Author Topic: Mortgage Payoff Club!!  (Read 303066 times)

channtheman

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Re: Mortgage Payoff Club!!
« Reply #1350 on: September 15, 2017, 05:17:00 AM »
After reading/skimming through the entire thread I'd like to post my situation as well and officially join the club!

My wife and I bought our first (and hopefully last) home for 267k.
10% down and 4.875% rate. 

Rate is high because I went with lender credits to pay for the closing costs.  The plan has been to pay down as much as possible and refinance somewhere around 200k in January at hopefully a 4% or less rate.  I want my income to easily cover all of our expenses as my wife will be going part time when our first child is born in April 2018. 

We are currently at 213k owed and putting about 3k extra per month.  Factor in the "bonus" 3rd checks we both get in October this year and another bonus check I have from getting a certification at work and we should easily be sub 200k when we refinance.  After we refi, I hope we can continue to put about $1000 extra per month with a final payoff in July 2027 when I turn 36.  I think we will be able to find ways to do it faster, but that's the plan. 

Now, why pay off mortgage instead of invest?  Easy answer.  DW has to be on board with the plan and she is very risk averse.  Probably more than most people.  She's not particularly happy about the 401k but understands the company match is free money.  In this situation, paying down the mortgage is the best possible use of our money and it is also risk free savings on interest.  My wife is happy, and I'm happy that she's happy.  Is it the most optimal, no.  But not everything is about the most optimal case.  Emotions and "sleeping at night" play a large role in everyone's decisions.  It's funny how investment advice always says to use an investment strategy that plays to your individual risk tolerance but then automatically ignores it when it comes to paying down a mortgage.   In our situation, when the house is paid off, my wife will not have to work at all if we don't want her to.  We plan an having 4-5 children and will value her being at home raising them.

Also, a note about the mortgage interest deduction.  For us it doesn't do a dang thing.  Even if we calculate the years interest at the highest amount we ever paid (appx $900 in one month), our yearly total is only $10800 (it's actually lower than this, and after the refinance will be even less in subsequent years).  The standard deduction for us as a married couple is $12,600.  So, unless we have a couple thousand more dollars to itemize, we're better off taking the standard deduction.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1351 on: September 18, 2017, 06:09:35 PM »
End of August...  5 digit club at last!   $99.9K.   

Yay!! Congrats! It feels like it shrinks very quickly after this point, in my experience.

Thanks @allsummerlong and everyone for the kind words!   Let it be written... so let it be done!!

bender

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Re: Mortgage Payoff Club!!
« Reply #1352 on: September 20, 2017, 11:21:38 AM »
...

Also, a note about the mortgage interest deduction.  For us it doesn't do a dang thing.  Even if we calculate the years interest at the highest amount we ever paid (appx $900 in one month), our yearly total is only $10800 (it's actually lower than this, and after the refinance will be even less in subsequent years).  The standard deduction for us as a married couple is $12,600.  So, unless we have a couple thousand more dollars to itemize, we're better off taking the standard deduction.

You get to deduct your property taxes as well.  In most places that will have you itemizing based on the stated home value.

channtheman

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Re: Mortgage Payoff Club!!
« Reply #1353 on: September 21, 2017, 10:00:09 AM »
...

Also, a note about the mortgage interest deduction.  For us it doesn't do a dang thing.  Even if we calculate the years interest at the highest amount we ever paid (appx $900 in one month), our yearly total is only $10800 (it's actually lower than this, and after the refinance will be even less in subsequent years).  The standard deduction for us as a married couple is $12,600.  So, unless we have a couple thousand more dollars to itemize, we're better off taking the standard deduction.

You get to deduct your property taxes as well.  In most places that will have you itemizing based on the stated home value.

Good to know.  Ours are pretty cheap (about 1300 this year), but maybe with our charitable giving we can itemize for a couple of years.

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1354 on: September 21, 2017, 02:21:39 PM »
...

Also, a note about the mortgage interest deduction.  For us it doesn't do a dang thing.  Even if we calculate the years interest at the highest amount we ever paid (appx $900 in one month), our yearly total is only $10800 (it's actually lower than this, and after the refinance will be even less in subsequent years).  The standard deduction for us as a married couple is $12,600.  So, unless we have a couple thousand more dollars to itemize, we're better off taking the standard deduction.

