Author Topic: Paid-off mortgage people: How long did it take you to pay off the house?  (Read 19685 times)

evanc

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #350 on: November 01, 2018, 05:49:57 PM »
Here in Canada, there is no tax deduction for mortgage interest.
This changes the math a bit for the early-payoff approach.
We paid ours, just under $200k, in 14 years, which is no great hurry. But we figured the Variable Rate deals we were getting--at one point less than 2%, and mostly in the 2-4% range--were a once in a lifetime opportunity to get the principal down. So we did that, while all the time investing as well, just slowly. Turned out it WAS a once in a lifetime deal, as rates have since gone back up.
For fairly weak-ass frugal people, we ended up mortgage free sort of fast, with no cash flow squeeze, ongoing savings and annual travel . . . on roughly the local median income.
I just don't know how so many people up here manage to spend all of their $100k plus salaries, and still require working to 65 or older. (Oh, yes I do: cars and trucks. Big TVs. Big data plans. Golf and ski fees.)

I hope this isn't too far off topic, but personally I find that the touted tax advantages for most Americans is overstated.  Let's say you have, in a given year, $10,000 of mortgage interest, and you are in a 30% tax bracket, so you are paying $10,000 in order to save $3000 on your taxes.  You have a net loss of $7000.  I am left scratching my head how people think this is a good idea.
Ok, I know i have defended paying off the mortgage, but a head scratching comment about why investing instead might be a good idea is an odd thing to say.  Perhaps because over time you have uses for the money which earn more than $7000 on average.

Seems pretty obvious both why paying off debt is attractive to some and why holding debt to invest more is attractive to some.  Why this there this need to be so critical of one option or another?  ..Seems odd to me.  The tax benefits are what they are.  Include them in you own personal analysis assumptions and decide if paying off the mortgage is for you. 

Some prefer a guaranteed return, some taking a risk that can pay off better long term.

 Not sure why you seem to take such personal offense to a comment that was not even replying to you, personally, but sincerest apologies for touching a nerve. Not my intention. As you said, there are risks and benefits either way, and we can definitely agree to disagree. Cheers, mate!
My only point was that tax benefits are part of the calculation for the cost of your debt, and accordingly part of the calculation one should make in deciding if paying down debt is a good idea.  Not sure where you got the idea that I took any personal offense.

Why that should leave one scratching ones head puzzled me.  It was as if you were saying possible tax benefits should not be considered. If you meant something different, I am sorry if I missunderstood.

My goal is for people to get good, analytical frameworks for assessing their life decisions.

Ok, we are on the same page then. I am here to learn and share my experiences and opinions. I never mind disagreeing with anyone; in fact, I welcome all thoughts, as it just allows me to learn more.  From the tone of your post, I was under the impression you took offense to my comment about scratching my head. I stand corrected. 

I completely agree with you that it's a matter of personal preference, after all is said and done in terms of the numbers, which admittedly could be different for you than for me.  My personal preference is to be 100% debt-free, but I do understand why others are comfortable carrying some level of debt in the form of a home mortgage. To each, his own.  I only wanted to make the point that the tax "savings" have a cost, which in my personal experience people do not adequately account for. If you know and understand those costs, then you can make the best informed decision for your personal situation.

TexasRunner

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #351 on: November 01, 2018, 07:42:50 PM »
  It has been my experience that most people tend towards the latter behavior,  given a long enough time horizon. YMMV.   And when I say stuff happens, I am referring to a persons ability to continually generate income.  Of course I don't expect to  wake up tomorrow and be unable to work, but it can happen. And if it did, my first thought would not be, how am I going to make my mortgage payment? 
Except for the several years where you have put yourself at more risk by paying extra but still having a mortgage payment.  In this example you would be better off investing until you had the full funds to pay it off in full.

Not to mention you can withdraw assets to continue paying the mortgage in an emergency scenario.

Let me propose a hypothetical situation for you, by way of further illustration. Let's say your investment of $400,000 tanks in a given year ( market volatility is a given),  end it just so happens that the same year, your mortgage company decides to call in the full amount of your loan. 

Strawman much?!....  Mortgage debt in the US is non-callable.  Basically as secure as you can get.

You would have thought that you could just take the money and pay off the loan, but what now? Go back to work?  What if you can't? What if you don't want to?

 Like I said, just some things to think about. I completely understand that mathematically speaking, what you are saying has the potential to be financially sound, but it does come with its own inherent risks.

And the risks are greater for paying it down early (unless, potentially paying it off in one fell swoop, but thats not what POTM club recommends...)

Bird In Hand

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #352 on: November 02, 2018, 11:07:18 AM »
Sheesh -- get a room, guys!  :D

jengod

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #353 on: November 02, 2018, 06:01:27 PM »
Wait wait wait, I was just reading back a page and boarder42 got banned?! How did I miss this drama?

TVRodriguez

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #354 on: November 02, 2018, 06:37:10 PM »
According to Dave Ramsey, the average millionaire pays off their house in 10.2 years.

Ours was two months shy of 11 years. We had some savings already and got a windfall from some stock options.

Curious about other journeys and practices amongst those who do choose to pay off the mortgage “early.”

We paid off our mortgage at almost exactly 10 years from date of purchase.  We always had a good emergency fund and usually maxed out retirement accounts.  We rarely had enough deductions to exceed the standard deduction, so the tax savings wasn't there.  And neither of us likes debt.

Boofinator

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #355 on: November 03, 2018, 09:21:15 AM »
Wait wait wait, I was just reading back a page and boarder42 got banned?! How did I miss this drama?

I miss that guy. I completely disagreed with his approach and many of his conclusions, but he was entertaining.

DreamFIRE

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #356 on: November 03, 2018, 11:05:03 AM »
Wait wait wait, I was just reading back a page and boarder42 got banned?! How did I miss this drama?
You must have missed this thread also:
https://forum.mrmoneymustache.com/off-topic/r-i-p-boarder42/

BlueHouse

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #357 on: November 03, 2018, 02:54:43 PM »

And the risks are greater for paying it down early (unless, potentially paying it off in one fell swoop, but thats not what POTM club recommends...)

Wait, says who?  I've never seen anyone say not to pay off in one fell swoop.  Sinking funds are recommended often, too.  For me, I took a big lump sum when I had it available, then paid my mortgage DOWN and did a no-charge recast (re-amortization) through the bank.  This brought my payments down to something I felt more comfortable with. 

The only thing I've ever argued against in this lengthy discussion is that no one should ever argue that one way is ALWAYS preferable to another. 

asauer

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Re: Paid-off mortgage people: How long did it take you to pay off the house?
« Reply #358 on: November 06, 2018, 05:39:58 AM »
It took us about 7 years of intense focus.  We lived in the house 2 years before that making regular payments.