Halp How fast is too fast to pay off a mortgage?

dbzeag

Wants to kiss you where it stinks
Jun 9, 2006
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So I just paid off my car. It's a 1.5 year old Toyota Hybrid so it will last a while. I do not have any other loans to pay off (school was done a while back). My regular monthly expenses are low.

Should I pay off the mortgage quicker or put some in savings? The mortgage is a 15 year with 2.75% interest that I already pay $100 a month extra in principal. I have budgeted the taxes and insurance out into another saving's account to collect interest already.

If I am REAL aggressive with my payments, I can have the house paid off in just over 5 years. I am already saving into a 401k more than enough for my employer to match as well as maxing out my HSA.

Thoughts?
 
If there is no penalty and you don't have other debt then pay that bitch off. Yes can "invest" that money other places but the reality is you don't know what your situation will be in 10 years. So if you can do it now then do it now. A majority of people's pay goes to their house so if you can eliminate that all together it opens up much larger opportunities on what you can do with your life.
 
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By overpaying, you're 'earning' 2.75%, and the real number is even less with interest deduction and shit.. You can do WAAAY better than that with long term investing. Open a Roth.
 
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By overpaying, you're 'earning' 2.75%, and the real number is even less with interest deduction and shit.. You can do WAAAY better than that with long term investing. Open a Roth.

But why? If he could pay off the house and have zero debt in 5 years or less then I would always do that. Then he can 100% control what he wants to do. Just think of different options you would have right now if you were in your current situation but you owned your house outright.
 
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Yes if you want to continue working for the rest of your life. That's a prime reason people work forever. If you have zero bills you can get away with making next to nothing.
But you can earn more than that, and then use the earnings to pay the mortgage in retirement. Paying off a mortgage makes sense in the mental freedom game, but it's almost never the best way to invest your money.
 
By overpaying, you're 'earning' 2.75%, and the real number is even less with interest deduction and shit.. You can do WAAAY better than that with long term investing. Open a Roth.
That was my next question. An IRA is something I haven't opened/maxed. Maybe that is what I should do, max the HSA (when the GOP expands it), max the Roth IRA, keep my 401k investments, then whatever is left dump into the house.
 
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But why? If he could pay off the house and have zero debt in 5 years or less then I would always do that. Then he can 100% control what he wants to do. Just think of different options you would have right now if you were in your current situation but you owned your house outright.
The numbers are relatively simple. He'll likely earn around 7% with a long term investing strategy, and less than 2.75% by overpaying the mortgage.
 
But you can earn more than that, and then use the earnings to pay the mortgage in retirement. Paying off a mortgage makes sense in the mental freedom game, but it's almost never the best way to invest your money.
A house is not an investment. It's a necessary evil, similar to a car.
 
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That was my next question. An IRA is something I haven't opened/maxed. Maybe that is what I should do, max the HSA (when the GOP expands it), max the Roth IRA, keep my 401k investments, then whatever is left dump into the house.
Max the Roth, then open a traditional investment plan. The best part about those is that you can withdraw your principal and earnings at any point, like when you're financially independent before the age of 65...
 
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But you can earn more than that, and then use the earnings to pay the mortgage in retirement. Paying off a mortgage makes sense in the mental freedom game, but it's almost never the best way to invest your money.

But if he's happy in his house he could technically semi retire once his house is paid off. I'm not arguing your comments because they are correct. I'm arguing that is a 20 year plan and you have zero idea what will happen over that time. My mother in law thought she was set on her long term plan when she retired and when everything took a shit in 08 she lost half of it. Why not take a 5 year or less plan and guarantee that house is done then at that point you can focus 100% of everything to retirement.
 
But if he's happy in his house he could technically semi retire once his house is paid off. I'm not arguing your comments because they are correct. I'm arguing that is a 20 year plan and you have zero idea what will happen over that time. My mother in law thought she was set on her long term plan when she retired and when everything took a shit in 08 she lost half of it. Why not take a 5 year or less plan and guarantee that house is done then at that point you can focus 100% of everything to retirement.
Then your mother in law wasn't properly vested. If she was that close to retirement, there was no way she should have had a large position in the stock market.
 
Then your mother in law wasn't properly vested. If she was that close to retirement, there was no way she should have had a large position in the stock market.

08 wasn't just about the stock market dropping. Some people who had pensions outright lost them. Maybe their retirement was to sell their larger house and it went underwater value wise. Medicare changed on what they would pay for as well as the amount you had to pay changed. There are tons of items that constantly change and fuck up peoples plans all the time.