Paid-off mortgage people: How long did it take you to pay off the house?

[boarder42]

Also you have a thread you can go post in that'd already the worst thread on these forums in my opinion.

[jengod]

OK well I guess we're just bad with math and money then and we'll only be house-rich or never make from being seven-figure millionaires to being eight-figure millionaires which starts to seem really rich

Choices have consequences, after all.

[boarder42]

OK well I guess we're just bad with math and money then and we'll only be house-rich or never make from being seven-figure millionaires to being eight-figure millionaires which starts to seem really rich

Choices have consequences, after all.

The first step is admitting you have a problem. So now that we've made it past that the second step would be acquiring the knowledge to help you understand how poor your decision is. Not looking for confirmation bias which is what this whole thread is about.

[jengod]

OK well I guess we're just bad with math and money then and we'll only be house-rich or never make from being seven-figure millionaires to being eight-figure millionaires which starts to seem really rich

Choices have consequences, after all.

The first step is admitting you have a problem. So now that we've made it past that the second step would be acquiring the knowledge to help you understand how poor your decision is. Not looking for confirmation bias which is what this whole thread is about.

I'm not the one having an insecure meltdown because other people don't follow your divinely ordained holy laws of FIRE and wealth creation.

[boarder42]

OK well I guess we're just bad with math and money then and we'll only be house-rich or never make from being seven-figure millionaires to being eight-figure millionaires which starts to seem really rich

Choices have consequences, after all.

The first step is admitting you have a problem. So now that we've made it past that the second step would be acquiring the knowledge to help you understand how poor your decision is. Not looking for confirmation bias which is what this whole thread is about.

I'm not the one having an insecure meltdown because other people don't follow your divinely ordained holy laws of FIRE and wealth creation.

It's not an insecure meltdown but thanks for taking a personal attack at me. I've attacked you're idea that's wrong in over 99.9% of historical scenarios and you've fallen all the way to the bottom rung of an argument by personally attacking someone. Please see forum rule number one.

[Clean Shaven]

It's an open forum I can post what I want where I want you can choose to read it or not your not blocking me from another thread asking the wrong question. Or promoting one of the worst things you can promote on this forum that is largely based around finances.

One of the worst things you could do is pay off your house?

Suuuuuuuure.

[boarder42]

It's an open forum I can post what I want where I want you can choose to read it or not your not blocking me from another thread asking the wrong question. Or promoting one of the worst things you can promote on this forum that is largely based around finances.

One of the worst things you could do is pay off your house?

Suuuuuuuure.

lets see its worse than

1. cable tv
2. eating out daily
3. paying a lawn service
4. using a clothes dryer
5. driving 50 miles or more RT to work daily
6. paying a bi weekly maid

its worse than all of that and you can even combine most of it depending on the cost in your location in most cases(read greater than 90%) historically for a 200k mortgage.

you can interpret worst as you please but in this land of pinching pennies its one of the worst when things on that list are harped on the most. 

stepping over dollars to pick u pennies.

[Clean Shaven]

It's an open forum I can post what I want where I want you can choose to read it or not your not blocking me from another thread asking the wrong question. Or promoting one of the worst things you can promote on this forum that is largely based around finances.

One of the worst things you could do is pay off your house?

Suuuuuuuure.

lets see its worse than

1. cable tv
2. eating out daily
3. paying a lawn service
4. using a clothes dryer
5. driving 50 miles or more RT to work daily
6. paying a bi weekly maid

its worse than all of that and you can even combine most of it depending on the cost in your location in most cases(read greater than 90%) historically for a 200k mortgage.

you can interpret worst as you please but in this land of pinching pennies its one of the worst when things on that list are harped on the most. 

stepping over dollars to pick u pennies.

How's it compare to buying a boat? Just curious where that one falls in the list.

[dandarc]

Depends on the boat.

[Dicey]

I'd like to follow this thread, but instead of just PTF-ing, I'll share my story briefly.

Current house: No mortgage, paid cash. Over $900k. HCOLA, if that isn't obvious.

The only way we could do that was because DH and I each had houses we'd owned a long time and held 30-year mortgages on. We sold them both to buy this one. We are proof that the DON'T Pay Off the Mortgage Crowd's message is worth listening to.

This shit works, it really works.

Oh, and lest the awesome DPOYM posse find fault, let me assure you that every one of our rentals has a nice 30-year fixed mortgage that were not pre-paying, even though we could easily pay them all off, but why would we?

Also, our current selves still kinda wish we'd locked down some of that super cheap mortgage money, but we bought on a short sale and the escrow took eight long months. Rates spiked during that time and at closing, we said "Fuck It" and just wrote a check. We never would have had that power without those early, l-o-n-g mortgages. Still  some day the people like B42 are going to have serious bragging rights. And the young folk will be envious of the rates that were available in the "olden days".

[boarder42]

It's an open forum I can post what I want where I want you can choose to read it or not your not blocking me from another thread asking the wrong question. Or promoting one of the worst things you can promote on this forum that is largely based around finances.

One of the worst things you could do is pay off your house?

Suuuuuuuure.

lets see its worse than

1. cable tv
2. eating out daily
3. paying a lawn service
4. using a clothes dryer
5. driving 50 miles or more RT to work daily
6. paying a bi weekly maid

its worse than all of that and you can even combine most of it depending on the cost in your location in most cases(read greater than 90%) historically for a 200k mortgage.

you can interpret worst as you please but in this land of pinching pennies its one of the worst when things on that list are harped on the most. 

stepping over dollars to pick u pennies.

How's it compare to buying a boat? Just curious where that one falls in the list.

my boat is far cheaper to operate and own than the earnings i get investing in lieu of paying down my mortgage - but i also dont have a celebratory thread looking for others to comfort me on a FIRE site in my poor choice for use of little green soldiers.

if you're interested in numbers a year or 2 ago i posted a thread about its cost in the antimustachian wall of shame and comedy where stuff like this belongs.

