DONT Payoff your Mortgage Club

[dragoncar]

Hey guys, good news!  Tax assessor hasn't received the property tax payment yet so they must have sent it via... sniffs the mail.  So I can go back to worrying about when it will be paid.

[Dicey]

Hey guys, good news!  Tax assessor hasn't received the property tax payment yet so they must have sent it via... sniffs the mail.  So I can go back to worrying about when it will be paid.

Not positive, but I think postmark before due date qualifies as "on time" payment.

[couponvan]

Still waiting for closing on our loanDepot no cost refi at 2.5% 30 year...worst post signing customer service I have ever had. Crickets from anyone. They aren’t on my recommendation list. Fingers crossed we actually do finalize this Monday. We have wired $5,800 to them already. Sigh.

[dragoncar]

Hey guys, good news!  Tax assessor hasn't received the property tax payment yet so they must have sent it via... sniffs the mail.  So I can go back to worrying about when it will be paid.

Not positive, but I think postmark before due date qualifies as "on time" payment.

This is true, as long as it actually arrives and has a postmark. 

[Dicey]

Hey guys, good news!  Tax assessor hasn't received the property tax payment yet so they must have sent it via... sniffs the mail.  So I can go back to worrying about when it will be paid.

Not positive, but I think postmark before due date qualifies as "on time" payment.

This is true, as long as it actually arrives and has a postmark.

However, the stress they're causing you is bullshit. Why does a dragon have an impound account?

[dragoncar]

Hey guys, good news!  Tax assessor hasn't received the property tax payment yet so they must have sent it via... sniffs the mail.  So I can go back to worrying about when it will be paid.

Not positive, but I think postmark before due date qualifies as "on time" payment.

This is true, as long as it actually arrives and has a postmark.

However, the stress they're causing you is bullshit. Why does a dragon have an impound account?

It's self-inflicted unfortunately.  I saved perhaps a thousand in closing costs going with escrow

I know everything will be fine... this is what happens when I have nothing else to micromanage

[kenmoremmm]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

[couponvan]

Still waiting for closing on our loanDepot no cost refi at 2.5% 30 year...worst post signing customer service I have ever had. Crickets from anyone. They aren’t on my recommendation list. Fingers crossed we actually do finalize this Monday. We have wired $5,800 to them already. Sigh.

Annnd-payoff! IDK what was wrong with the loan processor at the back end, but it’s done and they are sending us $450 for our hassles. Sweet, although not a great return for the stress. On to adding Tesla solar panels to the roof. No more escrow=no more wondering if they are paying the taxes and bills on time. We have lumpy income, so the $900 less per month is going to feel even better. $1,700 escrow refund is due by the 13th.

Back to paying the minimum and investing the maximum. We might payoff in FIRE, but at 2.5% that’s hard to justify.

[talltexan]

That escrow refund sounds small enough that you can deposit it through your banking app, well done!

[Dicey]

In related news, we're scrapping the investment property re-fis. The rates are good enough to warrant the hassle, but the fees are insane. One lender DH spoke to suggested waiting until Spring, because last Spring, she was writing 3% loans with no fees on investment properties. Absent some miracle, that's our new plan. Our current rates are still good from a historical perspective. Sigh. What a nonproductive pain in the ass that was.

[dandarc]

"What a nonproductive pain in the ass that was." - mortgage research and 90% of 'all-hands meetings' described in one sentence. Well done.

[couponvan]

That stinks on the rates and fees for investment properties. At least all of the interest on those is deductible too.

[Fomerly known as something]

That escrow refund sounds small enough that you can deposit it through your banking app, well done!

I don’t know how I became so “trusted” but my bank allows me to deposit $100k a day. 

[FIreDrill]

So I am starting to feel a little crazy because we keep on refinancing... I think this is our 4th refi in 2.5 years now.  Details on the rate we just locked in below.

