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Old 06-28-2020, 12:47 PM   #21
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IF you would be using $86k of the $108k in cash to pay off the 3% mortgage then I would pay off the mortgage assuming that the cash is earning not much.
+1
OP - pay off the mortgage there is no benefit to having it since it's costing you money at 3% while you might earn 1% on similar money.

I view a mortgage as a negative CD, so I'm always willing to trade in my CD and pay off my mortgage once the mortgage costs me a bunch.

The rest of your money invested is already in stocks, etc, which might go up/down so it's not like you need more investments when you are really borrowing the money at 3%.

This will still leave you with an emergency fund, plus your CC's.
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Old 06-28-2020, 05:17 PM   #22
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There will never be a consensus answer on this. It just really depends on a lot of things which really boil down to what makes you feel more warm and fuzzy.

For me, taxes and insurance are half my mortgage payment, so paying the house off only cuts my ongoing housing expenses in half, and I'd rather have that money in the stock market than in equity.

On the other hand, my house is a cookie-cutter commodity house on a 1/4 acre lot well-sited for commuting to places work, and not where I imagine myself being in retirement. (Even though I am now retired and the pandemic has caused me to delay my plans to move where I'd like to be retired.) I imagine if you know you're in your "forever" property, the value proposition may be different.

Also, I've proven to myself over the past 20 years I can now manage my money well and not let large piles of assets burn a big hole in my pocket. Some people may want or need the "forced savings".
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Old 06-28-2020, 06:10 PM   #23
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I would put half the cash on the mortgage and keep the other half as cash.
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Old 06-29-2020, 04:31 AM   #24
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Send an extra month or two of principal. Pay off in half or one third the time. You can always stop or even accelerate the extra payments.
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Old 07-03-2020, 03:46 PM   #25
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I paid ours off two days ago, so being a recent event, I can tell you I feel elated and no problem sleeping. If anything ever happened to my job, it would not take nearly as much to live on. Made double payments for the last 7 years to pay off in 16 years.
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Old 07-03-2020, 04:26 PM   #26
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Ours is paid off. It works for us. One of the tipping point is in Texas, over 65 can defer their taxes until the house is sold, or both spouses die. Our property tax is over $6,000 a year. There are cases in Tx, where banks have allowed the owner to defer the tax, sold the loan, new owner forecloses on the lone for failure to pay tax.

So yes, we could make money we don't really need, but we sleep better at night knowing the home is ours.

Oh, and I don't buy the 'if you loose your job, which would you rather have'. If you are retired it is real hard to loose your job, and if you loose your income you are in trouble either way, except if you own you home it is harder for someone to take it away.
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Old 07-03-2020, 04:48 PM   #27
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OP here. Appreciate the feedback from everyone per usual. As you can tell I am pretty conservative to have such a big emergency fund. One thing I failed to mention is that my car is pretty old and when it does fail I would like to be able to replace with cash, just like how I bought it. (A check if you you want to get technical.) So I think that I am going to pay off half. That will leave me with enough to pay for a car and have something left over. I know that the money is earning next to nothing in the Ally account but I sleep better at night knowing itís there. Itís nice to not have to worry about the random expenses that come up that you did not necessarily plan for.
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Old 07-03-2020, 05:01 PM   #28
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Sounds good. I think it comes down to which gives you more satisfaction, looking at the big bank balance, or less sucking sound from the monthly payment. I went with less sucking sound.
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Old 07-03-2020, 05:15 PM   #29
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Paid off my mortgage 2 years prior to retirement and never regretted it. Having a smaller monthly nut to pay makes me feel better. I donít see utility bills mentioned much but I installed solar panels before retirement and cut my utility bills to zero.
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Old 07-03-2020, 05:17 PM   #30
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Paid off the house on 03/23/2001. Put two children through college with no debt. Fully retired on 09/12/2016. The paid off house freed up a lot cash for investing etc.
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Old 07-03-2020, 05:22 PM   #31
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I will have the house paid off by the time I retire regardless of whether or not I pay off or pay down my mortgage. I have eight years left, am 42 and hope to retire by 50.
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Old 07-03-2020, 05:23 PM   #32
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my car is pretty old and when it does fail I would like to be able to replace with cash, just like how I bought it. (A check if you you want to get technical.)
Heh, I bought my last car with a debit card. It was one of the "no-hassle" used car dealerships.

