Author Topic: DONT Payoff your Mortgage Club  (Read 880222 times)

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22115
  • Age: 65
  • Location: NorCal
Re: DONT Payoff your Mortgage Club
« Reply #3700 on: November 15, 2023, 02:27:27 PM »
Thanks for this link, I'm still not paying off my mortgage, but recently took on additional debt at 4.99%.  Debatable move, but I'm comfortable with it.
That still seems like a good rate. What are your plans for the $$, if you don't mind my asking.
Nevermind, I found your new thread.

Radagast

  • Handlebar Stache
  • *****
  • Posts: 2488
  • One Does Not Simply Work Into Mordor
Re: DONT Payoff your Mortgage Club
« Reply #3701 on: November 15, 2023, 04:22:53 PM »
https://forum.mrmoneymustache.com/investor-alley/time-to-pay-off-recent-mortgages/

;)

Thanks for this link, I'm still not paying off my mortgage, but recently took on additional debt at 4.99%.  Debatable move, but I'm comfortable with it.
Cliffs notes version, I was suggesting that current numbers may indicate paying off mortgages with rates in the 6%, 7%, or higher range could be a better move than investing. People with sub 5% rates should not be in a hurry to pay them off.

catccc

  • Handlebar Stache
  • *****
  • Posts: 1896
  • Location: SE PA
Re: DONT Payoff your Mortgage Club
« Reply #3702 on: November 16, 2023, 07:03:20 AM »
Thanks for this link, I'm still not paying off my mortgage, but recently took on additional debt at 4.99%.  Debatable move, but I'm comfortable with it.
That still seems like a good rate. What are your plans for the $$, if you don't mind my asking.
Nevermind, I found your new thread.

Yeah, I thought it was good in the current environment.  In case people don’t want to go post hunting, it’s for a car.  And I just moved some $ around to mitigate the tax impact on interest income we’ll be earning since we opted not to pay cash, so it makes good sense.

catccc

  • Handlebar Stache
  • *****
  • Posts: 1896
  • Location: SE PA
Re: DONT Payoff your Mortgage Club
« Reply #3703 on: November 16, 2023, 07:07:33 AM »
https://forum.mrmoneymustache.com/investor-alley/time-to-pay-off-recent-mortgages/

;)

Thanks for this link, I'm still not paying off my mortgage, but recently took on additional debt at 4.99%.  Debatable move, but I'm comfortable with it.
Cliffs notes version, I was suggesting that current numbers may indicate paying off mortgages with rates in the 6%, 7%, or higher range could be a better move than investing. People with sub 5% rates should not be in a hurry to pay them off.

Yup, I’m in agreement here on those thresholds, personally.  But referring back to the “investment order” gospel, I have a tricky time wrapping my head around having two different thresholds for the pay it off or don’t debate.  The way I make it work in my mind is different expected returns.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22115
  • Age: 65
  • Location: NorCal

Fomerly known as something

  • Handlebar Stache
  • *****
  • Posts: 1617
  • Location: CA
Re: DONT Payoff your Mortgage Club
« Reply #3705 on: December 23, 2023, 08:30:42 AM »
Still just rounding up that $19.73 to an “even $50” every month.  I now have another excuse from others when I say I’m retiring when I’m first eligible for our pension.  In addition to me having no kids, I now have the advantage of a good mortgage rate (3.875).  Um if I were buying today, my purchase price would just be lower people.

LD_TAndK

  • Bristles
  • ***
  • Posts: 318
Re: DONT Payoff your Mortgage Club
« Reply #3706 on: January 07, 2024, 05:03:52 AM »
Just got our 1098 mortgage interest statement, looks like that deduction will save us around $1700 taxes.

Also, our mortgage rate is 2.875%, average 2023 inflation will probably come in around 4%. So the real value of our debt decreased more than $2500!

Additionally, our investments went up 22% during 2023, 18% factoring in inflation to be fair. That's more than $45k gained on the money that could have paid off our mortgage

Glad I didn't pay off my mortgage!

Telecaster

  • Magnum Stache
  • ******
  • Posts: 3512
  • Location: Seattle, WA
Re: DONT Payoff your Mortgage Club
« Reply #3707 on: January 07, 2024, 05:46:22 PM »
Also, our mortgage rate is 2.875%, average 2023 inflation will probably come in around 4%. So the real value of our debt decreased more than $2500!