585k
30yr
2.5%
0 points
0 lender fees
Appraisal waiver
Washington state
Current payment - 3170 - 30yr 2.75%
New payment - 2960
Fees not covered by lender - 1600
Break even - 8 months

What made this refinance really worth it was the appraisal waiver we received which put us across the 80% ltv threshold in order to drop PMI.  Next step 2%? Lol

[Dicey]

That stinks on the rates and fees for investment properties. At least all of the interest on those is deductible too.

Funny, one lender suggested we take a loan out on our primary residence, which is mortgage-free. She helpfully suggested we could use that money to pay off all three rentals. I politely asked, "Why would I want to do that?" "It would be easier", said she. "For whom?" was my response, followed by, "You really don't know how taxes work, do you?"

When she called back with the rates and fees ($7k per and that was if we escrowed, which is not our preference.), she suggested it again, so I clarified that it made no sense to swap three fairly cheap, fully tax deductible mortgages for one non-tax deductible one*, just to shave off a point of interest. I'm sure she still didn't get it. Just like she isn't going to get our business...
 
*I realize that a very small amount would be tax deductible, but nowhere near enough for this proposition to make a whit of sense.

[bownyboy]

We originally took out at 25 year mortgage in 2009 fixed for five years at 3.99%

We overpaid for a couple of years before educating ourselves on investing in pensions and ISAs instead.

In 2015 we fixed for another five years this time at 2.44%.

Now we’ve just completed on another five years at 1.44% with a fee of £999.

In that time we’ve effectively become ‘mortgage neutral’ as we have more than enough investments to pay off the mortgage if we wanted.

Initially my wife was all for paying off the mortgage but she’s come round to the idea of us having liquidity available so we have choices.

Thanks to sites like this, cheers!

[Dicey]

Murray! Congratulations on your progress, bownyboy!

That's an autocorrect for "Hooray". Who the hell is Murray?

[Fomerly known as something]

Was reading some responses in the MPP thread today, one included someone putting 70% down for a property with the idea of paying it off ASAP.  As I’ve mentioned, I could have bought my home in cash, I choose to take out just slightly lower than 80% in a mortgage (round loan number) in 2017 and invest the difference.  Went and looked at my Vanguard account today, with the crazy market it has a performance gain of 3.5 times more than the amount of mortgage payments I have made in 39 months.  Now I have added more than the difference of mortgage v non mortgage but choosing a mortgage is responsible for at least half of the gain.

[Dicey]

Was reading some responses in the MPP thread today, one included someone putting 70% down for a property with the idea of paying it off ASAP.  As I’ve mentioned, I could have bought my home in cash, I choose to take out just slightly lower than 80% in a mortgage (round loan number) in 2017 and invest the difference.  Went and looked at my Vanguard account today, with the crazy market it has a performance gain of 3.5 times more than the amount of mortgage payments I have made in 39 months.  Now I have added more than the difference of mortgage v non mortgage but choosing a mortgage is responsible for at least half of the gain.

Woot! Congratulations and thanks for the report!

[SwordGuy]

Bought a new house back in 2015 with the intent that it was our forever home.   Enjoyed living there very much.
Prior house was already paid off, long before I heard of MMM or this thread.

About the same time we inherited some cash and a  house from my mom.

This thread taught me to invest instead of pay off the mortgage, so we didn't pay it off with the cash.   We invested it.
We also didn't pay it off when we sold her house.   Also invested it.
We also didn't pay it off when we sold our old home.   Also invested it.
We also didn't pay it off when we sold one of the houses we invested in.    Also invested the proceeds.

I **hated**, **hated**, **hated** not paying off the mortgage each and every one of those times.   But investing was a far better choice for the long term.

We found a truly awesome home 5 years after the last move and bought it.  We were already retired by now
We're now fired.   

We cashed out some of the invested profits for a large downpayment so we could get a mortgage.

We sold off some houses we bought to help others out plus our old house.   That time we paid off the mortgage.