You get to deduct your property taxes as well.  In most places that will have you itemizing based on the stated home value.

Good to know.  Ours are pretty cheap (about 1300 this year), but maybe with our charitable giving we can itemize for a couple of years.


I kind of chuckle when people get excited about the mortgage interest deduction.  Yes, you 'get to' deduct it.  However, most folks that 'get to' deduct it are also paying staggering amounts of interest to the bank...only receive a small chunk back in the form of a deduction.  That's not exactly 'good' in my book. 

I found this article to be interesting :  http://www.thetruthaboutmortgage.com/why-are-mortgage-payments-mostly-interest/

If you plan to keep your loan full term...then the math does work.  However, for the general population, that's usually not how it works.  People tend to move, etc..and a new loan 'resets the clock'....and you are back to continually paying staggering amounts of interest to the bank.  And continually thinking the mortgage interest deduction is a 'good thing'.

Now I have good faith that the population here knows better.  However, it is really quite disturbing the number of people that fall into this loop...and never end up paying down their mortgage.  Yet another reason why paying it down *can* be a good thing, depending on your situation.

« Last Edit: September 21, 2017, 02:26:39 PM by farmecologist »

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1355 on: September 21, 2017, 04:22:49 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

Debts_of_Despair

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Re: Mortgage Payoff Club!!
« Reply #1356 on: September 21, 2017, 04:53:50 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!
« Last Edit: September 21, 2017, 04:59:39 PM by Debts_of_Despair »

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1357 on: September 22, 2017, 09:27:42 AM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.
« Last Edit: September 22, 2017, 09:29:30 AM by farmecologist »

plainjane

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Re: Mortgage Payoff Club!!
« Reply #1358 on: September 22, 2017, 09:28:36 AM »
DW has to be on board with the plan and she is very risk averse.  Probably more than most people.  She's not particularly happy about the 401k but understands the company match is free money.  In this situation, paying down the mortgage is the best possible use of our money and it is also risk free savings on interest.  My wife is happy, and I'm happy that she's happy.  Is it the most optimal, no.  But not everything is about the most optimal case.  Emotions and "sleeping at night" play a large role in everyone's decisions.

I think I've mentioned here that my SO was also pretty risk averse. But once we had paid down more of the house, investing felt less risky, because regardless of what happened, we had our home. Now that the house is paid off, all that money plus some is going into investments.
Using procrastination to my advantage since 2001.

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1359 on: September 22, 2017, 09:30:27 AM »
DW has to be on board with the plan and she is very risk averse.  Probably more than most people.  She's not particularly happy about the 401k but understands the company match is free money.  In this situation, paying down the mortgage is the best possible use of our money and it is also risk free savings on interest.  My wife is happy, and I'm happy that she's happy.  Is it the most optimal, no.  But not everything is about the most optimal case.  Emotions and "sleeping at night" play a large role in everyone's decisions.

I think I've mentioned here that my SO was also pretty risk averse. But once we had paid down more of the house, investing felt less risky, because regardless of what happened, we had our home. Now that the house is paid off, all that money plus some is going into investments.

That is exactly what we did...and it has turned out great!


crispy

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Re: Mortgage Payoff Club!!
« Reply #1360 on: September 22, 2017, 12:50:22 PM »
Mine will be paid officially paid off on October 1st!  I am ridiculous excited!  As a very risk averse person, my mortgage has felt like an albatross around my neck for years.  It feels good to be free!

iluvzbeach

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Re: Mortgage Payoff Club!!
« Reply #1361 on: September 23, 2017, 07:22:18 AM »
Crispy, it's stuff like paying off the mortgage that helps put you in the position to stand up to the office bully. Nicely done!
Planning to be FIREd in 2020!

crispy

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Re: Mortgage Payoff Club!!
« Reply #1362 on: September 23, 2017, 12:57:05 PM »
Crispy, it's stuff like paying off the mortgage that helps put you in the position to stand up to the office bully. Nicely done!

Exactly right!

