Anyone regret paying off mortgage early?

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mbasherp
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Re: Anyone regret paying off mortgage early?

Post by mbasherp »

Ivygirl wrote: Sat Apr 16, 2022 7:12 am
mbasherp wrote: Fri Apr 15, 2022 12:51 pm
HMSVictory wrote: Fri Apr 15, 2022 12:22 pm
Ivygirl wrote: Sun Mar 27, 2022 7:12 am
If "home" means your refuge, the place you have made your own, the place your children can always come back to, the edifice that secures your place in the world whose borders you would defend, the place that everything you love is there - a mortgage is a worry and an irritant and best gone ASAP.

Most people are the second kind, which is why Realtors cynically call every thing they sell a "home" and not a "house" which would be more accurate.
Well said. My home is not an option I look to leverage to invest the proceeds somewhere else.

I think almost everyone is the second kind but some people want to fool themselves they are "outsmarting", "leveraging" or "optimizing" the market and interest rates by borrowing to invest elsewhere. Same kind of smarter than the average bear stuff lead to the GFC of 2007-2009.
But even more resilient than a paid off home is the wisely non-attached “home is where the heart is” philosophy. Otherwise we may become possessed by our possessions.

The GFC was much more about really dumb loans to people that shouldn’t have them, not differing opinions on how to have shelter.
Maybe it is about waves. What do you think of when you think of a really big wave? Is it something you ride on a surfboard, for thrills amid blue skies and foam, in invulnerability? Or is it something that would drown you, coming at you relentlessly one after the other, as you swim for dear life and pray your arms and legs and breath don't fail?

Almost everyone is the second kind. Really. We are born naked and with nothing and we struggle upward from there. Waves don't look like a beach vacation to most of us.

"Home is where the heart is" is sometimes said to mean one doesn't need a home, that one's affections are independent of place. Homes hold our affections. They also hold what we have struggled for and value, the door that no one else has a key to, the comfortable bed we bought after years of sleeping on the floor, the nice rain jacket in the coat closet instead of the one that was shedding plastic and looked like a reject from Columbo. Home is the cherry tree I planted in its third year and loaded with little cherries.

The idea of a financial corporation being a majority stakeholder in my home is a worry and an irritant. I do not want them to have a key to my home. I think most people are like me. I think most people have a dread of waves, have had more than enough of them, and don't care to ride. We want to own our homes.
I don’t need to define one meaning for all waves. It depends! Just like all variable situations, just like the one being discussed here.

We seem to be on opposite ends of a spectrum. I am in favor of less attachment to things as a way to happiness. Exploring which way is better is definitely outside the scope of this thread.

Your closing paragraph is interesting though. I don’t know what kind of mortgage you’ve signed but I’ve never had any bank be a majority stakeholder in my home. They have no say in my home whatsoever; they merely lent me money based on my ownership of the home which allows them recourse if I break my end of the deal. I would want the same thing if I loaned someone money.

I own it. I have the keys. They offered me money at terms which are now better than even the US government gets and no, I have no intention of doing them a favor by paying them back earlier than agreed.
Apathizer
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Re: Anyone regret paying off mortgage early?

Post by Apathizer »

mbasherp wrote: Sat Apr 16, 2022 12:55 pm
Ivygirl wrote: Sat Apr 16, 2022 7:12 am
mbasherp wrote: Fri Apr 15, 2022 12:51 pm
HMSVictory wrote: Fri Apr 15, 2022 12:22 pm
Ivygirl wrote: Sun Mar 27, 2022 7:12 am
If "home" means your refuge, the place you have made your own, the place your children can always come back to, the edifice that secures your place in the world whose borders you would defend, the place that everything you love is there - a mortgage is a worry and an irritant and best gone ASAP.

Most people are the second kind, which is why Realtors cynically call every thing they sell a "home" and not a "house" which would be more accurate.
Well said. My home is not an option I look to leverage to invest the proceeds somewhere else.

I think almost everyone is the second kind but some people want to fool themselves they are "outsmarting", "leveraging" or "optimizing" the market and interest rates by borrowing to invest elsewhere. Same kind of smarter than the average bear stuff lead to the GFC of 2007-2009.
But even more resilient than a paid off home is the wisely non-attached “home is where the heart is” philosophy. Otherwise we may become possessed by our possessions.

The GFC was much more about really dumb loans to people that shouldn’t have them, not differing opinions on how to have shelter.
Maybe it is about waves. What do you think of when you think of a really big wave? Is it something you ride on a surfboard, for thrills amid blue skies and foam, in invulnerability? Or is it something that would drown you, coming at you relentlessly one after the other, as you swim for dear life and pray your arms and legs and breath don't fail?

Almost everyone is the second kind. Really. We are born naked and with nothing and we struggle upward from there. Waves don't look like a beach vacation to most of us.

"Home is where the heart is" is sometimes said to mean one doesn't need a home, that one's affections are independent of place. Homes hold our affections. They also hold what we have struggled for and value, the door that no one else has a key to, the comfortable bed we bought after years of sleeping on the floor, the nice rain jacket in the coat closet instead of the one that was shedding plastic and looked like a reject from Columbo. Home is the cherry tree I planted in its third year and loaded with little cherries.

The idea of a financial corporation being a majority stakeholder in my home is a worry and an irritant. I do not want them to have a key to my home. I think most people are like me. I think most people have a dread of waves, have had more than enough of them, and don't care to ride. We want to own our homes.
We are clearly on opposite ends of a spectrum. I am in favor of less attachment to things as a way to happiness. You appear to be the opposite. Exploring which is better is definitely outside the scope of this thread.

Your closing paragraph is interesting though. I don’t know what kind of mortgage you’ve signed but I’ve never had any bank be a majority stakeholder in my home. They have no say in my home whatsoever; they merely lent me money based on my ownership of the home which allows them recourse if I break my end of the deal. I would want the same thing if I loaned someone money.

I own it. I have the keys. They offered me money at terms which are now better than even the US government gets and no, I have no intention of doing them a favor by paying them back earlier than agreed.
But low interest rates often result in higher sale prices, which of course leads to a higher borrowing. Whether the mortgagor borrows $300K at 3% or $400K at 2.5%, if they only pay on schedule the total interest paid is massive on a 30-yr mortgage: About $155K on the former, $170K on the latter.