[meatgrinder]

Fuck the mortgage vs. investing debate...I'm putting it all in lottery tickets.

[Mesmoiselle]

I'm doing the full 15 year note at 3.5% interest on the 42k house I bought because my husband makes me :P

so it'll be done 2028. but I may rebel and pay it off the rest of the way when I FI as a celebration present to myself.

[Dicey]

I'm doing the full 15 year note at 3.5% interest on the 42k house I bought because my husband makes me :P

so it'll be done 2028. but I may rebel and pay it off the rest of the way when I FI as a celebration present to myself.

Pardon my French, but if I lived somewhere where a person could buy a whole goddamn house for 42k, I'd pay that fucker off too. Back in the eighties, when Denver hit the skids, a friend of mine bought a condo for $25k. She charged it on her American Express card, then paid it off.

I have always lived in a HCOLA. I am as amazed at your prices as you would probably be at mine.

[FireLane]

Bought my place at the beginning of 2009, with 20% down and a 15-year term. Paid off the mortgage this spring, so just over nine years total. Refinanced in 2013 at a crazy-low rate, which helped - I kept my payments the same, so more was going to principal.

I could've kept the mortgage longer and invested more, but what can I say, I like not having debt. I'm a millionaire not counting home equity anyway, so don't feel bad for me if I'm not doing the "optimal" thing.

[elysianfields]

It's an open forum I can post what I want where I want you can choose to read it or not your not blocking me from another thread asking the wrong question. Or promoting one of the worst things you can promote on this forum that is largely based around finances.

One of the worst things you could do is pay off your house?

Suuuuuuuure.

lets see its worse than

1. cable tv
2. eating out daily
3. paying a lawn service
4. using a clothes dryer
5. driving 50 miles or more RT to work daily
6. paying a bi weekly maid

its worse than all of that and you can even combine most of it depending on the cost in your location in most cases(read greater than 90%) historically for a 200k mortgage.

you can interpret worst as you please but in this land of pinching pennies its one of the worst when things on that list are harped on the most. 

stepping over dollars to pick u pennies.

How's it compare to buying a boat? Just curious where that one falls in the list.

my boat is far cheaper to operate and own than the earnings i get investing in lieu of paying down my mortgage - but i also dont have a celebratory thread looking for others to comfort me on a FIRE site in my poor choice for use of little green soldiers.

if you're interested in numbers a year or 2 ago i posted a thread about its cost in the antimustachian wall of shame and comedy where stuff like this belongs.

We bought a house in the late nineties with an 80% 1st and 15% 2nd mortgage, put down only 5%.

In a few years, our equity had grown, so we refinanced into an 80% for 30 years.

Rates dropped, we refinanced and restarted the 30-year clock.  Around then we changed jobs and moved out; our house became a rental.

Rates hit 3.5% on a 30-year fixed and we refinanced, and restarted the clock again.

Our equity has continued to grow and we now have a nice big HELOC on the house we can access if / when we need it.

The Federal and our State governments subsidize us on the > $13k of mortgage interest our tenants pay for us every year, as well as subsidizing our contributions to our retirement plans, medical insurance, HSA, IRA, our child(ren)'s college tuition, and the qualified dividends we earn and reinvest every year.

We could now pay off our mortgage(s) six times over with the assets which we accumulated by NOT paying off those fuckers, and still have enough cash to buy a new big-assed 3/4 ton pickup truck or two and drive it to and from the restaurants where we could eat morning, noon, and night if so inclined.

Those of you who are considering prepaying your mortgages should listen to the stories Dicey, B42, and I are telling and examine the math with your left brain, not with your heart.

Those of you who already prepaid your mortgages still have an opportunity to take out new mortgages now while rates remain low.

[wannabe-stache]

2 years, 5 months, back in 1994.  My house was worth about 1/4 what it is now, and I had a down payment of about 2/3 of the price paid.  Interest rates were about 6% then and I made regular bi-weekly payments with extra payments on the alternate weeks.  So glad I did this, because it freed up a lot of money, not to mention the peace of mind.

It is good that the interest rate was 6% or you might incur the righteous wrath of boarder42.

even paying down 6% back at the time mortgage interest was deductible was probably a poor decision here.  you're effectively at a 4% rate if you're in the 25% bracket with the avg state income tax in the US. Math's hard.

and you can poke fun all you want this site is partially about understanding money and finance better to retire earlier.  This is one of the more difficult concepts to grasp and should be shouted much louder than i do.

Maybe you have a point, but I believe that a few years later, rates were up around the 12% mark.  I still have no regrets, but I might not do the same today.

if mortgage rates were at 12% a few years later it makes the decision even worse since bonds and savings accounts were likely pumping out greater than the 6% that was paid down.  its counterintuitive and you did it at a different time than we live in now where you can go read a financial blog/forum and learn to retire at 30 - and in that climate and today's climate for interest rates its a huge deterent to FIRE to pay down a mortgage thats at a low fixed rate.

its why i really dont appreciate this post by the OP at all you're getting responses from a different time and people who may be in different countries with different rate environments.  Its just looking for confirmation something is good ... like walking into a dog fighting forum and asking what the best dog is to get to start fighting with and win the most - vs asking should i even be fighting dogs in first place?

This thread is meant to be a place for people who have already made this decision and feel good about it to share their circumstances and their motivations. If you feel strongly about keeping a mortgage and investing the money, by all means do that, but another family's different choice about the financial structure of their home ownership has no effect on you, either negative or positive.

no just no.  this board has no place for family choices.  there is no choice.  borrow you must.

in fact, i think boarder42 should open up a margin account for buying pot stocks to really reinforce his stance.

[boarder42]

2 years, 5 months, back in 1994.  My house was worth about 1/4 what it is now, and I had a down payment of about 2/3 of the price paid.  Interest rates were about 6% then and I made regular bi-weekly payments with extra payments on the alternate weeks.  So glad I did this, because it freed up a lot of money, not to mention the peace of mind.