Awesome!   Our obligations are eroding away at no cost to us. 

TheAnonOne

  • Handlebar Stache
  • *****
  • Posts: 1751
Re: DONT Payoff your Mortgage Club
« Reply #3708 on: January 07, 2024, 08:37:22 PM »
Sitting on just under a $410,000 note on our house at 2.75% for 30 years.

We really nailed the bottom there on rate.

We do round up $120 a month to get it to a nice round number.


That said, if some windfall fell on my lap, id be tempted to pay the thing off, it's still a large cash cost monthly, and probably the largest anxiety cost as far as how future FIRE looks for us. (In this fantasy world I wouldn't pay it off until HYSA rates fell under 2.75%)

-----------------------

Fun side math, since taking on the $450,000 note in mid 2019 approximately 20% of it's value was eroded due to inflation. So it should FEEL like $360,000 (-$90,000!), except, life isn't so cut and dry with wage growth, and other factors.

nereo

  • Senior Mustachian
  • ********
  • Posts: 17418
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: DONT Payoff your Mortgage Club
« Reply #3709 on: January 08, 2024, 04:18:26 AM »

That said, if some windfall fell on my lap, id be tempted to pay the thing off, it's still a large cash cost monthly, and probably the largest anxiety cost as far as how future FIRE looks for us. (In this fantasy world I wouldn't pay it off until HYSA rates fell under 2.75%)

-----------------------

Fun side math, since taking on the $450,000 note in mid 2019 approximately 20% of it's value was eroded due to inflation. So it should FEEL like $360,000 (-$90,000!), except, life isn't so cut and dry with wage growth, and other factors.

If you had a large windfall, wouldn’t that added investment cushion more than offset your anxiety on the monthly mortgage cost?  (Serious question).

In other words, would having an account with $410k (“home sinking fund”) in addition to your other investments make it a non issue?

TheAnonOne

  • Handlebar Stache
  • *****
  • Posts: 1751
Re: DONT Payoff your Mortgage Club
« Reply #3710 on: January 08, 2024, 10:17:04 AM »

That said, if some windfall fell on my lap, id be tempted to pay the thing off, it's still a large cash cost monthly, and probably the largest anxiety cost as far as how future FIRE looks for us. (In this fantasy world I wouldn't pay it off until HYSA rates fell under 2.75%)

-----------------------

Fun side math, since taking on the $450,000 note in mid 2019 approximately 20% of it's value was eroded due to inflation. So it should FEEL like $360,000 (-$90,000!), except, life isn't so cut and dry with wage growth, and other factors.

If you had a large windfall, wouldn’t that added investment cushion more than offset your anxiety on the monthly mortgage cost?  (Serious question).

In other words, would having an account with $410k (“home sinking fund”) in addition to your other investments make it a non issue?

This is all subjective and personal from a feelings standpoint. I'd likely have given difference answers at different points in my life.

For me, I already have enough investments to cover the mortgage, and having another account with more $$$ in it would certainly move the need to FIRE a bit. That said, ultimately, it's just another account.

10 years ago, with a net worth of basically 0, I'd 110% gone the "keep the cash and invest" route.


Again, I am not 100% saying I would make the mathematically wrong choice here, there are obvious choices like 'High Yield Savings' options that are clearly better routes with extreme little to zero risk.

nereo

  • Senior Mustachian
  • ********
  • Posts: 17418
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: DONT Payoff your Mortgage Club
« Reply #3711 on: January 08, 2024, 10:43:19 AM »

That said, if some windfall fell on my lap, id be tempted to pay the thing off, it's still a large cash cost monthly, and probably the largest anxiety cost as far as how future FIRE looks for us. (In this fantasy world I wouldn't pay it off until HYSA rates fell under 2.75%)

-----------------------

Fun side math, since taking on the $450,000 note in mid 2019 approximately 20% of it's value was eroded due to inflation. So it should FEEL like $360,000 (-$90,000!), except, life isn't so cut and dry with wage growth, and other factors.