Remember, apart from low-return assets like savings and CDs, investment returns aren't guaranteed, but that massive interest paid is if only paid on schedule. If the housing market depreciates significantly a la 2008-2009, mortgagors could be saddled with massive debt on a depreciating asset. Even with a low interest rate that's financially disastrous.
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NiceUnparticularMan
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Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

bltn wrote: Sat Apr 16, 2022 8:01 am Then I realized that your house is not really yours until your mortgage is paid off. Theoretically if one diesn t make his last mortgage payment, the house may be repossessed.
This is one of those situations in which I think having some familiarity with a number of legal concepts is helpful.

First, it is useful to know all sorts of liens can be placed on your home, and potentially ultimately lead to foreclosure. An unpaid mortgage is one way to that outcome, but so are tax liens, mechanic's liens, divorce liens, judgment liens, and so on. So, for good or ill, the idea that not having a mortgage immunizes you to foreclosure is inaccurate.

Second, security interests for loans are extremely common, and they do not in fact imply the lender with a security interest is a co-owner. A security is a contingent right to gain ownership through a legal process, but that right can only be exercise if the borrower fails to make the payments. Again, all sorts of things can contingently lead to your losing ownership of your home, including being married, having work done on the home, just owning a home where there are property taxes, doing anything which might possibly subject you to a lawsuit . . . .

So again, for good or ill, your ownership of your home is never totally secure against CONTINGENT events leading to foreclosure. That doesn't mean you have to agree adding the possibility of foreclosure due to your mortgage is necessarily a good idea. But it does mean when you have a mortgage, you have not crossed some fundamental line between being an owner and not being an owner.
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Re: Anyone regret paying off mortgage early?

Post by abuss368 »

Tom_T wrote: Sat Apr 16, 2022 12:39 pm
abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Not for me. As I said, it is entirely depending on one's particular situation. None of what you just said will apply to me.
Definitely for me and others I have worked with! It is all facts and circumstances of each specific situation.

Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
NiceUnparticularMan
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Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

Apathizer wrote: Sat Apr 16, 2022 10:51 amDiversification simultaneously reduces the likelihood of significant losses with the trade-off of also reducing potential for massive gains.
Right.

There are two main appeals to that proposition.

One is just that many people are risk/loss averse, and often for good reason, meaning a massive financial loss with some investment would be more bad for them then a massive financial gain would be good for them.

The second is there is good reason to believe markets do not provide return premiums for idiosyncratic risks, meaning risks that can be easily diversified away. So, generally in finance the idea is if you want to increase your possible gains efficiently, first you should diversify away idiosyncratic risk, and then you should add risk for which you get premiums. Like, through leveraged stock-buying, say.

Just avoiding diversification can also increase your possible gains, but by hypothesis, with marketed assets at least, it does so inefficiently. Meaning for each unit of upside potential you add, you are adding more units of downside potential than you need to.
That's mostly accurate, except for the low interest rate. Mine is 4.2%.
Refinancing wasn't an option?
Paying it down greatly reduces risk. With a significant mortgage If my home value depreciates I was in danger of potential double jeopardy in the sense that I'd be paying fairly high interest on a depreciating asset.
Sigh. We have been through this so many times.

If you don't face any possible need for your savings in the form of home equity, meaning you have so much in liquid financial assets already it can cover your taxes, insurance, maintenance, utilities, food, clothing, transportation, health care, and so on no matter what happens . . . sure. Of course, in those circumstances, it is unlikely mortgage payments are going to be a problem either. You are wealthy enough none of this is a real concern.

If instead there is any possibility you might actually need those savings in the form of home equity, then if your home is depreciating and you haven't borrowed against it in the past, you may be forced into selling it in bad market conditions.

If you have instead used a mortgage to get additional liquid financial savings, then in these circumstances you could potentially use those additional savings to keep paying your mortgage AND these other expenses for an extended period of time. Potentially many, many years.

Of course if the rate of return on those savings is lower than the rate of return on your mortgage, for the whole term of your mortgage, then eventually this will run out.

But in these circumstances you will be able to buy yourself time to at least see if you can do better. And often, people can.

But as I said, we keep going through this, and it is amazing how it never seems to deter people from simply failing to account for the additional liquid savings, and why that would be beneficial in times of severe financial crisis.
NiceUnparticularMan
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Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

Apathizer wrote: Sat Apr 16, 2022 12:26 pm Historically homeownership is usually only financially prudent in the long-term, and even then usually for families that need the space a house provides. For childless people homeownership seems like an unnecessary risk and complication. While it might be desirable, it's unnecessary like so many other consumer products.
Where I live, for a long time the breakeven for owning versus renting was like 3 years or less on modest houses (rowhouses and such that are equivalent in space to many apartments). It was just an oversupplied market for such units, and many people preferred newer apartment buildings with more amenities (pools and workout rooms and such), so it was easy to get a modest house for cheap. So, like PhD students and such were buying houses rather than renting because even planning to move after such a relatively short time, it made sense versus renting.

I think most of those neighborhoods near me are no longer so favorable, although then there are OTHER neighborhoods near me which are now potentially becoming viable for such a strategy.

Anyway, I don't think it makes sense to try to make a hard rule about for whom owning and renting might be better, as it is too dependent on local market conditions.
coachd50
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Re: Anyone regret paying off mortgage early?

Post by coachd50 »

bltn wrote: Sat Apr 16, 2022 8:01 am

After reading this post, by someone managing to accumulate a very nice retirement prospect on a moderate income, I wondered why emotionally it felt so good for me to have paid off my last two houses. Perpetual mortgages with relatively low interest rates might be the better way to accommodate wealth accumulation. Then I realized that your house is not really yours until your mortgage is paid off. Theoretically if one diesn t make his last mortgage payment, the house may be repossessed.

Also, if one has a completely paid mortgage, but doesn't make property tax payments, the house may be repossessed.
Apathizer
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Re: Anyone regret paying off mortgage early?

Post by Apathizer »

NiceUnparticularMan wrote: Sat Apr 16, 2022 2:32 pm
Right.

There are two main appeals to that proposition.