It is good that the interest rate was 6% or you might incur the righteous wrath of boarder42.

even paying down 6% back at the time mortgage interest was deductible was probably a poor decision here.  you're effectively at a 4% rate if you're in the 25% bracket with the avg state income tax in the US. Math's hard.

and you can poke fun all you want this site is partially about understanding money and finance better to retire earlier.  This is one of the more difficult concepts to grasp and should be shouted much louder than i do.

Maybe you have a point, but I believe that a few years later, rates were up around the 12% mark.  I still have no regrets, but I might not do the same today.

if mortgage rates were at 12% a few years later it makes the decision even worse since bonds and savings accounts were likely pumping out greater than the 6% that was paid down.  its counterintuitive and you did it at a different time than we live in now where you can go read a financial blog/forum and learn to retire at 30 - and in that climate and today's climate for interest rates its a huge deterent to FIRE to pay down a mortgage thats at a low fixed rate.

its why i really dont appreciate this post by the OP at all you're getting responses from a different time and people who may be in different countries with different rate environments.  Its just looking for confirmation something is good ... like walking into a dog fighting forum and asking what the best dog is to get to start fighting with and win the most - vs asking should i even be fighting dogs in first place?

This thread is meant to be a place for people who have already made this decision and feel good about it to share their circumstances and their motivations. If you feel strongly about keeping a mortgage and investing the money, by all means do that, but another family's different choice about the financial structure of their home ownership has no effect on you, either negative or positive.

no just no.  this board has no place for family choices.  there is no choice.  borrow you must.

in fact, i think boarder42 should open up a margin account for buying pot stocks to really reinforce his stance.

That's an incredibly different situation and if you don't understand the difference then it's why I keep posting about this. Sure families can make different decisions. Doesn't mean they should be promoted in a fire forum as good decisions. This isn't a good decision just like buying big trucks and boats and eating out everyday are bad decisions for the large majority here. 

[DoNorth]

everyone has a different risk tolerance.  paying off a mortgage is a guaranteed return at whatever rate you borrowed it and sleeping well at night with less $ in their pocket is more important to some people than worrying if that $10M you borrowed at 1.5% interest is going to be worth $6M in a year or two due to a prolonged recession.  MMM himself said his decision to pay off was psychological, but he did it nonetheless.  Not dumb, just not for everyone.

Had a 15 year loan on the house / farm and paid it off in about ten.   No more borrowing for me, I don't care if you can get loans for 1.5% it's still debt and monthly payments.

hahaha seriously if you could get a fixed not callable loan for 1.5% you wouldnt do it - this is just dumb.  This site would just be about getting these loans and quitting your job if these were available out there.  get 10MM in loans a 1.5% and invest it in VTSAX and retire -- some things make sense this statement does not.

i dont care if you give me free money i wouldnt take it thats basically what this statement is. its actually negative interest with regards to inflation - its better than free money.

[Slee_stack]

Do POYME folks truly grasp the price they've paid for their Peace of Mind?

If they do...its all good.

I suspect that many really don't understand their true opportunity costs though.

Is a paid off mortgage worth paying $10k for? How about $100K?  What about $1M?

Its great that... in hindsight.... many can say they ended up with enough anyway, so it doesn't really matter.

The reality, however, is that they could have reached enough sooner...or they could have accumulated more than enough in the same amount of time and perhaps could make an even bigger charitable impact during FI instead.

It seems such a sad, lost opportunity...all the while believing that their paid off mortgage was actually reducing their risk the whole time....when it was actually doing the exact opposite.

Celebrating a (very) in-optimal choice is a disservice to those forum members who might make a poor choice themselves as a result.

[G-dog]

14 years.

Put 20% down so no PMI. mortgage from local bank was 7 yr with balloon. Refinancing at 7 years with no new closing costs, etc, Again a 7 year with balloon.  Paid off at 14 years. Paid 2 extra payments per year.

Retired the next year.

[boarder42]

It seems such a sad, lost opportunity...all the while believing that their paid off mortgage was actually reducing their risk the whole time....when it was actually doing the exact opposite.

Celebrating a (very) in-optimal choice is a disservice to those forum members who might make a poor choice themselves as a result.

this 100%

[HAPPYINAZ]

Boarder42, thanks for the discussion you are providing.  I find it enlightening.  We paid off our mortgage years ago, and we were so happy to do so.  But unfortunately we didn't do it because the math worked out better.  We did it because we could and it felt good to reduce the interest by paying off early.  I wish I had done an analysis of investment returns that I could have had by not paying down mortgage vs % interest on my loan.  Maybe it would have come out in favor of my decision to pay it down, maybe it wouldn't have.  Someday I will go back and figure that out.  I didn't know much about investing then and one good thing about us having paid off our house is that during that time I learned a lot about investing.  So once we had the house paid off and our savings increased dramatically, then I had a better idea of what to do with the money. 

I encourage everyone who is considering paying off their mortgage to do the analysis and see if you wouldn't reach FI faster by investing vs paying down mortgage.  I have never regretted paying off our mortgage many years ago, but I haven't figured out what the opportunity cost was either, so my opinion might change.  I completely understand people who want to pay down their mortgage for the psychological advantage, but it should be done with full knowledge of the opportunity cost. 

[wannabe-stache]

1.  MMM paid off his house when rates were much different - his opinion today may be much different but he doesnt care anymore

2. Yes paying down your mortgage guarantees you're at higher risk of total financial failure until its 100% paid off that the only thing you're Guaranteed during that paydown period - just about no one paying off their mortgage actually grasps this concept.

3. the non guaranteed return you're saying the market provides is likely what you're basing your FIRE income on so good luck with that since its no guaranteed in your eyes.  How long do you plan to work til you feel its guaranteed - worst case inflation so you can keep all your money in the mattress? good luck with that.