If you had a large windfall, wouldn’t that added investment cushion more than offset your anxiety on the monthly mortgage cost?  (Serious question).

In other words, would having an account with $410k (“home sinking fund”) in addition to your other investments make it a non issue?

This is all subjective and personal from a feelings standpoint. I'd likely have given difference answers at different points in my life.

For me, I already have enough investments to cover the mortgage, and having another account with more $$$ in it would certainly move the need to FIRE a bit. That said, ultimately, it's just another account.

10 years ago, with a net worth of basically 0, I'd 110% gone the "keep the cash and invest" route.


Again, I am not 100% saying I would make the mathematically wrong choice here, there are obvious choices like 'High Yield Savings' options that are clearly better routes with extreme little to zero risk.

I’m certainly not trying to say your choice would be “wrong” either way, and agree that it’s subjective and personal. I ask because I’m interested in each persons decision.

FWIW, my parents set up a “sinking fund” for their mortgage that was invested in mutual funds circa 1980. By the time that fund had more in it than the remaining balance on the mortgage (including two cash out ReFis) in the mid 1990s, my parents decided they much preferred having those investments over having no mortgage. No doubt that has shaped my outlook. They joke it took them 42 years to pay off a 30 year mortgage, and now their mortgage sinking fund has morphed into a sizeable chunk of their NW

TheAnonOne

  • Handlebar Stache
  • *****
  • Posts: 1751
Re: DONT Payoff your Mortgage Club
« Reply #3712 on: January 08, 2024, 01:16:19 PM »

That said, if some windfall fell on my lap, id be tempted to pay the thing off, it's still a large cash cost monthly, and probably the largest anxiety cost as far as how future FIRE looks for us. (In this fantasy world I wouldn't pay it off until HYSA rates fell under 2.75%)

-----------------------

Fun side math, since taking on the $450,000 note in mid 2019 approximately 20% of it's value was eroded due to inflation. So it should FEEL like $360,000 (-$90,000!), except, life isn't so cut and dry with wage growth, and other factors.

If you had a large windfall, wouldn’t that added investment cushion more than offset your anxiety on the monthly mortgage cost?  (Serious question).

In other words, would having an account with $410k (“home sinking fund”) in addition to your other investments make it a non issue?

This is all subjective and personal from a feelings standpoint. I'd likely have given difference answers at different points in my life.

For me, I already have enough investments to cover the mortgage, and having another account with more $$$ in it would certainly move the need to FIRE a bit. That said, ultimately, it's just another account.

10 years ago, with a net worth of basically 0, I'd 110% gone the "keep the cash and invest" route.


Again, I am not 100% saying I would make the mathematically wrong choice here, there are obvious choices like 'High Yield Savings' options that are clearly better routes with extreme little to zero risk.

I’m certainly not trying to say your choice would be “wrong” either way, and agree that it’s subjective and personal. I ask because I’m interested in each persons decision.

FWIW, my parents set up a “sinking fund” for their mortgage that was invested in mutual funds circa 1980. By the time that fund had more in it than the remaining balance on the mortgage (including two cash out ReFis) in the mid 1990s, my parents decided they much preferred having those investments over having no mortgage. No doubt that has shaped my outlook. They joke it took them 42 years to pay off a 30 year mortgage, and now their mortgage sinking fund has morphed into a sizeable chunk of their NW

Yeah, "wrong" in terms of "historically keeping the money results in the largest pile at the grave".

In my case, in this fantasy, I am already FAT FIRE'd (something I hope to be in 3-6 years), adding 400k to a FAT FIRE pile doesn't change my life, but removing a payment immediately increases my monthly budget by 2-3k per month.

Though, you could just keep that pile on the side invested and make the payments out of it too. <-- this is the main reason I think HYSA options are probably better in the windfall world.

jsap819

  • 5 O'Clock Shadow
  • *
  • Posts: 55
Re: DONT Payoff your Mortgage Club
« Reply #3713 on: January 08, 2024, 01:29:59 PM »

That said, if some windfall fell on my lap, id be tempted to pay the thing off, it's still a large cash cost monthly, and probably the largest anxiety cost as far as how future FIRE looks for us. (In this fantasy world I wouldn't pay it off until HYSA rates fell under 2.75%)

-----------------------

Fun side math, since taking on the $450,000 note in mid 2019 approximately 20% of it's value was eroded due to inflation. So it should FEEL like $360,000 (-$90,000!), except, life isn't so cut and dry with wage growth, and other factors.