It cut our living expenses by well over $50,000 a year to ditch both mortgages plus the other houses.    We now don't really have to ever worry about a sequence of returns risk and we actually have a positive cash flow in a normal year without taking into account any stock or bond sales or dividends.

It was the right thing to do for us.   We have plenty and we don't have to worry about a splurge now and then.   Money no longer feels tight.   We can budget a nice amount for charity and still have a budget surplus.

But if we hadn't invested all those other times, those profits wouldn't have been there.     Because they were in taxable accounts instead of IRAs or 401Ks (those were already maxed out), we didn't take the huge tax hit we would have if we had pulled that downpayment from our retirement accounts.

Not paying off our prior mortgage early was a great decision for us.     Paying off our last mortgage over a 10 month period was another great decision for us.   It improved our quality of life and made us more financially secure, plus it simplified our life a goodly bit.   

Thanks again for all the good advice on this thread!

[mtnman125]

Closing on our LenderFi refi tomorrow, 41 days after initiation.

Loan: $499k (70% LTV, only put down 20% at closing in June- new construction)
Term: 30 fixed
Rate: 2.5%
Appraisal: $495
Cash to close: $250

Excited to hit the reset button already, savings will go to taxable.  Plan to FIRE in 12-15y, will decide then to payoff or keep loan- might relocate anyway.

[Dicey]

Closing on our LenderFi refi tomorrow, 41 days after initiation.

Loan: $499k (70% LTV, only put down 20% at closing in June- new construction)
Term: 30 fixed
Rate: 2.5%
Appraisal: $495
Cash to close: $250

Excited to hit the reset button already, savings will go to taxable.  Plan to FIRE in 12-15y, will decide then to payoff or keep loan- might relocate anyway.

Who's paying for the title insurance?

[mtnman125]

[/quote]
Who's paying for the title insurance?
[/quote]

Covered by lender credits

[achvfi]

Not paying off our prior mortgage early was a great decision for us.     Paying off our last mortgage over a 10 month period was another great decision for us.   It improved our quality of life and made us more financially secure, plus it simplified our life a goodly bit.   

Thanks for Sharing. Another great story for this club in US. There is no one way to do personal finance.

[August26th]

Seems like an appropriate place to ask this question.... and I have not read every post in this very long thread so I apologize if this scenario has been covered. Would you do this refinance?

Current loan: purchased March 2020, original loan 592K at 3.25% 30-year fixed. Principal and interest payment $2,576. Current balance is $584,181.

With the new conforming loan limits now at $548,250 I am considering a refinance into 2.375% with about $2,000 in closing costs. I’d have to bring 36-38K to do this, but the result is that my principal and interest payment would drop to $2,130. Monthly savings of $446.

Would you bring almost 38K to save $446 per month? If I did this, I’d let this loan ride for the long term and put the extra into investments. Or is this silly thinking? I have a bunch of cash piled up, waiting to buy an investment property, so the 40K wouldn’t hurt.   

Best guess is that I am 8-10 years away from FIRE.

[Dicey]

Seems like an appropriate place to ask this question.... and I have not read every post in this very long thread so I apologize if this scenario has been covered. Would you do this refinance?

Current loan: purchased March 2020, original loan 592K at 3.25% 30-year fixed. Principal and interest payment $2,576. Current balance is $584,181.

With the new conforming loan limits now at $548,250 I am considering a refinance into 2.375% with about $2,000 in closing costs. I’d have to bring 36-38K to do this, but the result is that my principal and interest payment would drop to $2,130. Monthly savings of $446.

Would you bring almost 38K to save $446 per month? If I did this, I’d let this loan ride for the long term and put the extra into investments. Or is this silly thinking? I have a bunch of cash piled up, waiting to buy an investment property, so the 40K wouldn’t hurt.   

Best guess is that I am 8-10 years away from FIRE.

This is 100% NOT silly thinking.

