Mortgage Payoff Club!!

[Bird In Hand]

It was a nice year mortgage free, but I had to do what any good American does when they pay off a loan- go get another one. And bigger!

Hahah...my antitote to this phenomenon is to immediately scale back my work hours so my salary reduction is commensurate with the lack of mortgage payment.  This way we can't really afford to move somewhere bigger/nicer even if we get tempted.  Plus downshifting -- however minor -- is another baby step toward RE.

Anyway, congrats (or condolences?) on the cool new place.  Good luck plowing ;)

[KBecks]

I think it's a very common temptation to think about getting a bigger property (or a 2nd property) after the mortgage is paid off.

Our lives are so wrapped up in our local area that it would be difficult to move, plus, there's still so much stuff!  And real estate agent fees.

[talltexan]

Made the first of what I hope will be no more than 25 payments to pay off our new mortgage.

Depends on what we sell our old home for and how quickly.    Might take 36 payments, might take 18.

All the data suggest that the housing market is strong in the SE. I also am trying to sell a property in Charlotte. Good luck!

[Bird In Hand]

Our principal balance got down to < $14k this month, and we impulsively decided to wipe it out yesterday afternoon.  Having never done a wire transfer before, I figured it would take several days to go through, get processed, and applied to our mortgage.  To my surprise, I logged into our mortgage account online this morning and it says our loan is paid in full.  w00t!

With ~$2,900 coming off the books (P&I) each month, I can now switch to a PT schedule if I so desire.  We'll probably build up our cash buffer a little more before I do so, but I'm thrilled that I've reached this milestone in our FI(RE?) journey.

[Monocle Money Mouth]

Our principal balance got down to < $14k this month, and we impulsively decided to wipe it out yesterday afternoon.  Having never done a wire transfer before, I figured it would take several days to go through, get processed, and applied to our mortgage.  To my surprise, I logged into our mortgage account online this morning and it says our loan is paid in full.  w00t!

With ~$2,900 coming off the books (P&I) each month, I can now switch to a PT schedule if I so desire.  We'll probably build up our cash buffer a little more before I do so, but I'm thrilled that I've reached this milestone in our FI(RE?) journey.

Congratulations!  Being mortgage free really simplifies your life.

We paid off our house on whim like that too :D the balance was too low to not just end it.

We had to jump through more hoops for our final payment though. I had to call the bank to get a specific payoff amount and drop off the check. Our lender was local so I could just go to our local bank branch and make the final payment.

[Bird In Hand]

Congratulations!  Being mortgage free really simplifies your life.

We paid off our house on whim like that too :D the balance was too low to not just end it.

We had to jump through more hoops for our final payment though. I had to call the bank to get a specific payoff amount and drop off the check. Our lender was local so I could just go to our local bank branch and make the final payment.

Thank you!  Yeah, once we realized we had enough in our slush fund to knock it out, I got very antsy and did what I needed to make it happen.

Despite the payoff processing quickly, we did encounter a few kinks in the process.  The lender side (Quicken Loans) was great.  I did have to call to request the official payoff figure, but I was only on the phone for 5 minutes or so.  I logged onto my mortgage account after I hung up the phone, and the payoff letter had already been uploaded with everything I needed.

On the payment side (Discover bank online), it was a little less smooth.  After I initiated the wire transfer online, the system said I had to call and authorize the transfer.  On the phone it took Discover about a half hour to verify my identity.  It was really a comedy of ridiculous technical errors on their part, but finally they accepted an uploaded picture of my driver's license as proof.

Big picture, I was pleased that I started the payoff process after lunch yesterday, and by this morning everything was processed.

[talltexan]

congratulations, guys!

[moneypitfeeder]

Congrats all! I'm antsy to pull the plug sooner too, but SO thinks we should just stay with the plan I set up. $19,000-ish left to go. Should be able to join you in 5 months!

[Bird In Hand]

Thanks @talltexan and @moneypitfeeder

Congrats all! I'm antsy to pull the plug sooner too, but SO thinks we should just stay with the plan I set up. $19,000-ish left to go. Should be able to join you in 5 months!

I'd say that it's probably more important to respect SO than to cut 5 months down to 1-4 months.  :)

I was lucky that my wife was fine with just killing our mortgage ~5 months early once it was sub $14k.  If she hadn't been, I probably would have been a bit antsy too.  But 6 months flies by.

[Eilonwy]

Well, please welcome me to the club! Or have I already left it? We just paid off our mortgage, twenty years practically to the day after we got our first 30 year loan. We have no debt at all now!

[Bird In Hand]

Well, please welcome me to the club! Or have I already left it? We just paid off our mortgage, twenty years practically to the day after we got our first 30 year loan. We have no debt at all now!

Congratulations!  Now, if you could only find that bauble... ;)

What are you planning on doing with the $$ that was previously going to P&I?

[Eilonwy]

I'm sure it'll turn up sometime. :-)

We don't really have a plan, though there are always lots of home improvements we want to make. We've vaguely considered buying a rental property, but we're not good candidates for that, personality-wise.