4. many here like me at one point in time thought a paid off mortgage would be essential to FIRE - til i wised up and was taught by others here.  People in these forums should come to learn and have their views of the world pushed past what society tells them they should be doing.  I dont care how many of you head in the sands dont want to listen stating youre doing it for risk when you're actually increasing risk b/c you dont understand it types want to keep fighting back - you're wrong and the inbox full of thank you messages i have is proof of it many people dont like conflict so they dont push the issue here - many people dont really care that much about what other people do with their money.  I dont really care i just want to present the best information to everyone so they can make the best decision and celebratory threads like these with half facts and in the case of this thread - a very poor question from the start do not assist people in making the best decision.  Just like the other 3 threads i started they are dumb and belong in the antimustachian wall of shame and comedy.

The craziest thing about this post is that it was actually edited and still reads as it does.

Your stance is clear, and is mathematically right for most people.  But your seething anger has overwhelmed your ability to communicate in a cohesive, non-belligerent manner.  It's off putting.  I suggest you put down the phone or keyboard and do some light stretching, maybe a little meditation.

Get ahold of yourself.  Go hug your mortgage and let these folks hug their unencumbered deeds.

[K-ice]

Short answer, just under 6 years on our present home.

That was before I started looking at ways to invest other than GICs (CDs in the US).

I hope that even Boarder42 would agree that if you are such a conservative investor that you will sit on cash or a CD at a rate = to or less-than your mortgage, paying your mortgage is better.

We also have a rental property and have held the mortgage for almost 13 years.  Once our present home was paid off we started hitting that mortgage as well but at a slower rate.

I just did the math and over the past 2 years my extra mtg payments to the rental are equal to my Vanguard investments within $1000.  That was not an intentional 50:50 but shows how I am torn with this process.

I could pay off the mortgage tomorrow, but I now get more thrill from watching my investments grow than seeing the mortgage go down. 

I belong to both the "pay off your mortgage club" and the "Don't pay off your mortgage club"

 ¯\_(ツ)_/¯ 

[boarder42]

1.  MMM paid off his house when rates were much different - his opinion today may be much different but he doesnt care anymore

2. Yes paying down your mortgage guarantees you're at higher risk of total financial failure until its 100% paid off that the only thing you're Guaranteed during that paydown period - just about no one paying off their mortgage actually grasps this concept.

3. the non guaranteed return you're saying the market provides is likely what you're basing your FIRE income on so good luck with that since its no guaranteed in your eyes.  How long do you plan to work til you feel its guaranteed - worst case inflation so you can keep all your money in the mattress? good luck with that.

4. many here like me at one point in time thought a paid off mortgage would be essential to FIRE - til i wised up and was taught by others here.  People in these forums should come to learn and have their views of the world pushed past what society tells them they should be doing.  I dont care how many of you head in the sands dont want to listen stating youre doing it for risk when you're actually increasing risk b/c you dont understand it types want to keep fighting back - you're wrong and the inbox full of thank you messages i have is proof of it many people dont like conflict so they dont push the issue here - many people dont really care that much about what other people do with their money.  I dont really care i just want to present the best information to everyone so they can make the best decision and celebratory threads like these with half facts and in the case of this thread - a very poor question from the start do not assist people in making the best decision.  Just like the other 3 threads i started they are dumb and belong in the antimustachian wall of shame and comedy.

The craziest thing about this post is that it was actually edited and still reads as it does.

Your stance is clear, and is mathematically right for most people.  But your seething anger has overwhelmed your ability to communicate in a cohesive, non-belligerent manner.  It's off putting.  I suggest you put down the phone or keyboard and do some light stretching, maybe a little meditation.

Get ahold of yourself.  Go hug your mortgage and let these folks hug their unencumbered deeds.

Never. Feel free to ignore it if you don't like it.  May as well have people post about Ferraris and yachts and not care about that here too.

The craziest thing about this post is you didn't even have an answer to the facts. You just chose to attack grammar

[Teachstache]

We personally loved paying off our mortgage. We had the funds sitting in a savings account. We don't plan on moving & we anticipate being in this house for the long term. For us, it was the best choice. Others may make a different choice.

[boarder42]

We personally loved paying off our mortgage. We had the funds sitting in a savings account. We don't plan on moving & we anticipate being in this house for the long term. For us, it was the best choice. Others may make a different choice.

Anecdotal.

I had the funds sitting in a savings account I bought a yacht and crew to cruise the world for us it was the best choice. Others may make a different decision.

Clearly we need more yacht threads in share your badassity. Oh wait just because we make an emotional decision to do something that counteracts the goal of a forum doesn't mean it needs to be part of that forum.

[wannabe-stache]

The craziest thing about this post is that it was actually edited and still reads as it does.

Your stance is clear, and is mathematically right for most people.  But your seething anger has overwhelmed your ability to communicate in a cohesive, non-belligerent manner.  It's off putting.  I suggest you put down the phone or keyboard and do some light stretching, maybe a little meditation.

Get ahold of yourself.  Go hug your mortgage and let these folks hug their unencumbered deeds.

Never. Feel free to ignore it if you don't like it.  May as well have people post about Ferraris and yachts and not care about that here too.

The craziest thing about this post is you didn't even have an answer to the facts. You just chose to attack grammar

well, your grammar is atrocious.

what "it" am i ignoring, and what "it" don't i like? what "facts" did i fail to negate?

the math that underlies the bible that you so steadfastly swear upon isn't complicated and is correct for most people in most situations.  if someone had to make a decision between contributing to a 401K or a 529 vs paying my mortgage, it's a no brainer.  especially at a high tax rate.  unfortunately, with a small(ish) mortgage, AGI phaseouts, and the higher standard deductions, until you understand that your math DOESN'T WORK FOR EVERYONE, you sound as bad as the dave ramsey crowd.

comparing mortgage paydowns to yachts or ferraris (your words) or burning $100 dollar bills (my words) doesn't get you anywhere.

you come across as a pompous windbag which really undercuts your message.  do yourself a favor and shut it (yourself) down.

i know you'll waste your time on a response.  mine will be "i told you so".