I'd be tempted to wait until the current administration changes. I expect Biden will get rid of that stupid .5% refinance fee that just kicked in.

We're working on refis for a couple of rental properties and the fees we're being quoted are stupidly high right now. We're not sure what to do, but we're going to be pissed if we jump the gun. If we spend $4k per property that we ultimately don't have to, it's not going to feel good.

In your case, saving $446 a month is still pretty tempting, fees and all.

Another thought - investment properties typically require 25% down. Will you have enough left for a DP on a rental if you bring that much cash to this closing? Another way of looking at that amount of cash is it's just part of what you could have put down to buy the property initially, but didn't.

[talltexan]

$38,000 is a lot of extra money to put into the house to get an already low rate down even lower. There's no hurry to refinance IMHO because bond yields will stay low for a long time. Do you have the $38,000 set aside as cash, or would you be selling risky investments to access it?

[achvfi]

Seems like an appropriate place to ask this question.... and I have not read every post in this very long thread so I apologize if this scenario has been covered. Would you do this refinance?

Current loan: purchased March 2020, original loan 592K at 3.25% 30-year fixed. Principal and interest payment $2,576. Current balance is $584,181.

With the new conforming loan limits now at $548,250 I am considering a refinance into 2.375% with about $2,000 in closing costs. I’d have to bring 36-38K to do this, but the result is that my principal and interest payment would drop to $2,130. Monthly savings of $446.

Would you bring almost 38K to save $446 per month? If I did this, I’d let this loan ride for the long term and put the extra into investments. Or is this silly thinking? I have a bunch of cash piled up, waiting to buy an investment property, so the 40K wouldn’t hurt.   

Best guess is that I am 8-10 years away from FIRE.

To me it seems like a no brainer.

[robartsd]

Current loan: purchased March 2020, original loan 592K at 3.25% 30-year fixed. Principal and interest payment $2,576. Current balance is $584,181.

With the new conforming loan limits now at $548,250 I am considering a refinance into 2.375% with about $2,000 in closing costs. I’d have to bring 36-38K to do this, but the result is that my principal and interest payment would drop to $2,130. Monthly savings of $446.

I'd be tempted to wait until the current administration changes. I expect Biden will get rid of that stupid .5% refinance fee that just kicked in.

We're working on refis for a couple of rental properties and the fees we're being quoted are stupidly high right now. We're not sure what to do, but we're going to be pissed if we jump the gun. If we spend $4k per property that we ultimately don't have to, it's not going to feel good.

In your case, saving $446 a month is still pretty tempting, fees and all.

Current interest: about $1582/mo
0.5% fee on new loan: about $2741
New loan interest: about $1084/mo

If the 0.5% fee goes away within about 5 months and interest rates don't increase, you'd be better off waiting. If the fee is in place for more than 6 months and the extra funds you bring wouldn't return much anyway, it would be better to do it now.

[UnleashHell]

townhouse - pmi removed - helps with the rental income.
main house - refi going through now to reduce payments by 200 a month. Of course the escrow is wrong and needs to be boosted by 100 a month but its all coming out of reduced interest so I'm ok with that. another 30 years of the payment clock! here we go!!

[CupcakeGuru]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

I just closed a cash out refi with AimLoan. The application and documentation gathering process was very easy since you just upload everything to their website.

THE CLOSING WAS HORRIBLE. The Title Closing company sent a notary to my house to sign all the final paperwork. It took them 8 days to receive and review the paperwork. They kept "missing" documents even though we signed them all and kept asking us to re-sign and send to them. Aim blamed everything on the title closing company and the title company blamed Aim. They kept "switching" who my main contact was so I really had no idea who was running point.

Funding of the refi and paying off the old lender took 3 days. I had to call and email constantly to get status updates.