One is just that many people are risk/loss averse, and often for good reason, meaning a massive financial loss with some investment would be more bad for them then a massive financial gain would be good for them.

The second is there is good reason to believe markets do not provide return premiums for idiosyncratic risks, meaning risks that can be easily diversified away. So, generally in finance the idea is if you want to increase your possible gains efficiently, first you should diversify away idiosyncratic risk, and then you should add risk for which you get premiums. Like, through leveraged stock-buying, say.

Just avoiding diversification can also increase your possible gains, but by hypothesis, with marketed assets at least, it does so inefficiently. Meaning for each unit of upside potential you add, you are adding more units of downside potential than you need to.
Yes. Active management is an idiosyncratic risk while some factor slanting seems to provide positive risk premiums. I think I'll stop there for risk or starting another factor debate. :shock:
NiceUnparticularMan wrote: Sat Apr 16, 2022 2:32 pm Refinancing wasn't an option?
It probably was, but it would've taken at least two years to break even after refinancing costs. There's a good chance I'll sell in about a year, so paying the mortgage way down seemed more prudent.
NiceUnparticularMan wrote: Sat Apr 16, 2022 2:32 pm But as I said, we keep going through this, and it is amazing how it never seems to deter people from simply failing to account for the additional liquid savings, and why that would be beneficial in times of severe financial crisis.
That's a fair point, which is why I didn't pay it off entirely. I still have enough in my taxable to cover almost a year of expenses if necessary, and if absolutely necessary I can withdraw from my ROTH.
NiceUnparticularMan wrote: Sat Apr 16, 2022 2:39 pm Anyway, I don't think it makes sense to try to make a hard rule about for whom owning and renting might be better, as it is too dependent on local market conditions.
I generally agree, though it's important for anyone who perceives homeownership as an investment to understand it's undiversified much like buying an individual stock. In both cases it might work out really well, or it could be disastrous, whereas diversified equity/bond investments almost certainly won't be.
Last edited by Apathizer on Wed Apr 27, 2022 6:29 pm, edited 2 times in total.
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corn18
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Re: Anyone regret paying off mortgage early?

Post by corn18 »

abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Imagine a world where CD's are paying higher than your 30 year fixed rate mortgage.
Consistently sets low goals and fails to achieve them.
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abuss368
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Re: Anyone regret paying off mortgage early?

Post by abuss368 »

corn18 wrote: Sat Apr 16, 2022 3:33 pm
abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Imagine a world where CD's are paying higher than your 30 year fixed rate mortgage.
Sam over at Financial Samurai recently penned an article related to this:

https://www.financialsamurai.com/homeow ... -for-free/

Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
hoofaman
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Re: Anyone regret paying off mortgage early?

Post by hoofaman »

abuss368 wrote: Sat Apr 16, 2022 3:36 pm
corn18 wrote: Sat Apr 16, 2022 3:33 pm
abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Imagine a world where CD's are paying higher than your 30 year fixed rate mortgage.
Sam over at Financial Samurai recently penned an article related to this:

https://www.financialsamurai.com/homeow ... -for-free/

Best.
Tony
Looks like his "math" ignores taxes
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abuss368
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Re: Anyone regret paying off mortgage early?

Post by abuss368 »

hoofaman wrote: Sat Apr 16, 2022 3:45 pm
abuss368 wrote: Sat Apr 16, 2022 3:36 pm
corn18 wrote: Sat Apr 16, 2022 3:33 pm
abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Imagine a world where CD's are paying higher than your 30 year fixed rate mortgage.
Sam over at Financial Samurai recently penned an article related to this:

https://www.financialsamurai.com/homeow ... -for-free/

Best.
Tony
Looks like his "math" ignores taxes
Would you be able to expand his article and provide an example?

Thanks.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Anyone regret paying off mortgage early?

Post by willthrill81 »

hoofaman wrote: Sat Apr 16, 2022 3:45 pm
abuss368 wrote: Sat Apr 16, 2022 3:36 pm
corn18 wrote: Sat Apr 16, 2022 3:33 pm
abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Imagine a world where CD's are paying higher than your 30 year fixed rate mortgage.
Sam over at Financial Samurai recently penned an article related to this:

https://www.financialsamurai.com/homeow ... -for-free/

Best.
Tony
Looks like his "math" ignores taxes
After he came out with his '0.5% SWR' nonsense a few years back, he lost whatever credibility he had, as far as I'm concerned.
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Apathizer
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Re: Anyone regret paying off mortgage early?

Post by Apathizer »

willthrill81 wrote: Sat Apr 16, 2022 3:50 pm
hoofaman wrote: Sat Apr 16, 2022 3:45 pm
abuss368 wrote: Sat Apr 16, 2022 3:36 pm
corn18 wrote: Sat Apr 16, 2022 3:33 pm
abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Imagine a world where CD's are paying higher than your 30 year fixed rate mortgage.
Sam over at Financial Samurai recently penned an article related to this:

https://www.financialsamurai.com/homeow ... -for-free/

Best.
Tony
Looks like his "math" ignores taxes
After he came out with his '0.5% SWR' nonsense a few years back, he lost whatever credibility he had, as far as I'm concerned.
He also assumes rent will increase; that's not necessarily the case.
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bluebolt
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Re: Anyone regret paying off mortgage early?

Post by bluebolt »

hoofaman wrote: Sat Apr 16, 2022 3:45 pm
abuss368 wrote: Sat Apr 16, 2022 3:36 pm Sam over at Financial Samurai recently penned an article related to this:

https://www.financialsamurai.com/homeow ... -for-free/

Best.
Tony
Looks like his "math" ignores taxes
In many cases, yes. One could do this investing in a Roth account and the benefit would be as described.
bltn
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Re: Anyone regret paying off mortgage early?

Post by bltn »

JoeRetire wrote: Sat Apr 16, 2022 12:19 pm
bltn wrote: Sat Apr 16, 2022 11:14 am
JoeRetire wrote: Sat Apr 16, 2022 8:37 am
bltn wrote: Sat Apr 16, 2022 8:01 am This makes me think of my brother in law who was having trouble paying the mortgage payments on his business property in 2009. He owed 180,000 and the bank was making it hard for him to refinance as his company was stalled in the recession. Somehow he managed to get some leniency from the bank. One year later a hotel chain offered him 3,000,000 for his property which included 1000 feet of beach frontage. Technically the bank could have taken his property.
He should have paid off his $180,000 mortgage! Oh, wait... he couldn't afford the payments, so how could he have paid off the mortgage?
And yet the bank didn't actually take his property.