[boarder42]

The math works for over 90% of forum users. Just like the math for all the other shit we do here

[wannabe-stache]

The math works for over 90% of forum users. Sorry you are so bad at it you think you're a special snowflake.

show me the math for "over 90% of forum users"

while you work yourself into a frenzy over that i'm gonna go do something productive, i.e. anything other than argue with an internet troll.

PS. i told you so

[boarder42]

The math works for over 90% of forum users. Sorry you are so bad at it you think you're a special snowflake.

show me the math for "over 90% of forum users"

while you work yourself into a frenzy over that i'm gonna go do something productive, i.e. anything other than argue with an internet troll.

PS. i told you so

You mean yourself. That's clearly what you're doing. You've posted on 6 different post of mine today only replying to me. Clearly you have an issue. Maybe you paid off your mortgage and you regret it and don't like hearing it all the time.

[Dicey]

1.  MMM paid off his house when rates were much different - his opinion today may be much different but he doesnt care anymore

2. Yes paying down your mortgage guarantees you're at higher risk of total financial failure until its 100% paid off that the only thing you're Guaranteed during that paydown period - just about no one paying off their mortgage actually grasps this concept.

3. the non guaranteed return you're saying the market provides is likely what you're basing your FIRE income on so good luck with that since its no guaranteed in your eyes.  How long do you plan to work til you feel its guaranteed - worst case inflation so you can keep all your money in the mattress? good luck with that.

4. many here like me at one point in time thought a paid off mortgage would be essential to FIRE - til i wised up and was taught by others here.  People in these forums should come to learn and have their views of the world pushed past what society tells them they should be doing.  I dont care how many of you head in the sands dont want to listen stating youre doing it for risk when you're actually increasing risk b/c you dont understand it types want to keep fighting back - you're wrong and the inbox full of thank you messages i have is proof of it many people dont like conflict so they dont push the issue here - many people dont really care that much about what other people do with their money.  I dont really care i just want to present the best information to everyone so they can make the best decision and celebratory threads like these with half facts and in the case of this thread - a very poor question from the start do not assist people in making the best decision.  Just like the other 3 threads i started they are dumb and belong in the antimustachian wall of shame and comedy.

The craziest thing about this post is that it was actually edited and still reads as it does.

Your stance is clear, and is mathematically right for most people.  But your seething anger has overwhelmed your ability to communicate in a cohesive, non-belligerent manner.  It's off putting.  I suggest you put down the phone or keyboard and do some light stretching, maybe a little meditation.

Get ahold of yourself.  Go hug your mortgage and let these folks hug their unencumbered deeds.

Nope, nope, nope. If you've followed along long enough, you'd know that the unattributed quote above is just b42's regular, everyday style. Early on, I privately (and more politely than you just did) asked him to proof his writing so more people could understand his message. I learned with time that he is passionate and caring, which is far more important than can-hardly-get-the-words-out-fast-enough sentence structure or occasional fractured syntax. He cares, he wants other people to understand, because the whole damn point of this forum is to learn how to do things differently.

You say you really, really want to get to FIRE as efficiently as possible?  Open your mind and listen to the message. It doesn't mean you have to do it, damn it, as long as you thoroughly understand what the fuck you're giving up when you mindlessly "kill.all.the.debt". If you want to learn, go check out the "DONT Pay Off Your Mortgage" thread. Study the "Sequence of Investing". Maybe even read "The Shockingly Simple Math". If you want to ignore the costs once you understand them, there are plenty of other threads you can follow to celebrate your decision.

@B42 is almost FIRE, I am six years post-FIRE. We are part of a die-hard group of MMMers who are passionate about helping others get to FIRE more efficiently. We willingly share the lessons we've learned along the way. Lessons often learned the hard way before this information was so readily available. Let me be crystal clear: we don't give one single fuck what you ultimately chose to do, provided the decision you make is an educated one. That's all.

Except this: If you live in a country where mortgages are neither fixed nor tax deductible, or if you live somewhere houses cost less than a new 4WD truck, please understand that this message may not apply to your situation.

[DoNorth]

@ Dicey.  Good points.  let me ask you this--I'm FI at 39 because of a substantial inflation adjusted military pension.  I originally paid off a mortgage on a property, bull dozed the structure on the property, built a house myself with cash and 0% credit card deals and now have a mortgage of 5.3% after I rolled up the remaining CC debt on it (it wasn't "done" enough when I applied for financing therefore I had to take a slightly higher rate).  I've since sold a rental that was tied to a VA loan.  I could now get a secondary market mortgage with Fannie or Freddy and reuse my VA loan. My balance is $240K and the house is worth about $425K.  Does it make sense to cash out refinance it at 100% LTV on a 15 year mortgage at say just north of 4%?  I could then take the $185K and reinvest index funds etc. ?

[boarder42]

@ Dicey.  Good points.  let me ask you this--I'm FI at 39 because of a substantial inflation adjusted military pension.  I originally paid off a mortgage on a property, bull dozed the structure on the property, built a house myself with cash and 0% credit card deals and now have a mortgage of 5.3% after I rolled up the remaining CC debt on it (it wasn't "done" enough when I applied for financing therefore I had to take a slightly higher rate).  I've since sold a rental that was tied to a VA loan.  I could now get a secondary market mortgage with Fannie or Freddy and reuse my VA loan. My balance is $240K and the house is worth about $425K.  Does it make sense to cash out refinance it at 100% LTV on a 15 year mortgage at say just north of 4%?  I could then take the $185K and reinvest index funds etc. ?

i'd go to a 30 year if you plan to stay there more than 7 years it usually wins now as to doing 100% LTV or 80% LTV that would greatly depend on what rate youre sacraficing or what you're paying in PMI to offset it.  100% LTV comes at a cost - 80% can be done fairly easily - rates are only climbing at this point with the fed raising rates, i'd do it.  I'm still exploring options to get around 100k in equity out of my house before rates climb too high - i'm not liking my current options though.  the 100k isnt enough to offset the rate increase i'd have to take on a full cash out refi.  and the HELOCs are a no go with variable rates.  HELs are starting to climb to the upper 6's - so my math hasnt worked out enough yet to pull out my 100k.  If you can pull low 4's or mid 4's on a 100% cash out refi i'd jump on that in a heart beat if i had a 5.3% mortgage.