Overall ok especially since I did not pay any closing fees including appraisal, title insurance, attorney etc. I also received a $760 credit from Aim. All in, I only paid transfer title, recording fee, taxes and insurance which you would have to pay anyway. A+B+C=382

[dragoncar]

Lenderfi is now showing me no-cost rates that would drop my payment by about $150/mo.  Unfortunately I just loaded up my credit cards for points so it’s not a great time.  I was under the impression the FNMA adverse market fee would drive rates up, not down. 

To follow up on my escrow saga, the county did finally report receipt of the payment two days before it was due.  Like two weeks after it was sent.  I tend to blame the county for this, since they probably did receive it a while back and just didn’t process it quickly.  I always used to epay so it would report quickly.  Still annoying though

[dragoncar]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

I just closed a cash out refi with AimLoan. The application and documentation gathering process was very easy since you just upload everything to their website.

THE CLOSING WAS HORRIBLE. The Title Closing company sent a notary to my house to sign all the final paperwork. It took them 8 days to receive and review the paperwork. They kept "missing" documents even though we signed them all and kept asking us to re-sign and send to them. Aim blamed everything on the title closing company and the title company blamed Aim. They kept "switching" who my main contact was so I really had no idea who was running point.

Funding of the refi and paying off the old lender took 3 days. I had to call and email constantly to get status updates.

Overall ok especially since I did not pay any closing fees including appraisal, title insurance, attorney etc. I also received a $760 credit from Aim. All in, I only paid transfer title, recording fee, taxes and insurance which you would have to pay anyway. A+B+C=382

IMO if you used the title company selected by the lender, it’s their reputation on the line either way.  They shouldn’t default to using a title company that sucks

[Dicey]

Lenderfi is now showing me no-cost rates that would drop my payment by about $150/mo.  Unfortunately I just loaded up my credit cards for points so it’s not a great time.  I was under the impression the FNMA adverse market fee would drive rates up, not down. 

To follow up on my escrow saga, the county did finally report receipt of the payment two days before it was due.  Like two weeks after it was sent.  I tend to blame the county for this, since they probably did receive it a while back and just didn’t process it quickly.  I always used to epay so it would report quickly.  Still annoying though

We pay property taxes in two counties. One cashed/recorded fairly quickly. It's been over two weeks and the other county hasn't cashed our check or acknowledged receipt of payment on their website. Kind of nerve wracking and we know we paid the bill. All of their epay options include hefty fees, so that option is out for us. Conclusion: paying property taxes sucks, no matter how it's done.

[CupcakeGuru]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

I just closed a cash out refi with AimLoan. The application and documentation gathering process was very easy since you just upload everything to their website.

THE CLOSING WAS HORRIBLE. The Title Closing company sent a notary to my house to sign all the final paperwork. It took them 8 days to receive and review the paperwork. They kept "missing" documents even though we signed them all and kept asking us to re-sign and send to them. Aim blamed everything on the title closing company and the title company blamed Aim. They kept "switching" who my main contact was so I really had no idea who was running point.

Funding of the refi and paying off the old lender took 3 days. I had to call and email constantly to get status updates.

Overall ok especially since I did not pay any closing fees including appraisal, title insurance, attorney etc. I also received a $760 credit from Aim. All in, I only paid transfer title, recording fee, taxes and insurance which you would have to pay anyway. A+B+C=382

IMO if you used the title company selected by the lender, it’s their reputation on the line either way.  They shouldn’t default to using a title company that sucks

I totally agree! But they had my signed loan paperwork, so I couldn't even stop the process since I had no confidence that they would honor the cancelation since it was past the 3 day cancellation notice period.

On a good note, I escalated my complaint throughout Aim and the title company after closing. I just received a $500 check from Aim as "compensation" for the delayed closing and all the other issues!
 

[fishnfool]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

Yes, we have used aimloan 2x's now and they are a very good company to work with and they also serviced my prior loan for 5 years without fail. We just did a refi and I think they are going to sell my loan this time. Not a big deal, but hoping that we don't have loancare again, they suck!

