Why can I not stop thinking about paying off my mortgage?!?!

[Mulligan]

I have neighbors like that. Never saved anything or invested. But get around $20k a month from city and state pensions. They seem to have no worries. Travel, new high end cars etc. Things like interest rates, market returns, inflation, Roth conversions, Tax torpedo's, SS etc. are nothing at all to them. Just a different way to go. While its still going...

Now, I could pay everything all off if I wanted to, no problem. But I have always been able to cash flow finance and typically for almost nothing. If other peoples money is very cheap or free, Im going to use it over mine all the time.

 

[Magus]

I doubt housing prices will tank overall (IOW, go down more than about 10%). There is such a huge shortage of housing in the country that it's hard for me to see this happening and sticking.

Not to mention housing prices have not tanked a few times in the last few decades like the person you are responding to said. They’ve tanked once and only once since the Great Depression (nationally) but the type of buyer and downpayment, and as you indicated housing stock situation, is 180 degrees from 2004-2007. I’ll be shocked if prices drop nationally. Could a market like Austin dip after going up 50-75% in 2 years? Perhaps some.

 

[Bigdawg]

While its still going...

Why would it stop? We currently have 2 retired military pensions and 2 small VA disability checks coming in each month. The ramifications, not only in the USA but world wide, if these stopped would be epic. Enron can fail, the US government cannot. We still are fiscally responsible and have aprox 800K invested. We don't invest (much) more because in addition to what we currently receive each month, we expect to receive a FERS and 2 SS checks eventually. Just like the when to take SS decison, the pay off your mortgage decision depends on your overall finanacial situation.

 

[Rianne]

I have neighbors like that. Never saved anything or invested. But get around $20k a month from city and state pensions. They seem to have no worries. Travel, new high end cars etc. Things like interest rates, market returns, inflation, Roth conversions, Tax torpedo's, SS etc. are nothing at all to them. Just a different way to go. While its still going...

So that's where my city and state taxes are going.

 

[Aerides]

I have neighbors like that. Never saved anything or invested. But get around $20k a month from city and state pensions. They seem to have no worries. Travel, new high end cars etc. Things like interest rates, market returns, inflation, Roth conversions, Tax torpedo's, SS etc. are nothing at all to them. Just a different way to go. While its still going...

What astounds me most by this, is that anyone would share anywhere near remotely this kind of personal financial detail with a neighbor. Even a pretty-close friend. I can't imagine the sort of conversations that would even lead to knowing this about someone I wasn't related to, and even then.

But if DH and I had solid $20k per month pensions, heck yeah we'd live like that (just also have some savings), but I'd be BTD'ing and have no worries either!

 

[almost there]

What astounds me most by this, is that anyone would share anywhere near remotely this kind of personal financial detail with a neighbor. Even a pretty-close friend. I can't imagine the sort of conversations that would even lead to knowing this about someone I wasn't related to, and even then.

But if DH and I had solid $20k per month pensions, heck yeah we'd live like that (just also have some savings), but I'd be BTD'ing and have no worries either!

Its public information, CalPERS, and others Example,https://publicpay.ca.gov/Reports/PositionRpts.aspx?rpt=CityManagers

 

[Magus]

What astounds me most by this, is that anyone would share anywhere near remotely this kind of personal financial detail with a neighbor. Even a pretty-close friend. I can't imagine the sort of conversations that would even lead to knowing this about someone I wasn't related to, and even then.

But if DH and I had solid $20k per month pensions, heck yeah we'd live like that (just also have some savings), but I'd be BTD'ing and have no worries either!

I've always thought the opposite. Why do people not talk about income, investing and the like more often? The only ones that benefit from people not talking about it are corporations. We already indirectly (as a society at least) do this through material possessions anyway.

I think in the case of pensions though, many states/counties publicly list them all so fairly easy to look up.

 

[aja8888]

If we had $20 K in monthly pensions I wouldn't be posting here very much!

 

[RHailey]

A compromise would be to pay down a portion of the mortgage and then recast it. You keep the same interest rate, same remaining months, and have a lower payment, and you would still have the option to pay more principle down if desired. Plus, you would not have sunk all your available funds into the mortgage. Based on your numbers, if you pay down half your mortgage you would reduce your monthly payment to under $1000/month. Make extra principal payments if you want to pay it off faster. Not all mortgages can be recast, but most can. It usually costs around $200.

 

[almost there]

Good idea. Another option would be by-monthly payments. Paid a small fee for mine years ago. Auto deductions by weekly. Add a bit here and there and its paid much faster. It was a 15 yr. Paid off in 7. As you have the low intetest loan, you can make the decision when to pay it off.

 

[corn18]

Partially paying it off is the worst of all worlds.

 

[almost there]

Partially paying it off is the worst of all worlds.

Orig. poster is 56 with a 29 year loan. Anyone really want to be 84 with a mortgage? Not sure I understand....

 

[corn18]

Orig. poster is 56 with a 29 year loan. Anyone really want to be 84 with a mortgage? Not sure I understand....

Why not? The data clearly show that paying it off would be stupid.

 

[Turbo29]

Paying off the mortgage is a religion to some. If one subscribes to that religion, great, but proselytizing is a bit much.

 

[homestead]

We paid off our mortgage in 1988. Our interest was 9.5% so it was to reduce our long term expenses. OP, yours is a different situation and it may be to your advantage to let inflation eat away at your monthly payment if you can talk yourself into it.

 

[daylatedollarshort]

Orig. poster is 56 with a 29 year loan. Anyone really want to be 84 with a mortgage? Not sure I understand....

The only true cost with a mortgage is the interest expense. The principal part of the payment just transfers money from your checking account to your home equity. By age 84, the interest expense would be a small part of the payment and the loan would be almost paid off, so it would be even easier then to pay off the loan if he should choose to do so.

If corn18 makes 2% on the spread with an average balance of $222,500 (1/2 of $445K X 2%), he makes $133,500 on the interest, or $4,4450 per year. If he invests that money, then he makes $271K on the investment interest, plus his original savings, for a total of $404,500. In year 28 of the loan he will have most of that $404,500 in his portfolio, with which to pay off his now very small mortgage balance of $50K or so.

Corn18 will be 84 in 28 years whether he has a mortgage or not. The difference is does he want to be 84 with an extra $404,500 in savings. I would personally sleep better with the extra $405K.

 

[Phroig]

In paying off the mortgage, OP is investing in a bond that pays 2.25%. Most treasuries are now yielding in excess of 3%. The expected return on equities at this point (IMO) is significantly more. OP doesn’t need to wait 29 years, but paying off everything immediately is clearly not optimal.

 

[Fire Dave]

As long as you have at least 20% equity and aren't paying PMI...I'd keep it.

Or split the difference and refinance to a 15 year? That's what I did a few years ago, but I went from 4.5% 30 year to 2.5% 15 year. Shaved like 80-$100,000 off of total interest, only raised the monthly payment like $300 and let's me sleep a LOT better at night. I didn't have the cash to pay it off anyway, but I probably wouldn't have even if I did. Granted I'm only 34 with money going into savings not out of it. 9 years left to go on that and I feel good about it. Any extra money I have is much better used other places.

I remember reading a click bait probably 10 years ago that Zuckerberg mortgaged one of the new big houses he bought or built. I remember thinking that was odd....since he could probably pay cash for the entire neighborhood....but just goes to show there are financial reasons (other than not having the money to pay in cash) to have a mortgage.