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1363 on: October 05, 2017, 07:31:50 PM »
Down to....one cent. Super annoying. I can't pay it off through their site because they require certified funds for the last cent + the fees.

You know....probably so the interest doesn't accrue/get out of whack on my 1 cent during the delay to confirm my non-certified cent has cleared.

birdman2003

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Re: Mortgage Payoff Club!!
« Reply #1364 on: October 06, 2017, 10:36:08 AM »
Down to....one cent. Super annoying. I can't pay it off through their site because they require certified funds for the last cent + the fees.

You know....probably so the interest doesn't accrue/get out of whack on my 1 cent during the delay to confirm my non-certified cent has cleared.

I just had a visual of somebody at the payment processing company opening an envelope to find a penny inside.

talltexan

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Re: Mortgage Payoff Club!!
« Reply #1365 on: October 09, 2017, 07:03:14 AM »
You could let that one cent grow and compound until...your original mortgage has completely regenerated!

Zombie mortgage ftw!

pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1366 on: October 10, 2017, 07:24:34 PM »
Too late for that. It is DONE!

Next month will be there first month with no payment at which point I'll get to celebrate again. And at some point before or after I'll get the paperwork.  2 celebrations to go.

Blindsquirrel

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Re: Mortgage Payoff Club!!
« Reply #1367 on: October 10, 2017, 07:53:13 PM »
  Good for you! Losing debt is freeing!
Even a blind squirrel finds a nut once in awhile.

wauske

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Re: Mortgage Payoff Club!!
« Reply #1368 on: October 12, 2017, 12:21:22 PM »
11k plus legt, bank is being annoying by requiring me to contact them every time I want to pay down extra in stead of the tried and true method of sending them extra by regular bank transfer.
So I called them this week and asked them to shorten the remaining term to 15 months. This means we are done by January 2019 unless we pay down more (which we will definitely do!).

Our mortgage started in 2012, being done next year was a bit later than planned but surely better than the full 27 years!
Everything I say is my personal opinion which is based on my subjective experience.

indentured4now

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Re: Mortgage Payoff Club!!
« Reply #1369 on: October 14, 2017, 05:20:20 AM »
@wauske,  Stay strong.   I'd imagine that Dutch bankers would have some quirks to say the least in the banking rules from hundreds of years of being fierce lenders.   The United States is still paying on Dutch loans and/or bonds issued from the 1700s!   

Use their annoying nature to motivate you both to save more... Then smile sweetly when you pay off those parasites.

boarder42

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Re: Mortgage Payoff Club!!
« Reply #1370 on: October 14, 2017, 05:47:18 AM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.
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KBecks

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Re: Mortgage Payoff Club!!
« Reply #1371 on: October 14, 2017, 07:18:46 AM »
I have been losing some momentum on the pay down, just putting a couple hundred extra the last few months.  My husband's summer income was on the low side, but now in the Fall it's high.  We have some home improvements that we would like to do and so we may funnel some cash into making our home a little nicer.  I am reluctant to spend money but it's OK when there is good value for what we spend.

Our balance is about $56k, so soon we should graduate into the balances under $50k club.  That's something too look forward to.


Debts_of_Despair

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Re: Mortgage Payoff Club!!
« Reply #1372 on: October 15, 2017, 01:13:57 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.

It's staggering to me that you think you will never have to face unemployment and/or have to keep a large emergency fund to keep making mtg payments the event of unemployment. 

I paid off my mtg in about a year.  I wake up everyday with a more confident future.  That mortgage payment now goes into tax advantaged retirement accounts.  Zero regrets.

bender

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Re: Mortgage Payoff Club!!
« Reply #1373 on: October 15, 2017, 10:02:43 PM »
For younger folks just getting started with investing it may make a lot of sense to use the low interest mortgage as leverage to buy into stocks.  As your portfolio becomes established with high 6-to-7 figures invested in stocks, the mortgage leverage strategy creates a smaller potential benefit.

Everyone is different - for me I decided to focus on eliminating the mortgage when my investments reached about half of my FI number.

farmecologist

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Re: Mortgage Payoff Club!!
« Reply #1374 on: October 16, 2017, 10:01:49 AM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.