If you had a large windfall, wouldn’t that added investment cushion more than offset your anxiety on the monthly mortgage cost?  (Serious question).

In other words, would having an account with $410k (“home sinking fund”) in addition to your other investments make it a non issue?

This is all subjective and personal from a feelings standpoint. I'd likely have given difference answers at different points in my life.

For me, I already have enough investments to cover the mortgage, and having another account with more $$$ in it would certainly move the need to FIRE a bit. That said, ultimately, it's just another account.

10 years ago, with a net worth of basically 0, I'd 110% gone the "keep the cash and invest" route.


Again, I am not 100% saying I would make the mathematically wrong choice here, there are obvious choices like 'High Yield Savings' options that are clearly better routes with extreme little to zero risk.

I’m certainly not trying to say your choice would be “wrong” either way, and agree that it’s subjective and personal. I ask because I’m interested in each persons decision.

FWIW, my parents set up a “sinking fund” for their mortgage that was invested in mutual funds circa 1980. By the time that fund had more in it than the remaining balance on the mortgage (including two cash out ReFis) in the mid 1990s, my parents decided they much preferred having those investments over having no mortgage. No doubt that has shaped my outlook. They joke it took them 42 years to pay off a 30 year mortgage, and now their mortgage sinking fund has morphed into a sizeable chunk of their NW

We are kind of in the same boat. Started a sinking fund in 2018 where all excess cash after expenses were invested in a taxable account with goals of paying off our mortgage in one lump sum once we had enough. Instead, we refi'd in 2021 from 3.75% to 2.375% to lower our monthly payment so we can invest more. Granted, the returns those years were phenomenal so luck played a big part.

As of today. we have surpassed our mortgage balance by $200k with no intention of paying it off. If we used those excess cash all these years to pay down the mortgage, we would still have $50k remaining. We have made a decision that we value liquidity over being debt free.

Radagast

  • Handlebar Stache
  • *****
  • Posts: 2488
  • One Does Not Simply Work Into Mordor
Re: DONT Payoff your Mortgage Club
« Reply #3714 on: January 08, 2024, 06:41:11 PM »
Meh, if you are in 32% tax bracket or less a treasury bond is guaranteed to give better returns if only by a little. At worst take the guaranteed more money and buy treasuries. Unless maybe you are concerned about a lawsuit in which you lose everything but your house.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22115
  • Age: 65
  • Location: NorCal
Re: DONT Payoff your Mortgage Club
« Reply #3715 on: January 19, 2024, 01:16:45 PM »
At the end of last year, there was a convo over at the "... and Beyond" thread. I've been meaning to post my thoughts here. Quoting the whole thing is a bit confusing, but I didn't want to edit it. The most pertinent parts are in bold below. For more of the discussion, you can check out that thread.

FFS, I've been meaning to follow up on this, but I'm doing a "forum lite" week, as we're on a trip. The response above is so off the mark that apparently now is the time to elaborate.

As I mentioned upthread, I believe this topic is less of a concern for this group. Frankly, though some believe one should always have a mortgage, I do not fully subscribe to that theory, particularly for the folks racing from $2M to $4M...and Beyond!

The reason to hold a long, low, fixed-rate rate mortgage on an affordable home, in a country where mortgages are tax-advantaged, is that it allows you to invest in equities which will compound, resulting in a higher net worth faster than paying off the mortgage before maxing out every other investment option first.

The average shlub is assumed to be an idiot who will blow every spendable cent. (See: Dave Ramsey or Suze Orman for endless examples.) These people may never have the means to retire, let alone early. For them, the goal of paying off the mortgage is not unreasonable. At least they'll have something.

Mustachians are smarter more financially literate than that and know how to save and invest.

Since the goal of MMM, and by extension this forum, is to retire early, holding on to a mortgage (with the caveats listed above) is a smart strategy. Mortgages, if managed correctly, are a powerful tool for building wealth. The sooner you start investing, the faster compound interest will begin to do the heavy lifting. Waiting to invest until the mortgage is paid off simply means it's going to take longer, and you'll have to earn more money (i.e. work longer) to reach FIRE.