[lepa71]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

I just closed with them on my refi with a cash-out on rental. It was fine. They had to extend the lock twice at no cost to me. They also agreed to reduce the rate because of the delay. Good communication.

[Dicey]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

I just closed with them on my refi with a cash-out on rental. It was fine. They had to extend the lock twice at no cost to me. They also agreed to reduce the rate because of the delay. Good communication.

What were the terms and fees for a non-owner occ loan?

[lepa71]

anyone use https://www.aimloan.com/ to do a refi? it looks like their rates/fees are just slightly lower than lenderfi, which a lot of people here have used. i'm curious on experiences working with aimloan.

I just closed with them on my refi with a cash-out on rental. It was fine. They had to extend the lock twice at no cost to me. They also agreed to reduce the rate because of the delay. Good communication.

What were the terms and fees for a non-owner occ loan?

I'm not sure I understand the question. I did a cash-out so I have had to pay for more points. I think it was like .5 points. My principal was too low for other refi. For example, AIM was the only one who was giving me a refi. My principal was $135K at 5%. If I would just take regular refi, the AIM rate was 3.625% with about $5k for closing cost. I refied $235K at 3% same 15 years with closing something $7k included in the loan. Also paid an extra $300 for not having an escrow account. Now wondering if I should pay off the primary as it is only $93K and nobody wants to refi it reasonably.

[robartsd]

What were the terms and fees for a non-owner occ loan?

I'm not sure I understand the question. I did a cash-out so I have had to pay for more points. I think it was like .5 points. My principal was too low for other refi. For example, AIM was the only one who was giving me a refi. My principal was $135K at 5%. If I would just take regular refi, the AIM rate was 3.625% with about $5k for closing cost. I refied $235K at 3% same 15 years with closing something $7k included in the loan. Also paid an extra $300 for not having an escrow account. Now wondering if I should pay off the primary as it is only $93K and nobody wants to refi it reasonably.

Dicey wants to know about the terms of a refinance on a non-owner occupied (rental) home. She owns several rental properties and was looking into refinancing them recently, but the fees were high enough that she decided to hold off on the refinance.

[lepa71]

Ok. Anybody can try it for themselves? https://www.aimloan.com/programs/get-rates?autorun=true&qid=1104774

[sherr]

Ok. Anybody can try it for themselves? https://www.aimloan.com/programs/get-rates?autorun=true&qid=1104774

That's actually a useful tool that I was unaware of, thanks for linking it. Most other rate quotes I've seen are hidden behind a "give us your email address / phone number so we can spam you to death" wall.

[Dicey]

This thread is a little quiet, because not paying off the mortgage eventually becomes kind of boring, at least in contrast to watching your investment balances explode.

Thought I'd check in to say we still haven't pulled the trigger on the rental re-fis. The interest rates are good, but the fees are insane! The payback time is far too long. So we wait and watch. The Aim website linked above is very useful.

Happy New Year to all you DPOYM-ers!

[FIreDrill]

This thread is a little quiet, because not paying off the mortgage eventually becomes kind of boring, at least in contrast to watching your investment balances explode.

Thought I'd check in to say we still haven't pulled the trigger on the rental re-fis. The interest rates are good, but the fees are insane! The payback time is far too long. So we wait and watch. The Aim website linked above is very useful.

Happy New Year to all you DPOYM-ers!

Happy New Year Dicey!

Investments for us were insane last year as well.  I shifted our allocation around in feb/march to give tech and growth stocks more weight and I also started putting a small portion into individual stock picks.  This was not a spur of the moment decision.  I had researched this possible allocation for about 5 months before jumping in but it happened to correspond with the covid crash.

Overall portfolio outperformed the SP500 and returned just shy of 38%.  Individual stock account returned 63%.  I am going to keep adding some new money to the stock-picking account so I can buy in when I find a new company that I believe in and the valuations look attractive to me.  I'll typically do 20-40 hours of research on a company before investing.  It's been a lot of fun learning different aspects of the market and individual stock investing.