It's staggering to me that you think you will never have to face unemployment and/or have to keep a large emergency fund to keep making mtg payments the event of unemployment. 

I paid off my mtg in about a year.  I wake up everyday with a more confident future.  That mortgage payment now goes into tax advantaged retirement accounts.  Zero regrets.

Dang..I knew 'boarder' would eventually infest this thread.  Just ignore the guy..he obviously thinks he is the supreme authority on 'finances'.  It's no use arguing with him.

Boarder...look, I think we all understand your points...but do not agree with them.  Just let the mortgage payoff crowd have this ONE thread of peace from your condescending attitude...ok?
« Last Edit: October 16, 2017, 10:06:04 AM by farmecologist »

Debts_of_Despair

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Re: Mortgage Payoff Club!!
« Reply #1375 on: October 16, 2017, 10:13:09 AM »
Yeah, we definitely all get the math behind it.  There is however more to life than just the math.

boarder42

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Re: Mortgage Payoff Club!!
« Reply #1376 on: October 16, 2017, 10:40:00 AM »
Yeah, we definitely all get the math behind it.  There is however more to life than just the math.

i dont agree that everyone here understands the math behind it. i think some do but for the most part i think many just see this giant thread here dedicated to it and fail to understand the math, b/c MMM paid his down - which made sense at the time b/c of a different lending environment than we currently have.
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Quint

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Re: Mortgage Payoff Club!!
« Reply #1377 on: October 16, 2017, 11:32:28 AM »
It's a little presumptuous to say that people in this thread don't understand the math.  There are countless threads on the forum and elsewhere that explain it if they'd like to investigate.  They don't have to spend their money the way you believe is best.  Maybe just be happy they are paying down their mortgage instead of being consumer clowns.  We're all here on the forums for the same reason and there are many paths to take to the finish line.

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #1378 on: October 16, 2017, 11:39:50 AM »
Yeah, we definitely all get the math behind it.  There is however more to life than just the math.

i dont agree that everyone here understands the math behind it. i think some do but for the most part i think many just see this giant thread here dedicated to it and fail to understand the math, b/c MMM paid his down - which made sense at the time b/c of a different lending environment than we currently have.
Boarder42, I thought you had already agreed to stay out of this thread?  You set up your own thread elsewhere and you've been doing a great job dismissively patronizing people who have risk tolerance different from yours.  Go enjoy your own superiority in your own thread, but please let people who are making very sound financial decisions rejoice in their accomplishments.  Stop trying to rain on everyone's parade. 
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pdxmonkey

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Re: Mortgage Payoff Club!!
« Reply #1379 on: October 17, 2017, 06:05:14 PM »
People also pretend they get the whole deduction as a discount when only the difference between the standard deduction and the itemized deductions matters. $13000 in deduction vs $12300 standard. Great you just got 700 in extras deductions. In the 25% bracket you just spent $13k on taxes and interest to save yourself $175...

LOL, so true!  I occasionally talk to people who don't do their own taxes (or otherwise don't understand them) and they think the "write off" for their mortgage interest is equal to a tax credit.  Think again!


Yep, that is spot on...I forgot to add that tidbit.   It is just funny to me when people ( mostly coworkers ) excitedly tell me how much they 'saved' by deducting mortgage interest.  These are obviously people with obscene mortgages.  It goes to show you that even people that are smart and successful in other areas are not necessarily smart with taxes/finances.

Again, I think the crowd here is smarter financially than the 'average joe'...so I hope we all know better....but who knows.

It's staggering to me that you think you're making the best financial decision paying down a low fixed interest loan when it's not the best way to use your dollars. Now your coworkers are likely normal people and spending their extra but not paying down a mortgage and investing the extra capital shows a true understanding of finances.

My property and state taxes max out the standard deduction and all of our mortgage interest is then tax deductible. But the size of the interest paid is not relevant. It's the return that money could be making vs the interest rate on your loan.

It's staggering what a 🍆 you are and how you pay without reading my prior comments in the thread which recognize the fact the mathematical best option in theory/statistically is not paying things down. It's also staggering that you aren't 100% in Bitcoin given its statistical history.