Hi. Pay down mortgage or invest in TODAY's market ?

[RetireAge50]

I see it as a cash flow issue. If you can pay off the mortgage before you retire, you will have an extra (whatever your mortgage payment is) every month. We had 2 homes and sold one when we retired, paying off both mortgages. Very happy with this decision.

I see what you are saying but I did the opposite (not pay off the mortgage) for the same reason (more cash available). [emoji3]

 

[ERD50]

I see it as a cash flow issue. If you can pay off the mortgage before you retire, you will have an extra (whatever your mortgage payment is) every month. We had 2 homes and sold one when we retired, paying off both mortgages. Very happy with this decision.

And as RetireAge50 just posted, your 'analysis' completely ignores the major cash flow that it took to pay off the mortgage!

It amazes me that so many posters look at only one side of the equation. I can only assume that they simply want to justify their decision?

It's very much like saying "I like muni bonds because I don't have to pay FIT on them!". OK, great, but if you don't mention, don't take into account that munis pay a lower interest rate (because they can), it isn't helping anyone make a decision on the matter.

Munis, or a mortgage pay-off may be appropriate for an individual, but it is not an informed decision if you ignore certain aspects. As also stated by others, the mortgage pay off does not come 'free'. If you don't consider all aspects, it seems you are fooling yourself, intentionally or not.

-ERD50

 

[WhenIsItTime]

And as RetireAge50 just posted, your 'analysis' completely ignores the major cash flow that it took to pay off the mortgage!

It amazes me that so many posters look at only one side of the equation. I can only assume that they simply want to justify their decision?

It's very much like saying "I like muni bonds because I don't have to pay FIT on them!". OK, great, but if you don't mention, don't take into account that munis pay a lower interest rate (because they can), it isn't helping anyone make a decision on the matter.

Munis, or a mortgage pay-off may be appropriate for an individual, but it is not an informed decision if you ignore certain aspects. As also stated by others, the mortgage pay off does not come 'free'. If you don't consider all aspects, it seems you are fooling yourself, intentionally or not.

-ERD50

Also must consider debt to investable asset ratio, income to spend, and possibly age and estate goals. Binary is too simplistic. Variety of inputs/goals lead to variety of right answers.

 

[FIREarly]

There are a lot of personal decisions you need to make on paying down your mortgage vs investing the money. I can only give you my opinion.

What % are you paying in interest? 4%+?

Microsoft, MSFT, continues to be an amazing investment. I believe it is beating the S&P500 over the last multiple years. Right now, Microsoft just dominated its 4th quarter numbers. Yes, this is one time but it is from an article I was reading yesterday. Either way, MSFT is an excellent option in my opinion.

 

[corn18]

There are a lot of personal decisions you need to make on paying down your mortgage vs investing the money. I can only give you my opinion.

What % are you paying in interest? 4%+?

Microsoft, MSFT, continues to be an amazing investment. I believe it is beating the S&P500 over the last multiple years. Right now, Microsoft just dominated its 4th quarter numbers. Yes, this is one time but it is from an article I was reading yesterday. Either way, MSFT is an excellent option in my opinion.

Why do you recommend MSFT in threads that have nothing to do with anything remotely related to MSFT? (this isn't the only one)

 

[FIREarly]

I'm not so much looking to pay off mortgage in full but when have extra couple/few hundred dollars each month, would you invest or pay down principle?

The reason for speaking about investing in MSFT is because the original question quoted above asks "would you invest or pay down principle?" That is his final decision but I believe it is worth it to look at MSFT as an option.

 

[jmp470]

Pay off the debt. It’s liberating.... We are on a kick to eliminate all debt before I try to retire again.... First time was good and taught me several things.

 

[Housewife]

FWIW, we recently paid off our mortgage. It was a large 15-year mortgage with substantial P&I payments. We struggled for a while trying to decide whether to keep the mortgage outstanding for a larger investment pot. We eventually pulled the trigger most due to: (1) Trump’s new tax law reduced the value of mortgage interest deduction, (2) the persistently low interest environment, particularly for investment grade FI instruments, and (3) Significant cash flow needs potentially constrain our investment allocation flexibility. Paying off the mortgage is indeed a relief for us psychologically. Although on the flip side, i have also noticed that we are spending more liberally on other stuff because of the lower (perceived?) expenses. The degree of financial discipline is just not the same any more.

 

[jmp470]

FWIW, we recently paid off our mortgage. It was a large 15-year mortgage with substantial P&I payments. We struggled for a while trying to decide whether to keep the mortgage outstanding for a larger investment pot. We eventually pulled the trigger most due to: (1) Trump’s new tax law reduced the value of mortgage interest deduction, (2) the persistently low interest environment, particularly for investment grade FI instruments, and (3) Significant cash flow needs potentially constrain our investment allocation flexibility. Paying off the mortgage is indeed a relief for us psychologically. Although on the flip side, i have also noticed that we are spending more liberally on other stuff because of the lower (perceived?) expenses. The degree of financial discipline is just not the same any more.

Reminds me of when people asked me how much my plan costs! I always told them, as much as the wife and I were willing to spend!

But with no mortgage, I believe you have more freedom. Maybe I’m just thinking emotionally about it.

 

[Maidensong]

Real estate we live in is almost always an emotional decision. We use numbers to justify our choices, but in the end, it's where our lives play out and we feel strongly about it. Which is why I suspect my comments struck a nerve. I didn't intend to offend anyone who opts not to pay their mortgage off early. I merely shared how we felt about it.

And lest you think we had a magic wand to wave the indebtedness away, let me assure you that is not so. We threw extra principle payments at the debt for many years. Perhaps the financial discipline involved is why people are congratulated when the mortgage is paid off early.

One other thing: We hope to leave an inheritance to our children. They may decide to sell our home and rental properties, but at least while they are trying to do that, they won't be burdened by a monthly mortgage payment. My cousins inherited a brand new lake home from their dad. None of them lived near enough to use so they put it on the market. It took 3 years to sell. And they had to pay the mortgage every month until it did.

 

[DeborahB]

I hoped to not have a mortgage in retirement but I moved and bought a house. I don’t have children or parents to worry about. I loved not having a mortgage. But the escrow for my taxes and insurance is close to $900 a month. My mortgage is at 4.125%. So I grit my teeth and remember that logically,I do better with a huge interest deduction.

 

[Eastbayboy]

So your AA is 0/100?



Good point, but it is generally one in favor of keeping a mortgage.

The $40K will pay a mortgage for a long, long time. And the utilities, property tax, maintenance, insurance etc, and all your other non-house related bills, like food. If you pay it off, you have $40K less to cover property tax, maintenance, insurance etc. That is what could put you in a bind.




Hogwash. Maybe it feels like a weight on your shoulders, but many of us are just fine with it, and have benefited immensely from it. Not all debt is bad debt. That kind of thinking holds you back from taking advantage of good opportunities.

-ERD50

What he said!