Poll:Do you Own your home outright?

[COcheesehead]

Mortgage under 3%.
Bond ladders paying close to 6%
We itemize interest and property taxes.
The house is new. We spend little to nothing on maintenance.
Yard is xeriscaped so little outside work.
Zero interest in paying it off.
No emotional stress that it’s not paid off.

 

[jollystomper]

We paid off our mortgage in 2020 two years after I retired. Reasons included the pandemic curtailing a lot of our planned spending, and savings interest rates falling to next to nothing. At that point, even with a low monthly payment and interest rate, I thought lets just simplify our financial life with one less payment.

By coincidence, it was about 30 years after we originally purchased the home:

1990 - purchase, 30 year fixed, 9.75%
1993 - refinance, 30 year fixed, 7.25% (same lender)
2003 - refinance, 20 year fixed, 6% (lender #2)
2009 - refinance, 15 year fixed, 4.5% (lender #2)
2013 - refinance, 15 year fixed, 2.875% (lender #3)

 

[GalaxyBoy]

Retired with only a few years left on a 15 year mortgage. Low interest rate and since we’re near the end, the majority of the monthly payment is principal so I see little advantage to paying it off now.

 

[corn18]

Every time I plug in paying off my mortgage, my model yells at me and tells me I'm an idiot.

 

[Jeffman52]

As a requirement for getting DW on board for early retirement, we agreed to pay off the house. We moved from Georgia to Ohio 5 years ago to help take care of her dad and we got a new 15 year mortgage on a house that was really too large but was super close to him, so it made caring for him easier. We paid that off a few months ago (5 years on a 15 year). Her dad passed away this year as well so there is nothing holding us to Ohio unless we want to stay. The house is really too large for us (with a fully finished basement, and the bedroom is on the second floor) so we will probably sell and downsize somewhat into a single level house over the next few years.


For us, its a peace of mind thing and indeed for this area house prices have increased quite a bit in 5 years and seem to be holding steady. For this house, from 300K to 500K, so not a bad investment anyway.

 

[Northforker]

Paid the house mortgage off in 2014, 6 years before retirement. Bought equities with the money that used to go to the bank. No other debts either, boat. Rv. Florida RV lot. Car. Truck. All paid off!

 

[EarlyandLate]

My last two homes have been bought with cash. Being a cash buyer was a great advantage in both cases. I likely would not have gotten my current condo in a perfect location had I not been paying with cash and able close quickly. I know that you cant believe much that realtors say, but I was told that my offer was chosen out of 5 just because I was cash.

 

[Yipper]

Mortgage under 3%.
Bond ladders paying close to 6%
We itemize interest and property taxes.
The house is new. We spend little to nothing on maintenance.
Yard is xeriscaped so little outside work.
Zero interest in paying it off.
No emotional stress that it’s not paid off.

We're in a similar situation (except for xeriscaping)... happy for the spread in interest rates. Inflation making the mortgage cheaper and cheaper.

 

[rodi]

We originally bought in 2003 with a 30 year mortgage. Refied in 2007 to a 15 year mortgage with 3.25%. Made extra principal payments along the way as a means of 'saving' (building equity). Built an ADU/Granny flat for in-laws to live in in 2007-8. Paid cash for that. When mortgage got down to about $40k we decided to pay it off... hadn't gotten tax benefit for a while. That was 2014. Started renting out (with market rent) in 2014 as FIL had passed and MIL needed a more supportive situation (memory care.)

Retired in 2014.

Currently get $2600/month rent for the ADU/granny flat. So our home is paying us. We can deduct some of the property taxes (2/3s because of how prop 13 works). The income stream was definitely part of our retirement cashflow plan.

We did consider taking a mortgage out on the 'granny flat' portion of the property as that's what a FAFSA knowledgeable FA suggested to offset our rental income. But he admitted this hadn't been tested. FAFSA rules require you to count the 'business' portion of your home as 100% available for college tuition. We opted not to - since we had 529 money set aside.

 

[SloHan]

House was paid off about three years before retiring in 2018. I invested what was the mortgage $$ in to a taxable brokerage account.