I had to call my bank ahead of time with an estimate so they would allow a larger than usual transaction. Put my card and PIN in the machine, drove away in my car.
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Old 07-03-2020, 05:24 PM   #33
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Iíve never lost a good nightís sleep worrying about not having a mortgage. We paid ours off in the middle of the last financial crisis.
The future of the stock and bond markets are pretty uncertain right now, and saving cash doesnít pay much. I think your best bet is to pay off the mortgage.
+1

Not having a mortgage is so freeing.
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Old 07-03-2020, 05:37 PM   #34
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Iíve never lost a good nightís sleep worrying about not having a mortgage. We paid ours off in the middle of the last financial crisis.
The future of the stock and bond markets are pretty uncertain right now, and saving cash doesnít pay much. I think your best bet is to pay off the mortgage.
I agree. Zilch to be made in guaranteed money like CDís. Whatever the loan interest rate is is your return percentage. With the markets being volatile, no house payment could never be a mistake.
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Old 07-03-2020, 06:10 PM   #35
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I agree. Zilch to be made in guaranteed money like CDís. Whatever the loan interest rate is is your return percentage. With the markets being volatile, no house payment could never be a mistake.
Never say never. Suppose today you use all of your savings/investments to pay off the mortgage, figuring you'd have no problem making ends meet from your income with the eliminated mortgage expense.

Tomorrow the HVAC goes out. Or the car has a major transmission problem. Or you have a huge medical expense with a large deductible. Suddenly you have to come up with some cash to pay that expense, but it's all tied up in your house.

It doesn't even have to take a major expense. Suppose you retired early and have 5 years to go before you can tap retirement funds. You could use the bulk of your taxable savings to pay off the mortgage, but you still have too much in monthly expenses until you can start your pension, SS benefits, and access your retirement savings. Wouldn't you be better off to just keep the mortgage and make the monthly payment to make your money last until you can access the rest of your money? Leverage the mortgage to make your money last through that bridge period.

Like I said, never say never.
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Old 07-03-2020, 06:37 PM   #36
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OP here. Appreciate the feedback from everyone per usual. As you can tell I am pretty conservative to have such a big emergency fund. One thing I failed to mention is that my car is pretty old and when it does fail I would like to be able to replace with cash, just like how I bought it. (A check if you you want to get technical.) So I think that I am going to pay off half. That will leave me with enough to pay for a car and have something left over. I know that the money is earning next to nothing in the Ally account but I sleep better at night knowing itís there. Itís nice to not have to worry about the random expenses that come up that you did not necessarily plan for.
That makes sense. I believe having enough cash to weather planned/unplanned situations is worth giving up some return to have that comfortable feeling.
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Old 07-03-2020, 07:23 PM   #37
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I paid off mine two years ago. Yes, I could have paid it off a lot sooner because I had more than enough in investments - but I just hate selling equities. I left work a month later when I realized my expenses were now so low that I never had to work again. But my house is also a fraction of my net worth so I will not have to tap the equity.
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Old 07-03-2020, 08:07 PM   #38
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You will get a variety of responses here.

We paid ours off. One way to view it is a guaranteed zero-risk 3% return on your money. Where else can you get that right now?

And the feeling of zero debt is pretty nice as well.
But you only make the 3% once, never again.
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Old 07-03-2020, 08:13 PM   #39
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@RunningBum I get what you are saying. If I pay down the mortgage I will shave off four years and save 8K of interest. I have looked at the numbers and after property taxes and insurance I will have about 1K more per month to use however I wish once the mortgage is gone. I would then have 48K more by the time if I save the money in preparation for my retirement.
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Old 07-03-2020, 08:37 PM   #40
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But you only make the 3% once, never again.
Not really. Youíre not making the 3%, you are avoiding paying someone else 3% for all those years. To off set that, you need the same amount as the payoff invested, risk free and returning 3%, which you canít get now.

Iíve have the same struggle. Years ago I borrowed against my mortgage and invested. Now in 2020, I just paid it off with 7 years left since I fired last year.

I am using the bucket system, do this all comes out of bucket two.
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