Not sure what the moral of this story was supposed to be...

:confused
But the bank could have taken the property. They were in control of the ownership of the property. They were willing to adjust the terms of the repayment agreement and allow him to keep his property under a new arrangement. But it was theirs to take if they chose, based on the original legal arrangement. Making the presence of a mortgage high risk.
See?
So "never have a mortgage"
[ quote fixed by admin LadyGeek]

Is that a useful reply?

Just emphasizing the risk a mortgage carries, like any leveraged investment.
Last edited by bltn on Sun Apr 17, 2022 3:29 am, edited 1 time in total.
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Re: Anyone regret paying off mortgage early?

Post by vineviz »

abuss368 wrote: Sat Apr 16, 2022 11:05 am
I would agree. Have you personally paid off your mortgage, and if so, found it to be a sound financial decision based on your individual circumstances?
I've not paid off my mortgage, primarily because we (for reasons both sound and unsound) have concentrated most of our financial wealth in tax-advantaged accounts like 401k plans, IRAs, and 529 plans.

We do make additional principal payments when we're able, and almost always do so before investing any after-tax money in bonds for obvious reasons.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
bltn
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Re: Anyone regret paying off mortgage early?

Post by bltn »

NiceUnparticularMan wrote: Sat Apr 16, 2022 2:14 pm
bltn wrote: Sat Apr 16, 2022 8:01 am Then I realized that your house is not really yours until your mortgage is paid off. Theoretically if one diesn t make his last mortgage payment, the house may be repossessed.
This is one of those situations in which I think having some familiarity with a number of legal concepts is helpful.

First, it is useful to know all sorts of liens can be placed on your home, and potentially ultimately lead to foreclosure. An unpaid mortgage is one way to that outcome, but so are tax liens, mechanic's liens, divorce liens, judgment liens, and so on. So, for good or ill, the idea that not having a mortgage immunizes you to foreclosure is inaccurate.

Second, security interests for loans are extremely common, and they do not in fact imply the lender with a security interest is a co-owner. A security is a contingent right to gain ownership through a legal process, but that right can only be exercise if the borrower fails to make the payments. Again, all sorts of things can contingently lead to your losing ownership of your home, including being married, having work done on the home, just owning a home where there are property taxes, doing anything which might possibly subject you to a lawsuit . . . .

So again, for good or ill, your ownership of your home is never totally secure against CONTINGENT events leading to foreclosure. That doesn't mean you have to agree adding the possibility of foreclosure due to your mortgage is necessarily a good idea. But it does mean when you have a mortgage, you have not crossed some fundamental line between being an owner and not being an owner.
Agree.
Any possession I presume is subject to a lien. And most possessions owned personally have a liability risk. Although I think in some states a personal residence is exempted from loss in bankruptcy. But not exempted from loss to an unpaid mortgagor.

I could be wrong about this. I m not a lawyer, just an observer.
Shorty
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Re: Anyone regret paying off mortgage early?

Post by Shorty »

Agreed, dumb article. Widely acknowledged that a 2% 30 yr loan is valuable in an inflationary period. He contrives an example of creating positive leverage by investing money that you would pay in safe vehicles. If you had that money, why not invest per AA? It’s as if you could borrow an infinite amount at that rate.

Misses the overall AA concept and is based on unreasonable asset assumptions (for most).
willthrill81 wrote: Sat Apr 16, 2022 3:50 pm
hoofaman wrote: Sat Apr 16, 2022 3:45 pm
abuss368 wrote: Sat Apr 16, 2022 3:36 pm
corn18 wrote: Sat Apr 16, 2022 3:33 pm
abuss368 wrote: Sat Apr 16, 2022 10:31 am Having a home paid off affords so much more additional flexibility.

In addition, during retirement it can significantly reduce the stress on a portfolio during market pullbacks. Imagine a market downturn, with assets dropping, and mortgage payments must be withdrawn.

Best.
Tony
Imagine a world where CD's are paying higher than your 30 year fixed rate mortgage.
Sam over at Financial Samurai recently penned an article related to this:

https://www.financialsamurai.com/homeow ... -for-free/

Best.
Tony
Looks like his "math" ignores taxes
After he came out with his '0.5% SWR' nonsense a few years back, he lost whatever credibility he had, as far as I'm concerned.
Ivygirl
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Re: Anyone regret paying off mortgage early?

Post by Ivygirl »

mbasherp wrote: Sat Apr 16, 2022 12:55 pm
Ivygirl wrote: Sat Apr 16, 2022 7:12 am
mbasherp wrote: Fri Apr 15, 2022 12:51 pm
HMSVictory wrote: Fri Apr 15, 2022 12:22 pm
Ivygirl wrote: Sun Mar 27, 2022 7:12 am
If "home" means your refuge, the place you have made your own, the place your children can always come back to, the edifice that secures your place in the world whose borders you would defend, the place that everything you love is there - a mortgage is a worry and an irritant and best gone ASAP.

Most people are the second kind, which is why Realtors cynically call every thing they sell a "home" and not a "house" which would be more accurate.
Well said. My home is not an option I look to leverage to invest the proceeds somewhere else.

I think almost everyone is the second kind but some people want to fool themselves they are "outsmarting", "leveraging" or "optimizing" the market and interest rates by borrowing to invest elsewhere. Same kind of smarter than the average bear stuff lead to the GFC of 2007-2009.
But even more resilient than a paid off home is the wisely non-attached “home is where the heart is” philosophy. Otherwise we may become possessed by our possessions.

The GFC was much more about really dumb loans to people that shouldn’t have them, not differing opinions on how to have shelter.
Maybe it is about waves. What do you think of when you think of a really big wave? Is it something you ride on a surfboard, for thrills amid blue skies and foam, in invulnerability? Or is it something that would drown you, coming at you relentlessly one after the other, as you swim for dear life and pray your arms and legs and breath don't fail?