[DoNorth]

thanks--the VA loan doesn't have a PMI requirement and since I have a documented VA disability, the VA funding fee is waived (would be similar to PMI, but paid upfront usually).  I think on a refinance, I can go to 90% LTV....underwriting is a little more stringent, but rates are a bit lower.  a 30 year would cost me just over $2000/month at 4.5% interest with .7 pts.

My pension with a 3% cola raise for next year will be $5250/month--$1700 of which federally taxable, none of it state taxable so with no other debts and modest expenses, I would have $3250 left for non-mortgage expenses/month.   I have about $500K in tax deferred/529 accounts that I want to let compound and grow.   Where would you park the cash out funds?  VTSAX, dividend producing funds etc or something else? 

sounds like holding tight in your situation makes sense.



 

[boarder42]

thanks--the VA loan doesn't have a PMI requirement and since I have a documented VA disability, the VA funding fee is waived (would be similar to PMI, but paid upfront usually).  I think on a refinance, I can go to 90% LTV....underwriting is a little more stringent, but rates are a bit lower.  a 30 year would cost me just over $2000/month at 4.5% interest with .7 pts.

My pension with a 3% cola raise for next year will be $5250/month--$1700 of which federally taxable, none of it state taxable so with no other debts and modest expenses, I would have $3250 left for non-mortgage expenses/month.   I have about $500K in tax deferred/529 accounts that I want to let compound and grow.   Where would you park the cash out funds?  VTSAX, dividend producing funds etc or something else? 

sounds like holding tight in your situation makes sense.



 

you should write an IPS https://www.bogleheads.org/wiki/Investment_policy_statement

and you should invest your money per that - my IPS would have all the money flowing into VTSAX since thats what it says for taxable.  - also chasing dividends isnt something you should do - if you want to research it you can but i'd avoid chasing dividends they are less tax efficient than just owning index funds. 

sounds like you've got piles of money and you're doing well and your pension can easily cover your housing cost on the 30 year. how much are you paying to buy down to the 4.5%? Have you done the math based on your expected time in the property to see if its worth the buy down.  i'd assume you can get an even better rate at 80% LTV.  that will be the best rate you can get typically.

I'm hoping for a perfect storm here in a few years - market pull back - investors flock to bonds - bond yields fall - mortgage rates fall.  basically 2008 with out the crash of equity in the housing market and hopefully the numbers will make sense then.  depending on the size of the pull back the interest rate doesnt even have to be that great b/c you can assume a full recovery from whatever the crash was. 

[DoNorth]

good suggestion on the IPS.

the buydown to the 4.5% is the .7 points and the normal closing costs to refi so about $2800 + closing   there's no rate advantage at 80% LTV or lower with a VA loan.  Essentially the Veteran's Administration guarantees the mortgage against default on behalf of the veteran borrower  There's normally a funding fee (.5% of the mortgage balance) that the veteran borrower pays into a guarantee pool at closing; when a default happens, the VA pays the lender a certain amount to offset their loss if the veteran borrower defaults.  Since I have a documented VA disability, the fee is waived so I can do the 90% LTV and at a slightly lower rate than a normal mortgage refi (because of the added protection of the VA guarantee)--there's just more paperwork.  It's a good deal....I was just on the fence on whether or not I should take on additional mortgage debt in order to free up some extra capital for taxable investments .  Should that scenario you described come to fruition, I can use a streamlined refinance program called IRRL to lower the rate on the note with minimal cost and hassle.

[boarder42]

good suggestion on the IPS.

the buydown to the 4.5% is the .7 points and the normal closing costs to refi so about $2800 + closing   there's no rate advantage at 80% LTV or lower with a VA loan.  Essentially the Veteran's Administration guarantees the mortgage against default on behalf of the veteran borrower  There's normally a funding fee (.5% of the mortgage balance) that the veteran borrower pays into a guarantee pool at closing; when a default happens, the VA pays the lender a certain amount to offset their loss if the veteran borrower defaults.  Since I have a documented VA disability, the fee is waived so I can do the 90% LTV and at a slightly lower rate than a normal mortgage refi (because of the added protection of the VA guarantee)--there's just more paperwork.  It's a good deal....I was just on the fence on whether or not I should take on additional mortgage debt in order to free up some extra capital for taxable investments .  Should that scenario you described come to fruition, I can use a streamlined refinance program called IRRL to lower the rate on the note with minimal cost and hassle.

this seems win win all around to me.  I'd pull the trigger in your shoes.

[RWD]

The math works for over 90% of forum users. Sorry you are so bad at it you think you're a special snowflake.

show me the math for "over 90% of forum users"

About 90% of people get a 30 year fixed rate mortgage. People who took out a 30 year mortgage in the last 10 years with good credit (most MMM forum members have good credit, I assume) should have started with a rate under 6%. The average home buyer stays in a house for 13 years so a significant portion of people will fall into that category. And everyone has had a great opportunity to refinance to even lower rates in the last ~8 years.

I'll defer to investment order post on the break even point which is currently 6.084%. And that's the debt interest rate at which it makes sense to invest instead even if you aren't getting any tax breaks and are investing in a taxable account. If you can deduct some of your mortgage interest and/or haven't yet maxed a 401k (or similar) then the point is even higher. I think it's fair to say 90%+ of forum users with a mortgage should be investing instead of paying down that debt.

We could run some statistical analysis with cFIREsim too though there are plenty of other threads on this forum discussing the historical and expected returns of the stock market.

PS. i told you so

Classy

[boarder42]

Over 90% of forum users are in the us or based in countries that have very low mortgage rates while not fixed these are much lower than the us fixed rates are. I've seen Canadian and England rates in the low 1's.

If you want to get not picky and say 90% of users don't own houses that's fine but I'd think that by default they are excluded from the conversation since it's completely irrelevant to them.

