank you,
Dillon
Yes. Compounding of interest (or gains) essentially works the same when you pay it or receive it (loan or on an investment). It is only different in our minds. Did you calculate what you earned on money you put into investments last year (or didn't take out) that you might have put into the mortgage and compared that to the extra interest paid?

If you were only going to be there ~10 years and have extra money I would have gotten a 15 year mortgage.

Starfish
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by Starfish » Thu Jan 16, 2020 10:55 pm

Rule no 1: if the poster writes principle instead of principal, skip it :)

The way I see mortgages is that is a gift from te government and I would be crazy not to take it. What other country gives you fixed low interest 30y loans for cardboard houses?
Inflation works for me. Tax deduction works for me.
It's pretty much a free loan after inflation and tax.
Stock market works for me.
It is safer to have some buffer instead of putting money in the house.

LittleMaggieMae
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by LittleMaggieMae » Thu Jan 16, 2020 11:05 pm

Starfish wrote:
Thu Jan 16, 2020 10:55 pm
Inflation works for me. Tax deduction works for me.
It's pretty much a free loan after inflation and tax.
That doesn't work so good these days... Inflation is steady (and low) and the Tax Deduction isn't what it use to be since the Standard deduction was raised (especially if you are married). OK, that mostly effects us little guys *and gals) with lots less than 10K in mortgage interestand few other deductions.

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Re: Pay Down Mortgage? Is Interest Really 4%

Post by michaeljc70 » Thu Jan 16, 2020 11:33 pm

Starfish wrote:
Thu Jan 16, 2020 10:55 pm
Rule no 1: if the poster writes principle instead of principal, skip it :)

The way I see mortgages is that is a gift from te government and I would be crazy not to take it. What other country gives you fixed low interest 30y loans for cardboard houses?
Inflation works for me. Tax deduction works for me.
It's pretty much a free loan after inflation and tax.
Stock market works for me.
It is safer to have some buffer instead of putting money in the house.
+1. Locking in a (now) low rate for 30 years is not available in the vast majority of the world. It is a bad deal for the lender therer are government backstops though generally). How many people would have their money tied up for 30 years for 3.5% in something much less safe than government debt?

Starfish
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Re: Pay Down Mortgage? Is Interest Really 4%

Post by Starfish » Fri Jan 17, 2020 12:01 am

I forgot to add another very important thing: the gift of refinacing.
It's like having the opportunity to lock the stock market at a price and change your mind later if the price goes down. It's free lunch. I refinanced my house 3 or 4 times.
LittleMaggieMae wrote:
Thu Jan 16, 2020 11:05 pm
Starfish wrote:
Thu Jan 16, 2020 10:55 pm
Inflation works for me. Tax deduction works for me.
It's pretty much a free loan after inflation and tax.
That doesn't work so good these days... Inflation is steady (and low) and the Tax Deduction isn't what it use to be since the Standard deduction was raised (especially if you are married). OK, that mostly effects us little guys *and gals) with lots less than 10K in mortgage interestand few other deductions.

Inflation is low but when you have 3% interest rate even 1-2% inflation is still very relevant.
It's true that tax deduction works only for people in high tax bracket from high tax states with itemized deductions.

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