Almost everyone is the second kind. Really. We are born naked and with nothing and we struggle upward from there. Waves don't look like a beach vacation to most of us.

"Home is where the heart is" is sometimes said to mean one doesn't need a home, that one's affections are independent of place. Homes hold our affections. They also hold what we have struggled for and value, the door that no one else has a key to, the comfortable bed we bought after years of sleeping on the floor, the nice rain jacket in the coat closet instead of the one that was shedding plastic and looked like a reject from Columbo. Home is the cherry tree I planted in its third year and loaded with little cherries.

The idea of a financial corporation being a majority stakeholder in my home is a worry and an irritant. I do not want them to have a key to my home. I think most people are like me. I think most people have a dread of waves, have had more than enough of them, and don't care to ride. We want to own our homes.
I don’t need to define one meaning for all waves. It depends! Just like all variable situations, just like the one being discussed here.

We seem to be on opposite ends of a spectrum. I am in favor of less attachment to things as a way to happiness. Exploring which way is better is definitely outside the scope of this thread.

Your closing paragraph is interesting though. I don’t know what kind of mortgage you’ve signed but I’ve never had any bank be a majority stakeholder in my home. They have no say in my home whatsoever; they merely lent me money based on my ownership of the home which allows them recourse if I break my end of the deal. I would want the same thing if I loaned someone money.

I own it. I have the keys. They offered me money at terms which are now better than even the US government gets and no, I have no intention of doing them a favor by paying them back earlier than agreed.
I bolded the part I am replying to.

Happy the person, then, whose stocks fall 50%, that they might be less attached.

Not really, though, right? We are investors here, we are interested in gains, you and me both.

The fact is, unless we are willing to live in a jar on the street like one ancient philosopher did, whose nickname was "Dog" because he lived like one, we have to achieve a home, and a home costs so much it sometimes takes 30 years to pay for, and our old age the same. This is a practical problem for philosophy to solve: preserve one's independence from money and things, while using them.
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Re: Anyone regret paying off mortgage early?

Post by HMSVictory »

Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
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Re: Anyone regret paying off mortgage early?

Post by willthrill81 »

HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
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Re: Anyone regret paying off mortgage early?

Post by HMSVictory »

willthrill81 wrote: Sun Apr 17, 2022 9:03 am
HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
I'm happier still working without one!!!!!!!!
Stay the course!
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Re: Anyone regret paying off mortgage early?

Post by willthrill81 »

HMSVictory wrote: Sun Apr 17, 2022 9:05 am
willthrill81 wrote: Sun Apr 17, 2022 9:03 am
HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
I'm happier still working without one!!!!!!!!
Me too. Heaven knows that it was a better move than buying nominal bonds.
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Re: Anyone regret paying off mortgage early?

Post by JoeRetire »

willthrill81 wrote: Sun Apr 17, 2022 9:03 am
HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
Anyone else wonder if this is truly a cause and effect relationship or not?

If you have the money to pay off your mortgage, you should be pretty happy anyway.
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Re: Anyone regret paying off mortgage early?

Post by willthrill81 »

JoeRetire wrote: Sun Apr 17, 2022 9:19 am
willthrill81 wrote: Sun Apr 17, 2022 9:03 am
HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
Anyone else wonder if this is truly a cause and effect relationship or not?

If you have the money to pay off your mortgage, you should be pretty happy anyway.
I'm not sure if they included income or assets as controls. But the relationship between liquid assets and life satisfaction has been shown to hold across income and assets, so I suspect that the same would be true with having a paid off house and happiness.
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Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

JoeRetire wrote: Sun Apr 17, 2022 9:19 am Anyone else wonder if this is truly a cause and effect relationship or not?

If you have the money to pay off your mortgage, you should be pretty happy anyway.
Scientific questions like this are the bane of placebos.
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Re: Anyone regret paying off mortgage early?

Post by JoeRetire »

willthrill81 wrote: Sun Apr 17, 2022 9:24 am
JoeRetire wrote: Sun Apr 17, 2022 9:19 am
willthrill81 wrote: Sun Apr 17, 2022 9:03 am
HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
Anyone else wonder if this is truly a cause and effect relationship or not?

If you have the money to pay off your mortgage, you should be pretty happy anyway.
I'm not sure if they included income or assets as controls. But the relationship between liquid assets and life satisfaction has been shown to hold across income and assets, so I suspect that the same would be true with having a paid off house and happiness.
So if the relationship is "liquid assets and life satisfaction", then mortgage/no mortgage isn't required - just the liquid assets you could otherwise use to pay off the mortgage.
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Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

JoeRetire wrote: Sun Apr 17, 2022 10:46 am
willthrill81 wrote: Sun Apr 17, 2022 9:24 am
JoeRetire wrote: Sun Apr 17, 2022 9:19 am
willthrill81 wrote: Sun Apr 17, 2022 9:03 am
HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
Anyone else wonder if this is truly a cause and effect relationship or not?

If you have the money to pay off your mortgage, you should be pretty happy anyway.
I'm not sure if they included income or assets as controls. But the relationship between liquid assets and life satisfaction has been shown to hold across income and assets, so I suspect that the same would be true with having a paid off house and happiness.
So if the relationship is "liquid assets and life satisfaction", then mortgage/no mortgage isn't required - just the liquid assets you could otherwise use to pay off the mortgage.
In fact, net home equity is a lot less liquid than normal financial assets, so . . . .

That being said, I see enough people report significant anxiety over mortgages that I don't really doubt that for many people, paying off their mortgage will cause them an increase in happiness . . . at least as long as they never experience a bad enough crisis that the lack of those liquid financial savings becomes a major issue.

For that matter, outside of the context of a supersavers club like this forum, for many households a paid off mortgage actually means more savings, as otherwise most if not all of the funds in question would be used for consumption instead of additional financial savings. And I do not doubt that also ends up causing an increase in happiness for many.

Indeed, I think these things are related. As we have seen here, lots of anecdotes are traded about people with mortgages getting into trouble in a personal financial crisis. It is usually pretty apparent in those anecdotes that the background is not that the mortgage was used to fund cautious financial investments, it was used to fund consumption, including in the form of buying more house than the person could really safely afford.