I don't think I would have taken on the additional risk of individual stock picking without having a substantial amount of investments in our "normal" portfolio, and it turns out I love it.  The research, collaboration with people, financial analysis, technical analysis, it is all so fun and fascinating to me.  Not paying off the mortgage has been a great decision so far and I doubt we will ever pay it off once this next refi closes out at 2.5% 30yr term.  I love having the flexibility that a giant pile of investments brings, it has freed me up to try new things and that's what this is about.  Flexibility!

Happy New Year all!

[talltexan]

Beginning when the Democrats won the Georgia Senate seats last week ten-year yields have risen 20 basis points. The window may quickly close to get these remarkable rates.

[nereo]

Beginning when the Democrats won the Georgia Senate seats last week ten-year yields have risen 20 basis points. The window may quickly close to get these remarkable rates.

aw man!  We couldn't refinance because we are in the process of selling, and we won't be ready to buy again for several months.

[talltexan]

If you're already under contract, your selling price was higher because of the low rates.

[kenmoremmm]

If you're already under contract, your selling price was higher because of the low rates.

the housing market is most definitely not as dynamic as the daily interest rate changes.

[Holocene]

Happy New Year All!

This month was my first mortgage payment on my brand new 30 year mortgage.  Back to square one and happy about it :)

Not paying off my mortgage over that last 8+ years has been great!  I'm almost FI and will probably quit my day job sometime next year.  I wouldn't have gotten there quite so fast if I'd paid down the mortgage.  Mostly luck.  The stock market has been pretty damn great over the last 8 years.  Definitely better than my 3.5% mortgage.  Which is now refinanced at an even lower 3.125%.

For anyone that may be worried about a mortgage in retirement, don't forget that the 4% rule doesn't really apply for mortgages because you don't need to adjust for inflation annually, and also the mortgage will eventually be paid off (unless you keep refinancing!).  The way I think of it, I have my estimate of all expenses excluding the mortgage.  These are all expenses affected by inflation, so I calculate my FIRE number based on these expenses at ~3.5% WR (since I have a long potential retirement so 4% is a little too risky for me).  Then I add my expected remaining mortgage balance at planned FIRE date to this number, which I think should be pretty conservative.  I could theoretically pay off the mortgage in a lump sum on my FIRE date.  Or I could keep the money invested and be better off approximately 98% of the time (according to cFIREsim).  I think I'll take my chances.  :)

Example: $250k loan at 3%.  Payment is $1054/mo or $12,648/yr.
Plug this in cFIREsim for 30 years with "Not Inflation Adjusted" checked for spending plan.  Result is 98% success rate (2 of 118 failed), with a median balance of $409k, highest balance of $1.5M.  I think I'd rather have $409k and a paid off mortgage in 30 years rather than just a paid off mortgage now!
https://www.cfiresim.com/8daadb27-0d6a-496f-9506-5c48ffee4ed9

I'm sure I'm mostly preaching to the choir at this point, but I hope maybe some newcomers can be helped by thinking about mortgages in retirement in this way.  It sure helped me when I read it here on this forum somewhere many years ago!

[couponvan]

@Vapour I really like your thinking about the mortgage and how it doesn't go up with inflation. 

I definitely think many retirees underestimate the amount of repairs and the cost of repairs for their homes.  My grandmother (95) bought a brand new house with a 50 year terra cotta tile roof in 1985 when they retired.  They assumed they'd NEVER have to replace the roof. Well, guess what?  50 year roofs really only last about 35 years. She's been patching it here and there, but she's going to need a new roof.  Her kitchen is 1985 come to call.  Her carpet is blue, and she still loves it.  But as the appliances die, it's hard to find replacements that fit 1985 cabinetry. Luckily she's got plenty of cash to pay for her roof and grandchildren that would help her out. BUT, a kitchen renovation is not something many retirees have in their budgets - which is why grandma's houses generally look like time warp photos.