If you're on this forum, you're here to strategize so that you can at least reach FI efficiently. Ignoring the leverage a good mortgage creates over the imagined way it's going to "feel" to "kill the mortgage" before filling every other investment option makes so little sense that the blowback continues to surprise me.

Again, I don't believe this discussion is necessary in this group, but the recent scorn that's been directed my way is ironic, given that it's happening on this forum.

For the love of Dog, can we send this discussion back to the DPOYM thread, where both sides of the question are addressed?

NorthernIkigai

  • Bristles
  • ***
  • Posts: 320
  • Connoisseur of Leisure
Re: DONT Payoff your Mortgage Club
« Reply #3716 on: January 19, 2024, 02:15:25 PM »
Would you argue that fixed-rate is also an important qualifier here, not just tax-advantaged?

nereo

  • Senior Mustachian
  • ********
  • Posts: 17418
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: DONT Payoff your Mortgage Club
« Reply #3717 on: January 19, 2024, 04:30:25 PM »
Would you argue that fixed-rate is also an important qualifier here, not just tax-advantaged?

It certainly makes the decision-process more straight forward, but that doesn't mean you can't also benefit from not paying down a mortgage with an ARM.

There's plenty of people who took out 5/1 or 7/1 ARMs in 2021/22 at sub 3% rates. Certainly they would have been in a better position having invested, even in iBonds.  Provided there's no pre-payment penalty it makes good financial sense to continue stockpiling money and seeing what the rates look like in 2026-28.

Telecaster

  • Magnum Stache
  • ******
  • Posts: 3512
  • Location: Seattle, WA
Re: DONT Payoff your Mortgage Club
« Reply #3718 on: January 19, 2024, 05:50:07 PM »
Would you argue that fixed-rate is also an important qualifier here, not just tax-advantaged?

For sure.   That said, a 5/1 or a 7/1 ARM almost always make sense if you think you will live in a place for less than ten years.   I wouldn't pay those down at all.

But in general, an adjustable mortgage is like a time bomb.   It could go off, you don't know when, seems like a future unknown...sounds like something I don't want. 

But a sub 4% fixed rate?  Back up the truck.  Deal of a lifetime. 


Must_ache

  • Bristles
  • ***
  • Posts: 306
  • Age: 52
Re: DONT Payoff your Mortgage Club
« Reply #3719 on: January 19, 2024, 09:25:39 PM »
Would you argue that fixed-rate is also an important qualifier here, not just tax-advantaged?

Not just fixed-rate, but low fixed-rate.  My own personal rate of 2.625% is almost certainly going to get trounced by the stock market.  It's really not clear you want to try to outdo more recent values like 7% and 8%.  I wonder where the ideal threshold is, no doubt it varies by person but at some point it shouldn't be considered subjective but decidedly disadvantageous.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22115
  • Age: 65
  • Location: NorCal
Re: DONT Payoff your Mortgage Club
« Reply #3720 on: January 19, 2024, 09:54:12 PM »
Would you argue that fixed-rate is also an important qualifier here, not just tax-advantaged?

I wouldn't argue with you at all. Here's what I actually said:

At the end of last year, there was a convo over at the "... and Beyond" thread. I've been meaning to post my thoughts here. Quoting the whole thing is a bit confusing, but I didn't want to edit it. The most pertinent parts are in bold below. For more of the discussion, you can check out that thread.

FFS, I've been meaning to follow up on this, but I'm doing a "forum lite" week, as we're on a trip. The response above is so off the mark that apparently now is the time to elaborate.

As I mentioned upthread, I believe this topic is less of a concern for this group. Frankly, though some believe one should always have a mortgage, I do not fully subscribe to that theory, particularly for the folks racing from $2M to $4M...and Beyond!

The reason to hold a long, low, fixed-rate rate mortgage on an affordable home, in a country where mortgages are tax-advantaged, is that it allows you to invest in equities which will compound, resulting in a higher net worth faster than paying off the mortgage before maxing out every other investment option first.