[Lan Mandragoran]

1.  MMM paid off his house when rates were much different - his opinion today may be much different but he doesnt care anymore

2. Yes paying down your mortgage guarantees you're at higher risk of total financial failure until its 100% paid off that the only thing you're Guaranteed during that paydown period - just about no one paying off their mortgage actually grasps this concept.

3. the non guaranteed return you're saying the market provides is likely what you're basing your FIRE income on so good luck with that since its no guaranteed in your eyes.  How long do you plan to work til you feel its guaranteed - worst case inflation so you can keep all your money in the mattress? good luck with that.

4. many here like me at one point in time thought a paid off mortgage would be essential to FIRE - til i wised up and was taught by others here.  People in these forums should come to learn and have their views of the world pushed past what society tells them they should be doing.  I dont care how many of you head in the sands dont want to listen stating youre doing it for risk when you're actually increasing risk b/c you dont understand it types want to keep fighting back - you're wrong and the inbox full of thank you messages i have is proof of it many people dont like conflict so they dont push the issue here - many people dont really care that much about what other people do with their money.  I dont really care i just want to present the best information to everyone so they can make the best decision and celebratory threads like these with half facts and in the case of this thread - a very poor question from the start do not assist people in making the best decision.  Just like the other 3 threads i started they are dumb and belong in the antimustachian wall of shame and comedy.

The craziest thing about this post is that it was actually edited and still reads as it does.

Your stance is clear, and is mathematically right for most people.  But your seething anger has overwhelmed your ability to communicate in a cohesive, non-belligerent manner.  It's off putting.  I suggest you put down the phone or keyboard and do some light stretching, maybe a little meditation.

Get ahold of yourself.  Go hug your mortgage and let these folks hug their unencumbered deeds.

Never. Feel free to ignore it if you don't like it.  May as well have people post about Ferraris and yachts and not care about that here too.

The craziest thing about this post is you didn't even have an answer to the facts. You just chose to attack grammar

I will call you Rorschach ;P. For your hilarious ability/dedication to never compromise lol.

[boarder42]

1.  MMM paid off his house when rates were much different - his opinion today may be much different but he doesnt care anymore

2. Yes paying down your mortgage guarantees you're at higher risk of total financial failure until its 100% paid off that the only thing you're Guaranteed during that paydown period - just about no one paying off their mortgage actually grasps this concept.

3. the non guaranteed return you're saying the market provides is likely what you're basing your FIRE income on so good luck with that since its no guaranteed in your eyes.  How long do you plan to work til you feel its guaranteed - worst case inflation so you can keep all your money in the mattress? good luck with that.

4. many here like me at one point in time thought a paid off mortgage would be essential to FIRE - til i wised up and was taught by others here.  People in these forums should come to learn and have their views of the world pushed past what society tells them they should be doing.  I dont care how many of you head in the sands dont want to listen stating youre doing it for risk when you're actually increasing risk b/c you dont understand it types want to keep fighting back - you're wrong and the inbox full of thank you messages i have is proof of it many people dont like conflict so they dont push the issue here - many people dont really care that much about what other people do with their money.  I dont really care i just want to present the best information to everyone so they can make the best decision and celebratory threads like these with half facts and in the case of this thread - a very poor question from the start do not assist people in making the best decision.  Just like the other 3 threads i started they are dumb and belong in the antimustachian wall of shame and comedy.

The craziest thing about this post is that it was actually edited and still reads as it does.

Your stance is clear, and is mathematically right for most people.  But your seething anger has overwhelmed your ability to communicate in a cohesive, non-belligerent manner.  It's off putting.  I suggest you put down the phone or keyboard and do some light stretching, maybe a little meditation.

Get ahold of yourself.  Go hug your mortgage and let these folks hug their unencumbered deeds.

Never. Feel free to ignore it if you don't like it.  May as well have people post about Ferraris and yachts and not care about that here too.

The craziest thing about this post is you didn't even have an answer to the facts. You just chose to attack grammar

I will call you Rorschach ;P. For your hilarious ability/dedication to never compromise lol.

there is no reason to compromise on this - compromising on this would lead to more people making poor decisions while thinking they are good.  The people who are paying down their mortgages can keep doing so blindly or learn and decide. some have learned and decided its worth it for them to keep paying it down.  Celebrating a decision thats not minorly suboptimal but majorly suboptimal is detrimental to those who may not even know.  I really don't care about changing the minds of these far strung people who are paying down at all costs in the face of intentional ingorance or those who Know the math and have chosen a different path - i care about those who stumble into this forum and arent aware .

I dont know how many times i've said it in different forums but this is an ultra counter logical method to use to get to FIRE faster compared to what most people are brainwashed with their whole life.  So it needs a larger spot light on it - it also doesnt need people sitting there saying its awesome to pay off your house.  b/c paying off your house is worse for your FIRE date than eating out every day or paying a lawn service company every week or paying a maid to clean - its actually worse than the combination of the 3 for your FIRE date for most - Its a BIG deal.  and people get their shit slapped silly for hiring a maid or a lawn service around here - i just wish we could all agree that mortgage paydowns deserve face punches and outside of Australia should not be celebrated with the current rate environment in the other parts of the western world.  - but that will never happen so i will relentlessly post these rambling half nonsensical sentences to challenge the subject every time its raised.

[scantee]

It’s possible to agree with someone on the facts and yet have their delivery be so off-putting that whatever they have to say gets categorized as irrelevant.

That is what has happened to boarder42. It was probably helpful the first or tenth or one-hundredth time you showed up in a thread to lecture everyone about mortgage maths. Now you just seem like a frothing asshole (ban me if you’d like, the right to post here isn’t the end all be all of my life). I do not take you seriously anymore because you seem unable to even approach wholistic thinking on this issue, nor do your seem to be willing to truly live out the ethos you supposed feel so strongly about (i.e., by constantly remortgaging or reforecasting to put more money in the market).

But keep ranting if that’s how you gets your rocks off.