But I think these mortgage horror stories, for some people, then bleed over into a sort of general aversion to mortgages.

Or really debt in general. Again, there are plenty of debt horror stories, and I think for some they bleed over into a general aversion to debt.
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Re: Anyone regret paying off mortgage early?

Post by hoops777 »

NiceUnparticularMan wrote: Sat Apr 16, 2022 7:35 am
Ivygirl wrote: Sat Apr 16, 2022 7:12 am Maybe it is about waves. What do you think of when you think of a really big wave? Is it something you ride on a surfboard, for thrills amid blue skies and foam, in invulnerability? Or is it something that would drown you, coming at you relentlessly one after the other, as you swim for dear life and pray your arms and legs and breath don't fail?
Some people are in fact so afraid of drowning they never go into water past their ankles. Other people do in fact surf. I am not sure there is much use in trying to condemn one or the other.
The idea of a financial corporation being a majority stakeholder in my home is a worry and an irritant. I do not want them to have a key to my home. I think most people are like me. I think most people have a dread of waves, have had more than enough of them, and don't care to ride. We want to own our homes.
Like this. If the very idea of foreclosure being a possibility is that much of a worry to you, then OK, it is reasonable for you to eliminate it.

To me, foreclosure is not a worry. I literally never think about it, because it is so unlikely to happen.

So why is it important for you to believe most other people are like you? I know some are. I know some are not. What difference does it make how many of each of us there are?
Your points,many points, are all mathematically correct.
Just realize there are many people who could care less about squeezing out a potentially larger brokerage account.
Life is more than a spreadsheet.How you feel is more important to many people.
What makes me happy does not make you happy.
Such is life.
One can invest irresponsibly and one can pay off a mortgage irresponsibly.
Last edited by hoops777 on Sun Apr 17, 2022 11:45 am, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.
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Re: Anyone regret paying off mortgage early?

Post by AnEngineer »

JoeRetire wrote: Sun Apr 17, 2022 9:19 am
willthrill81 wrote: Sun Apr 17, 2022 9:03 am
HMSVictory wrote: Sun Apr 17, 2022 8:07 am Guys we better let Christine know she is sub-optimal! She paid off her house! No!

Who does she think she is? One of the foremost experts on retirement planning and investing in America (oh wait she is)? Oh no. :oops:

https://www.barrons.com/articles/a-top- ... eid=yhoof2
Maybe she came across the research from Wes Moss' book, "What the Happiest Retirees Know," which indicates that retirees with no mortgage are happier than those with one.
Anyone else wonder if this is truly a cause and effect relationship or not?

If you have the money to pay off your mortgage, you should be pretty happy anyway.
Sure, but even if it's true when controlling for the proper things, it may not have any relevance to individuals given the high levels of innumeracy. That is, people who paid off their mortgage may be happier, but some may believe so because they think it's a good financial decision when it's not. The same argument would apply the other direction too.
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Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

hoops777 wrote: Sun Apr 17, 2022 11:20 am
NiceUnparticularMan wrote: Sat Apr 16, 2022 7:35 am
Ivygirl wrote: Sat Apr 16, 2022 7:12 am Maybe it is about waves. What do you think of when you think of a really big wave? Is it something you ride on a surfboard, for thrills amid blue skies and foam, in invulnerability? Or is it something that would drown you, coming at you relentlessly one after the other, as you swim for dear life and pray your arms and legs and breath don't fail?
Some people are in fact so afraid of drowning they never go into water past their ankles. Other people do in fact surf. I am not sure there is much use in trying to condemn one or the other.
The idea of a financial corporation being a majority stakeholder in my home is a worry and an irritant. I do not want them to have a key to my home. I think most people are like me. I think most people have a dread of waves, have had more than enough of them, and don't care to ride. We want to own our homes.
Like this. If the very idea of foreclosure being a possibility is that much of a worry to you, then OK, it is reasonable for you to eliminate it.

To me, foreclosure is not a worry. I literally never think about it, because it is so unlikely to happen.

So why is it important for you to believe most other people are like you? I know some are. I know some are not. What difference does it make how many of each of us there are?
Your points,many points, are all mathematically correct.
Just realize there are many people who could care less about squeezing about a potentially larger brokerage account.
Life is more than a spreadsheet.How you feel is more important to many people.
What makes me happy does not make you happy.
Such is life.
One can invest irresponsibly and one can pay off a mortgage irresponsibly.
Yeah, I am really the opposite of dogmatic on this. If you have plenty of savings and paying off your low-rate mortgage with some of them would make you happier, OK, cool.

I just find it interesting some people seem to think it is important to argue that people who feel like that are more normal, love their homes more, or whatever. To me, it is fine to stop at this is something that you want to do with your wealth. That is sufficient justification, and you don't need to further argue it represents some higher/shared values.

I guess it is in part a reaction to the idea it might not be optimal financially. But lots of things we do, we do for other purposes. Like, I don't take vacations because I think they are good investments. And I don't find the need to justify them that way.
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Re: Anyone regret paying off mortgage early?

Post by corn18 »

I am really enjoying having enough money to pay off my mortgage but instead of doing that, I am building a CD ladder that pays more than my mortgage interest net of taxes.
Consistently sets low goals and fails to achieve them.
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Re: Anyone regret paying off mortgage early?

Post by randomguy »

JoeRetire wrote: Sat Apr 16, 2022 12:19 pm
bltn wrote: Sat Apr 16, 2022 11:14 am
JoeRetire wrote: Sat Apr 16, 2022 8:37 am
bltn wrote: Sat Apr 16, 2022 8:01 am This makes me think of my brother in law who was having trouble paying the mortgage payments on his business property in 2009. He owed 180,000 and the bank was making it hard for him to refinance as his company was stalled in the recession. Somehow he managed to get some leniency from the bank. One year later a hotel chain offered him 3,000,000 for his property which included 1000 feet of beach frontage. Technically the bank could have taken his property.
He should have paid off his $180,000 mortgage! Oh, wait... he couldn't afford the payments, so how could he have paid off the mortgage?
And yet the bank didn't actually take his property.

Not sure what the moral of this story was supposed to be...