 

[djsander]

Paid off our previous home about 10 years ago. Retired two and a half years ago, sold house moved and paid cash for our retirement home. The retirement house did cost more than our previous home, it was 2021 and the ridiculous bidding wars and escalating prices but the cash offer made the deal very desirable to the seller.

 

[rkser]

Paid cash for the down sized retirement home in 2016

 

[tenant13]

I'm in large rent controlled apartment that costs me ridiculously little to keep. The rent includes all utilities, even central AC - so I have no clue what are electricity, water or gas prices... Therefore I never owned. It made no financial sense - I invested in the market instead and it worked out to my advantage. It's less "a home" than a base - I travel so much these days that I'm here maybe 4-5 months a year. And I own two rental properties in Europe - one could conceivably become my base in the future since I have EU passport but as long as I like having a place in NY, I'm not changing anything.

 

[Yipper]

My last two homes have been bought with cash. Being a cash buyer was a great advantage in both cases. I likely would not have gotten my current condo in a perfect location had I not been paying with cash and able close quickly. I know that you cant believe much that realtors say, but I was told that my offer was chosen out of 5 just because I was cash.

Being a cash buyer has been a nice benefit for us with our current house and a couple of rental properties... even though we've used HELOCs to free up cash it's worked very well as a leverage point. Sellers love a cash buyer.

 

[freedomatlast]

Paid off the first house in 6 years in 1990. Paid off the second one in 2000. Bought the next two with cash. No mortgage definitely helps with cash flow.

 

[11522914]

Bought house in 1992 with 30 year 8.5% mortgage rate.

Did a no cost 30 year refi 2 years later and lowered rate to 7.125%.

Did a no cost 15 year refi in 2003 with a 5.125 rate and thought, wow, we'll never see no cost rates that low again. [emoji1787]

Then 2008 came. I thought my wife and I were both going to lose our jobs. I was in the PMI industry and she was in the construction equipment rental business.

We were raising 2 young kids at the time. I vowed if we make it through this crisis and keep our current jobs we will pay off this mortgage early as it was the only debt we had and life would be much easier to manage with no debt.

We kept our jobs but didn't pay off the mortgage until 2014 as maxing out both our 401ks was another goal. Still, we paid extra principal every month. It took us 22 years from the original mortgage to pay it off.

I retired 5 years later.

 

[corn18]

Would anyone on here pay off my 2.25% 30 year fixed rate mortgage with 28 years left? Peace of mind is ok, but not with the current fixed income spread. It's free money. I have more than enough to pay it off, but won't.

 

[Gumby]

Would anyone on here pay off my 2.25% 30 year fixed rate mortgage with 28 years left? Peace of mind is ok, but not with the current fixed income spread. It's free money. I have more than enough to pay it off, but won't.

If I were in your shoes, I probably would not pay it off.

 

[skyking1]

I'm in large rent controlled apartment that costs me ridiculously little to keep. The rent includes all utilities, even central AC - so I have no clue what are electricity, water or gas prices... Therefore I never owned. It made no financial sense - I invested in the market instead and it worked out to my advantage. It's less "a home" than a base - I travel so much these days that I'm here maybe 4-5 months a year. And I own two rental properties in Europe - one could conceivably become my base in the future since I have EU passport but as long as I like having a place in NY, I'm not changing anything.

That sounds like a sweet deal. Perfect for retirement travel.

 

[clifp]

During the mid 2000, my house had no mortgage.

However, once the Fed decided to launch it's war on savers, and reduced interest rates to near zero. I took out mortgages and kept, refinancing. My last one was $750,000 because that is the maximum you can get a tax deduction for, at 1.875% rate for 15 years. (I probably should have paid the extra 1/2% and got if for 30 years)

I'm loaning the money out at an interest rate that starts at 12% and go up. I figure I making at least 75K/year on the spread. Peace of mind ain't worth $75K/year to me but YMMV.

 

[CaptTom]

...I'm loaning the money out at an interest rate that starts at 12% and go up. I figure I making at least 75K/year on the spread. Peace of mind ain't worth $75K/year to me but YMMV.