[PizzaSteve]

The rants are not helping anyone thoughtfully consider options.  Agree that since the style of delivery is like shouting evangelical rants via a megaphone on a soap box, no one is converting their religious beliefs based on a crazy ranting preacher.

The refusal to allow posting of reasonable talking points without an arguing response is horrible for the forum.   You must accept that stocks are not guaranteed to rise over the next decades, despite a belief that the math of statistics will make it happen.

No one has been brainwashed.  There are legitimate reasons to reduce risk, using the  formal definition of financial risk (vs some made up `its riskier because it may slow FIRE date' definition of risk thing you invented).

The obsession with responding to everyone seems really unhealthy and I am really worried you might need help keeping a balanced perspective on things.

People will FIRE just fine paying down a morgage or investing.  Which is faster depends on a future none of us know.  Lets leave it at that, because the arguements are not helpful to people.  Reasonable discussion is much better.

PS I will delete this to keep the thread clean and suggest you guys delete your argument as well. Perhaps keeping helpful links or data.

[boarder42]

It’s possible to agree with someone on the facts and yet have their delivery be so off-putting that whatever they have to say gets categorized as irrelevant.

That is what has happened to boarder42. It was probably helpful the first or tenth or one-hundredth time you showed up in a thread to lecture everyone about mortgage maths. Now you just seem like a frothing asshole (ban me if you’d like, the right to post here isn’t the end all be all of my life). I do not take you seriously anymore because you seem unable to even approach wholistic thinking on this issue, nor do your seem to be willing to truly live out the ethos you supposed feel so strongly about (i.e., by constantly remortgaging or reforecasting to put more money in the market).

But keep ranting if that’s how you gets your rocks off.

feel free to take it however you like - i'm not concerned with those who seem off put by it.  Its what all the cool kids nowadays do "get offended"

[Clean Shaven]

That is what has happened to boarder42. It was probably helpful the first or tenth or one-hundredth time you showed up in a thread to lecture everyone about mortgage maths.

Yep. And I pointed out the boat hypocrisy above.

And I'm pretty sure he's the same poster whose backup plan for when markets crash, jobs are lost, but mortgage payments are still due, is to ask his rich parents to bail him out. (Correct me if I'm wrong on the identity here.)

That financial security is why I like a paid off house. I know the long term math is in favor of not paying off a low interest rate mortgage.

However, someone once said that the markets can stay irrational longer than you can stay solvent, so as with many things, YMMV.

[PizzaSteve]

It’s possible to agree with someone on the facts and yet have their delivery be so off-putting that whatever they have to say gets categorized as irrelevant.

That is what has happened to boarder42. It was probably helpful the first or tenth or one-hundredth time you showed up in a thread to lecture everyone about mortgage maths. Now you just seem like a frothing asshole (ban me if you’d like, the right to post here isn’t the end all be all of my life). I do not take you seriously anymore because you seem unable to even approach wholistic thinking on this issue, nor do your seem to be willing to truly live out the ethos you supposed feel so strongly about (i.e., by constantly remortgaging or reforecasting to put more money in the market).

But keep ranting if that’s how you gets your rocks off.

feel free to take it however you like - i'm not concerned with those who seem off put by it.  Its what all the cool kids nowadays do "get offended"

This is why you fail padawan

- Yoda

[boarder42]

That is what has happened to boarder42. It was probably helpful the first or tenth or one-hundredth time you showed up in a thread to lecture everyone about mortgage maths.

Yep. And I pointed out the boat hypocrisy above.

And I'm pretty sure he's the same poster whose backup plan for when markets crash, jobs are lost, but mortgage payments are still due, is to ask his rich parents to bail him out. (Correct me if I'm wrong on the identity here.)

That financial security is why I like a paid off house. I know the long term math is in favor of not paying off a low interest rate mortgage.

However, someone once said that the markets can stay irrational longer than you can stay solvent, so as with many things, YMMV.

1, owning a boat and discussing why mortgage paydown is terrible and doesnt belong in the share your badassity thread are mutually exclusive - no one here follows all of the mustachian bullshit to a T - using someones personal choice to partake in something anti mustachian does not make a different anti mustachian decision magically mustachian.

2. asking my rich parents for money is like the 10th step down the long ass list of shit i would do if all of that happened.  It was misconstrued by another poster who selected one statement i made about how my family helps each other both ways with money - its not even anything to do with job loss but if there is a deal someone needs to purchase and the cost can flow both ways so we can minimize tax hits of selling off invested assets - you know optimization - i'm not going to go all the way thru my long pile of cash i can tap if armageddon happens

3. paying down a house faster over time vs investing increases financial insecurity during the paydown period only once 100% paid off does it add the security of protecting against SORR <- thats its only minor benefit.  This has nothing to do with long term math you inflated the risk you were trying to mitigate during paydown.

if you believe your 4th statement how do you plan to fund your FIRE?

[boarder42]

It’s possible to agree with someone on the facts and yet have their delivery be so off-putting that whatever they have to say gets categorized as irrelevant.

That is what has happened to boarder42. It was probably helpful the first or tenth or one-hundredth time you showed up in a thread to lecture everyone about mortgage maths. Now you just seem like a frothing asshole (ban me if you’d like, the right to post here isn’t the end all be all of my life). I do not take you seriously anymore because you seem unable to even approach wholistic thinking on this issue, nor do your seem to be willing to truly live out the ethos you supposed feel so strongly about (i.e., by constantly remortgaging or reforecasting to put more money in the market).

But keep ranting if that’s how you gets your rocks off.

feel free to take it however you like - i'm not concerned with those who seem off put by it.  Its what all the cool kids nowadays do "get offended"

This is why you fail padawan

- Yoda

this is hilarious - b/c i'm not failing there are new comers to the DPOYMC - and i get PMs unlike the ones you send they thank me for my relentlessness - i probably hit people that have my personality more than the mainstream person here - and i'm ok with that - people can choose to be closed minded and dig their heals in its to their own detriment.