:confused
But the bank could have taken the property. They were in control of the ownership of the property. They were willing to adjust the terms of the repayment agreement and allow him to keep his property under a new arrangement. But it was theirs to take if they chose, based on the original legal arrangement. Making the presence of a mortgage high risk.
See?
So "never have a mortgage"?
No have a mortgage. If he didn't have one, he wouldn't have owned the property and would have missed out on a 3 million dollar offer from a hotel chain.....
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Re: Anyone regret paying off mortgage early?

Post by mbasherp »

Ivygirl wrote: Sun Apr 17, 2022 6:54 am
Happy the person, then, whose stocks fall 50%, that they might be less attached.
Yes! Yes wholeheartedly! You expect me to say no, it seems.

If you can say, in trying your best to provide for your future needs, that things came up which are less than ideal, non-attachment is your friend. And if the course of action which ultimately didn’t turn out well was also the most logically sound, well then there’s no need to be unhappy in the slightest. You did your best with what you had. It is what it is. I know I could accept that.

We need not make a false choice between greed and fear. There are many paths forward. The one I am articulating could use more voice on this forum.
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Re: Anyone regret paying off mortgage early?

Post by Cali4en »

AnEngineer wrote: Sun Apr 17, 2022 11:26 am
That is, people who paid off their mortgage may be happier, but some may believe so because they think it's a good financial decision when it's not. The same argument would apply the other direction too.
Note though that there are some scenarios where paying off the mortgage can be financially better even given a nice spread between mortgage rate and the relevant investment return. For example, anyone retiring early with a family or on the cusp of a MAGI cliff might get more return on increased ACA subisidies and CSRs than they'd receive from investing their potential home equity. Or perhaps a person whose income would qualify their kids for massively more grant aid for college due to the way primary home equity is given special treatment by the FAFSA and CSS Profile.

The first scenario is somewhat rare among the general populace, but the latter could affect anyone near or below the median household income if they have major potential home equity.
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Re: Anyone regret paying off mortgage early?

Post by slalom »

My biggest reason for paying off my mortgage is because i’m not confident that i will have this high paying a job forever and i want to know that if i have to take a pay cut it won’t affect my life much.
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Re: Anyone regret paying off mortgage early?

Post by CletusCaddy »

slalom wrote: Sun Apr 17, 2022 2:24 pm My biggest reason for paying off my mortgage is because i’m not confident that i will have this high paying a job forever and i want to know that if i have to take a pay cut it won’t affect my life much.
This reasoning is the same that I used to justify taking out an interest only mortgage instead of an amortizing mortgage.

If my earnings were cut back I wouldn’t need to stress about making principal payments, only interest payments. For me that’s $32k/yr of forced savings I didn’t need to account for in my worst-case budgeting.
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Re: Anyone regret paying off mortgage early?

Post by Ivygirl »

mbasherp wrote: Sun Apr 17, 2022 1:30 pm
Ivygirl wrote: Sun Apr 17, 2022 6:54 am
Happy the person, then, whose stocks fall 50%, that they might be less attached.
Yes! Yes wholeheartedly! You expect me to say no, it seems.

If you can say, in trying your best to provide for your future needs, that things came up which are less than ideal, non-attachment is your friend. And if the course of action which ultimately didn’t turn out well was also the most logically sound, well then there’s no need to be unhappy in the slightest. You did your best with what you had. It is what it is. I know I could accept that.

We need not make a false choice between greed and fear. There are many paths forward. The one I am articulating could use more voice on this forum.
Yet still you and I have the problems of housing and old age. Expensive, real problems, worthy of real philosophy. You can't get out of them by being unattached. Your body is attached, attached to you, and it must be housed and cared for.

Let me know when you have solved this problem, philosophically, I've been trying for years.
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Re: Anyone regret paying off mortgage early?

Post by Hoosier CPA »

corn18 wrote: Sun Apr 17, 2022 1:07 pm I am really enjoying having enough money to pay off my mortgage but instead of doing that, I am building a CD ladder that pays more than my mortgage interest net of taxes.
This might get buried in this discussion, but can you provide some details about this? We refi'd a few times over the past couple years, going from a 30 with 22 years left @ 3.5% to a new 30 @ 2.5%. Sticking with the old amortization schedule fits us well as it would be paid off around when I hit 65 years old, but I wouldn't mind stockpiling the extra money instead and getting a better return, and then have the flexibility to pay it off at once down the line. What I don't want to happen is the extra funds just go to consumption, which I think happens more than people want to admit, or happens often outside the people on this forum. Can you get CDs over 2.5% already? Edit: Actually it would have to beat 2.5% for us as we itemize every other year, so taxes would be paid every year on the CD but the interest on the mortgage is at best deductible every other year (for us).
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Re: Anyone regret paying off mortgage early?

Post by mbasherp »

Ivygirl wrote: Sun Apr 17, 2022 6:19 pm
mbasherp wrote: Sun Apr 17, 2022 1:30 pm
Ivygirl wrote: Sun Apr 17, 2022 6:54 am
Happy the person, then, whose stocks fall 50%, that they might be less attached.
Yes! Yes wholeheartedly! You expect me to say no, it seems.

If you can say, in trying your best to provide for your future needs, that things came up which are less than ideal, non-attachment is your friend. And if the course of action which ultimately didn’t turn out well was also the most logically sound, well then there’s no need to be unhappy in the slightest. You did your best with what you had. It is what it is. I know I could accept that.

We need not make a false choice between greed and fear. There are many paths forward. The one I am articulating could use more voice on this forum.
Yet still you and I have the problems of housing and old age. Expensive, real problems, worthy of real philosophy. You can't get out of them by being unattached. Your body is attached, attached to you, and it must be housed and cared for.

Let me know when you have solved this problem, philosophically, I've been trying for years.
I’m having trouble seeing anything other than a straw man argument in this reply. Assuming that’s right, I know that there’s no purpose in devoting more to this.

However, in case it’s of future use to you or anyone else, I will point out that the challenges of growing older may be the same regardless of one’s philosophy. What I believe are the countless studies which indicate a less attached, more optimistic, more stoic person is more likely to:
Have better health
Better outcomes when they don’t have good health
Have higher lifetime happiness
Have better “luck”
Have stronger human connections
And more.