Yeah, but the loan shark business wouldn't give me peace of mind, either.

Seriously, I get what you're saying and it's absolutely a smart move. Just that not all of us are in your situation. Having a roof over one's head can be a good thing, too.

 

[iloveyoga]

It changed my life when we paid off our house in 2010. It gave me the confidence I needed to retire at age 54. It was always my biggest bill/payment. I have been happy with that decision, the peace of mind was great for us.

 

[yakers]

I wrote this maybe 20 years ago, I'm one of the old f@rts on the board I suppose, retired 15 years ago @ 57 and on the board some years before that, don't know if the '29 depression impact has carried over to the another generation but some of us are childern of the children of the depression.
Not financial advice, just my story relating to paying off the mortgage:

I am my father's son.

Today I made the final payment on my mortgage, paid it off early, very early. Had a 15 year mortgage and paid it off in 11 years.

I can calculate a number of ways that carrying cheap debt is a reasonable way to proceed. But my Dad survived the Depression, it had a profound effect on him and I guess on me. My Grandfather had a coal distribution business in Chicago from about 1905 and was doing well. The coal company provided the coal on credit and the retail customers of my Grandfather were expected to pay him in 30 days. The depression hit and the customers could not pay him and he could not pay the coal company. He was always a good businessman, worked hard, did not cheat or live high and he got wiped out. Like a lot of other people.
*
My father NEVER borrowed money in his life. He saved up and bought a fixer upper house for cash in 1964. Always had old used cars. Never had much money but was never in debt. It worked for him. I have had a few loans in my life for vehicles and paid them off early. Now the mortgage is gone. I have older cars all paid for. No credit card debt, no car debt, no house debt, none, nada, nine, naght, zero, and it feels good.

Now in college I realized that having a fixed attitude about debt is missing part of the financial picture. A lot of people who borrowed money after WWII and leveraged themselves into suburban houses did well for themselves. Some of my uncles did well that way but most didn't. Anyone who bought gold before 1974 must have done well when the dollar was taken off the gold standard. But all that was too speculative for my Dad. I do think there is more to finance then his simple system (don't borrow money and save 10% of what you make) but only if a person really studies finance and has the discipline to systematically invest.

He had a good life: worked as a truck driver, was never in debt, fought in WWII, raised his 5 kids who all went to college and when he retired had about a 100% replacement of his modest working income. He died over ten years ago and I still miss him. But when I paid the mortgage off it sort of felt like he was there.

 

[Unpaintedhuffhines]

I get the psychological point of view of paying off the house, but when I look at the numbers, it doesn't make any sense (for us anyway). We have a 30-year mortgage at 2.5%, so we have zero intention of paying that off early (my only regret is that we didn't take more cash out when we did our last refi).

 

[ERD50]

I would be more ahead if I had my 2 homes on mortgage, and invested the payments.

But when the rate got so low that it looked like a no-brainer, where would I apply to remortgage, an ER with no earned income, no pension, and not even SS?

Could I pledge my 7-figure investment accounts in addition to the homes as collateral? The mortgage industry does not know how to deal with that. ...

I was able to do it, it wasn't hard. The rules are weird though, and I jumped through some hoops unnecessarily, that I could have avoided if I had been better prepared.

#1 - Ask them - what is the minimum I need to qualify? Then only provide enough documentation to support that. I had submitted docs on everything (they assume most people need everything they own to qualify), and then they just ask questions about those accounts (got messy with some joint, some in DW trust, some in my trust - and that doesn't align with eh 'entity' taking out the mortgage)and you need to respond now that it's on record, but I wouldn't even need the funds from that account to qualify anyhow.

I guess there is no #2 - I told you it wasn't hard!

In the end, all I needed to do was to document an account with something like 2.5 years worth of payments, and show that I set up automatic withdrawals from that account to my checking account that would meet their 'income' requirement, and I think show one actual transfer (which I transferred back the next week!). The fact that it wasn't 'income', but just moving money from one account to the other didn't matter. They need to check a box.

But that was when rates were 3.0%, not such a deal now.

-ERD50