The average shlub is assumed to be an idiot who will blow every spendable cent. (See: Dave Ramsey or Suze Orman for endless examples.) These people may never have the means to retire, let alone early. For them, the goal of paying off the mortgage is not unreasonable. At least they'll have something.

Mustachians are smarter more financially literate than that and know how to save and invest.

Since the goal of MMM, and by extension this forum, is to retire early, holding on to a mortgage (with the caveats listed above) is a smart strategy. Mortgages, if managed correctly, are a powerful tool for building wealth. The sooner you start investing, the faster compound interest will begin to do the heavy lifting. Waiting to invest until the mortgage is paid off simply means it's going to take longer, and you'll have to earn more money (i.e. work longer) to reach FIRE.

If you're on this forum, you're here to strategize so that you can at least reach FI efficiently. Ignoring the leverage a good mortgage creates over the imagined way it's going to "feel" to "kill the mortgage" before filling every other investment option makes so little sense that the blowback continues to surprise me.

Again, I don't believe this discussion is necessary in this group, but the recent scorn that's been directed my way is ironic, given that it's happening on this forum.

For the love of Dog, can we send this discussion back to the DPOYM thread, where both sides of the question are addressed?

P.S. Any discussion about mortgages is a good discussion, IMO. Thanks for giving me the opportunity to clarify.

P.P.S. Before any of you always-have-a-mortgage-no-matter-what-folks start feeling left out, for the record, we still have three LLFRM's. We also never had a mortgage on our primary, so technically, except when we sell a property, we've never actually paid off a mortgage early. Everybody happy? I hope so, because year after year of not paying off your mortgage gets kind of ho-hum. Well, except for watching your investment balances grow...

NorthernIkigai

  • Bristles
  • ***
  • Posts: 320
  • Connoisseur of Leisure
Re: DONT Payoff your Mortgage Club
« Reply #3721 on: January 19, 2024, 11:56:51 PM »
Oh, not argue as in ”have an argument” but rather “make the argument that”.

In my mortgage market, fixed rates are hardly ever offered. If they are, it’s actually not a true fixed-rate but rather an ARM with a max 10-year initial rate. As they are rare, they are also not priced attractively.

So everyone just has a variable rate mortgage. I guess when everyone does, it’s normal to sit on a time bomb? Banks are required to calculate whether you could handle rates up to 6%, which felt silly a couple of years ago when rates were negative, but doesn’t feel silly anymore. People spend a lot of time and brain power thinking about which base rate to tie their mortgage to: 3m, 12m, etc. The differences are peanuts, but people basically don’t seem to like to be “surprised” by their mortgage payments changing more than once a year. (Although with the amount of space given to rates in the news, I don’t see how anyone can be surprised when it does change.)

We have two mortgages at the moment since we’re in the process of moving house, and both are adjustable rate at about 4.5% (adjusting at different moments). Although they’ve gone up a lot from the 0.4-something, I’m always thinking that for them to go up to something that’s unaffordable to *us* (our housing choices are not cheap, but certainly not extravagant) a whole lot of other people would already have been in trouble a long time ago. So I’m kind or trusting that the Mustachianism of our housing choices and savings will put a big damper on the time bomb.

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 8584
Re: DONT Payoff your Mortgage Club
« Reply #3722 on: January 20, 2024, 04:57:15 AM »
In my mortgage market, fixed rates are hardly ever offered. If they are, it’s actually not a true fixed-rate but rather an ARM with a max 10-year initial rate. As they are rare, they are also not priced attractively.

So everyone just has a variable rate mortgage. I guess when everyone does, it’s normal to sit on a time bomb?

The typical mortgages we have in Canada are 5 year fixed term or 5 year variable rate. You can get shorter and a little longer, but nothing meaningfully longer that compare to US 30 year fixed mortgages.

I've had a variable mortgage the last ~13 years. For most of that time it's been great. The last couple years my payments went up with the recent rate hikes. Less awesome, but not a big deal in so far as we expected that rates can move in either direction. Expectation here is rates will start to drop in 2024 again. Our 5 year term ends in 2026. I expect we'll get another variable rate mortgage.

Shorter fixed mortgages cost more in general than variable rate and unless you get lucky with the timing you'll be forced to renew and deal with the higher rates anyway. If you just happen to renew before rates climb and they go back down in time for the next renewal you win, but you were lucky.