Growing older presents new situations, none of which need be framed as “problems.” But you do you and I’ll do me, I guess. It all comes around to doing the best with what we’ve got and being content with whatever outcome arises. In closing, no, I see no point in paying off my mortgage early and I’m happy I didn’t do so when I considered it a few years ago.

I’ll leave it there.
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Re: Anyone regret paying off mortgage early?

Post by Tom_T »

corn18 wrote: Sun Apr 17, 2022 1:07 pm I am really enjoying having enough money to pay off my mortgage but instead of doing that, I am building a CD ladder that pays more than my mortgage interest net of taxes.
+1
NiceUnparticularMan
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Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

Cali4en wrote: Sun Apr 17, 2022 1:55 pm
AnEngineer wrote: Sun Apr 17, 2022 11:26 am
That is, people who paid off their mortgage may be happier, but some may believe so because they think it's a good financial decision when it's not. The same argument would apply the other direction too.
Note though that there are some scenarios where paying off the mortgage can be financially better even given a nice spread between mortgage rate and the relevant investment return. For example, anyone retiring early with a family or on the cusp of a MAGI cliff might get more return on increased ACA subisidies and CSRs than they'd receive from investing their potential home equity. Or perhaps a person whose income would qualify their kids for massively more grant aid for college due to the way primary home equity is given special treatment by the FAFSA and CSS Profile.

The first scenario is somewhat rare among the general populace, but the latter could affect anyone near or below the median household income if they have major potential home equity.
Yeah, I actually think these are the far more interesting issues than most of what we have discussed here. Obviously it is all individualized, but figuring out how to manage income, taxes, subsidies, and grants in these contexts can be tricky business.
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Re: Anyone regret paying off mortgage early?

Post by Cali4en »

NiceUnparticularMan wrote: Mon Apr 18, 2022 8:48 am
Yeah, I actually think these are the far more interesting issues than most of what we have discussed here. Obviously it is all individualized, but figuring out how to manage income, taxes, subsidies, and grants in these contexts can be tricky business.
Particularly since the annual returns from things like healthcare and college subsidies are known/calculable and not usually subject to taxation, whereas the market return is unknown and usually taxable. There's also the fact that financial planning for college needs to be done on a prior-prior year basis, so someone who isn't aware of the rules will not be able to correct course immediately.

Of course, a lot of folks who have the luxury of potentially paying off their mortgages also have incomes or educational savings such that financial aid isn't much of a consideration anyway. It can be a huge deal for some households though.
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Re: Anyone regret paying off mortgage early?

Post by aws »

I'm starting to regret it a bit. A year ago I paid off my 30 year 3.125% mortgage which had 22 years to go. I figured I didn't need the leverage at the time, and I always had the option of borrowing on margin from my broker at 1% interest if I wanted to leverage up later. But the margin loan would be tied to the federal funds rate, and that will soon be higher than what the mortgage used to be. And I can't see getting a fixed rate loan anytime soon as the rates on those have exploded. Is it true 30 year fixed is at almost 7%? Last I heard it was just hitting 5%.

Source: https://money.com/todays-mortgage-rates-april-18-2022/
vas
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Re: Anyone regret paying off mortgage early?

Post by vas »

aws wrote: Tue Apr 19, 2022 4:37 pm I'm starting to regret it a bit. A year ago I paid off my 30 year 3.125% mortgage which had 22 years to go.
I think I understand your feelings on this. I'm paying off a $200K 2.75% mortgage this week and I'm pretty sure I've never waffled this much over any other decision. As I'm sure you know, there are no end of threads advocating paying off or not paying off mortgages. For me it came down to the following:

1. Mortgage was less than 7% of NW so it would take a lot of arbitrage to make any difference.
2. I wasn't willing to place the payoff funds in a risky investment (required to have any hope of exceeding 2.75% after tax)
3. I'm in my late 50s and expecting to retire in the not too distance future.
4. More space for Roth conversions if I'm not pulling mortgage payments out of a pretax account.

It does feel like giving up something valuable though because I can't just go out an get another loan at that rate. But then again, I neither need nor want a mortgage.

What would you have done with the funds you used to pay off the mortgage?
“For every complex problem, there is a solution that is clear, simple, and wrong.” - H. L. Mencken
aws
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Re: Anyone regret paying off mortgage early?

Post by aws »

I would have just had the money in something risk-free to save for taxes. I had a windfall capital gain in 2021 and had over a year until the associated tax was due. I thought I might as well payoff the mortgage at 3.125% and then borrow the money at 1% in April 2022 to pay taxes, effectively saving the 2% spread. In the end with rates going up and uncertainty in the market I just sold some other assets instead this year to cover the tax bill. If I could go back and swap back into that mortgage know what I do now I'd do it, but obviously I didn't expect rates to go up so much so quickly, so it's definitely just a hindsight is 20/20 situation.
TheCowbell
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Re: Anyone regret paying off mortgage early?

Post by TheCowbell »

corn18 wrote: Sun Apr 17, 2022 1:07 pm I am really enjoying having enough money to pay off my mortgage but instead of doing that, I am building a CD ladder that pays more than my mortgage interest net of taxes.
i-bonds!
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corn18
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Re: Anyone regret paying off mortgage early?

Post by corn18 »

TheCowbell wrote: Fri Apr 22, 2022 4:49 pm
corn18 wrote: Sun Apr 17, 2022 1:07 pm I am really enjoying having enough money to pay off my mortgage but instead of doing that, I am building a CD ladder that pays more than my mortgage interest net of taxes.
i-bonds!
Be nice if I could buy $500k of them at once.
Consistently sets low goals and fails to achieve them.
CletusCaddy
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Re: Anyone regret paying off mortgage early?

Post by CletusCaddy »

corn18 wrote: Fri Apr 22, 2022 7:39 pm
TheCowbell wrote: Fri Apr 22, 2022 4:49 pm
corn18 wrote: Sun Apr 17, 2022 1:07 pm I am really enjoying having enough money to pay off my mortgage but instead of doing that, I am building a CD ladder that pays more than my mortgage interest net of taxes.
i-bonds!
Be nice if I could buy $500k of them at once.
You can, it would just take 25 years to deliver between you and your spouse.
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