I could simply pay off my mortgage if I wanted to and I would at least consider that option at renewal time. I would also consider taking out more equity and investing it and/or extending the amortization back to 25-30 years. I've got a few reasons to keep a mortgage including the risk of a very significant earthquake where we live.

I wouldn't say no to a low rate 30 year fixed mortgage, but we just don't have that option yet I am still a DPOYM fan.

NorthernIkigai

  • Bristles
  • ***
  • Posts: 320
  • Connoisseur of Leisure
Re: DONT Payoff your Mortgage Club
« Reply #3723 on: January 21, 2024, 03:48:07 AM »
I mean it makes sense for the rate of a variable mortgage to be lower than that of a fixed one (on average), since it’s the customer taking on the risk instead of the bank.

The Euribor rates are already coming down a little, and it seems the ~4.5 we’re paying now (which includes .x% going to the bank) was a peak that we’ve just passed.

Meanwhile, in a neighbouring country, it’s not actually required to pay off your mortgage. You have to pay it off (very slowly) until you’ve paid half (or half of the house, I’m not sure which), and after that you can just pay interest if you want. In an interview comparing different countries and typical mortgages, the people from that country didn’t even under the question about the length of the mortgage! X-D

davisgang90

  • Handlebar Stache
  • *****
  • Posts: 1358
  • Location: Roanoke, VA
    • Photography by Rich Davis
Re: DONT Payoff your Mortgage Club
« Reply #3724 on: January 21, 2024, 04:15:15 AM »
Through dumb luck, we refinanced into a 2.25% 30 year on our home.

We are in no hurry to pay that off for sure!

Our only problem is that though we are FIRE, this is not our forever home, so we'd like to downsize at some point, but it will probably be a while. We have enough deductions to itemize, so there isn't really a downside to us keeping the mortgage.

NorthernIkigai

  • Bristles
  • ***
  • Posts: 320
  • Connoisseur of Leisure
Re: DONT Payoff your Mortgage Club
« Reply #3725 on: January 21, 2024, 07:55:19 AM »
Through dumb luck, we refinanced into a 2.25% 30 year on our home.

We are in no hurry to pay that off for sure!

Our only problem is that though we are FIRE, this is not our forever home, so we'd like to downsize at some point, but it will probably be a while. We have enough deductions to itemize, so there isn't really a downside to us keeping the mortgage.

You have a Mustachian People Problem :-)

dandarc

  • Walrus Stache
  • *******
  • Posts: 5400
  • Age: 41
  • Pronouns: he/him/his
Re: DONT Payoff your Mortgage Club
« Reply #3726 on: January 21, 2024, 09:51:02 AM »
After years of being dedicated DPYMC member for years, I've decided this is for the birds. Going to pay off the 3.75% mortgage no later than early-to-mid 2025.

Spoiler: show
Put another, truer way,: we've decided that we're going to relocate and will be selling the house and renting wherever we land in North or possibly South Carolina to be closer to family. If we weren't moving then we'd just continue with our minimum-payments and possible take a 2nd mortgage or refinance if interest rates and my appetite for applying for loans get a little better.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 22115
  • Age: 65
  • Location: NorCal
Re: DONT Payoff your Mortgage Club
« Reply #3727 on: January 21, 2024, 09:58:12 AM »
After years of being dedicated DPYMC member for years, I've decided this is for the birds. Going to pay off the 3.75% mortgage no later than early-to-mid 2025.

Spoiler: show
Put another, truer way,: we've decided that we're going to relocate and will be selling the house and renting wherever we land in North or possibly South Carolina to be closer to family. If we weren't moving then we'd just continue with our minimum-payments and possible take a 2nd mortgage or refinance if interest rates and my appetite for applying for loans get a little better.

Spoiler: show
Haha. If you look at it that way, I've done it five times, plus paid all-cash twice. Oh, the shame!

dandarc

  • Walrus Stache
  • *******
  • Posts: 5400
  • Age: 41
  • Pronouns: he/him/his
Re: DONT Payoff your Mortgage Club
« Reply #3728 on: January 23, 2024, 08:12:15 AM »
Wow - that message came from the department of redundancy department in multiple places.