[Askel]

Well, please welcome me to the club! Or have I already left it? We just paid off our mortgage, twenty years practically to the day after we got our first 30 year loan. We have no debt at all now!

Congrats! Enjoy that fuzzy debt free glow.  It's pretty nice knowing that no matter what happens, nobody from the bank will ever be pounding on your door some morning for that mortgage payment.   

[gaja]

Starting: $165 000
1/12/2019: $158 000
1/01/2020: $157 000
1/02/2020: $155 000

Pausing for a few months to pay for some house upgrades: solar panels, EV charger, and a stronger roof.

[BlueHouse]

I guess I will join this thread!

At the end of last year, I really struggled with the decision to pay my mortgage off with one big pile of cash or invest it all. I chose to pay it off, mostly to keep my wife happy.

I always kind of regretted it thinking I was missing out on gains. I also thought I would have a better stomach for market crashes ( having never been through a major one)  but after this week, I think I am destined to just leave my mortgage paid off forever!!!

It is mostly emotional, but its a nice feeling to know we could be headed for a recession and we will be safe in our home no matter what happens.

Congratulations!  I know we're not supposed to time the market, but you couldn't have wished for better timing.  Enjoy your peace of mind! 
( It's a tremendous achievement no matter when it happens)

[Money Badger]

I guess I will join this thread!

At the end of last year, I really struggled with the decision to pay my mortgage off with one big pile of cash or invest it all. I chose to pay it off, mostly to keep my wife happy.

I always kind of regretted it thinking I was missing out on gains. I also thought I would have a better stomach for market crashes ( having never been through a major one)  but after this week, I think I am destined to just leave my mortgage paid off forever!!!

It is mostly emotional, but its a nice feeling to know we could be headed for a recession and we will be safe in our home no matter what happens.

Outstanding!   The margin of safety now lets you invest that free cash flow to have all future income working for you, not the bank!   Great times for dollar cost averaging the market volatility in recessions.   Buying other hard assets as both stock market and inflation hedges is now an option as well with free cash flow.   Enjoy these new diversification options and your freedom!

[Eilonwy]

It's really starting to sink in emotionally that the mortgage is gone. I feel free of money stress for the first time since I can remember. And we've been perfectly comfortable for a long time; it's just some psychological thing I couldn't get over.

[AK]

I'm considering paying off my mortgage this year but feel like it'll be meh. I paid off my student loans in 2018 in advance and it was very anti-climactic. It felt like onto the next goal and the next. Anyone else feel like that?

Mentally I've committed to paying it off this year but am reconsidering because I like having a sizable cash cushion despite knowing the opportunity cost of not investing it.

[gaja]

Starting: $165 000
1/12/2019: $158 000
1/01/2020: $157 000
1/02/2020: $155 000

Pausing for a few months to pay for some house upgrades: solar panels, EV charger, and a stronger roof.

That was a short break. Got a windfall this week, and now we are below 100'.
Starting:    $165 000
1/12/2019: $158 000
1/01/2020: $157 000
1/02/2020: $155 000
8/03/2020: $ 75 000

[SwordGuy]

Starting: $165 000
1/12/2019: $158 000
1/01/2020: $157 000
1/02/2020: $155 000

Pausing for a few months to pay for some house upgrades: solar panels, EV charger, and a stronger roof.

That was a short break. Got a windfall this week, and now we are below 100'.
Starting:    $165 000
1/12/2019: $158 000
1/01/2020: $157 000
1/02/2020: $155 000
8/03/2020: $ 75 000

That was a nice sized windfall!   I hope it was for fun reasons, otherwise, my condolences.

[gaja]

Starting: $165 000
1/12/2019: $158 000
1/01/2020: $157 000
1/02/2020: $155 000

Pausing for a few months to pay for some house upgrades: solar panels, EV charger, and a stronger roof.

That was a short break. Got a windfall this week, and now we are below 100'.
Starting:    $165 000
1/12/2019: $158 000
1/01/2020: $157 000
1/02/2020: $155 000
8/03/2020: $ 75 000

That was a nice sized windfall!   I hope it was for fun reasons, otherwise, my condolences.

Thank you, but I would say neither. An old insurance claim that finally got through 8 years of investigations and paperwork. A big relief to have finally have that worry out of the way.

[Money Badger]

I'm considering paying off my mortgage this year but feel like it'll be meh. I paid off my student loans in 2018 in advance and it was very anti-climactic. It felt like onto the next goal and the next. Anyone else feel like that?

Mentally I've committed to paying it off this year but am reconsidering because I like having a sizable cash cushion despite knowing the opportunity cost of not investing it.

AK,  That anti-climactic feeling is normal.   Only you really know the discipline and sacrifices you made to pay off loans usually.  But being 100% debt free is something else... That cash
is all working for you in many ways then.   It’s more than the ~3% mortgage savings...   It’s how you breathe.  Its how you react to future situations.   It’s how you can invest like crazy with free cash flow after.    It’s how you can relax even after job or other setbacks.   It’s damn good!  ;)

[talltexan]

I read that one policy being considered to help economic is suspending mortgage payments for the next few months. I'd feel pretty annoyed if I thought banks were being propped up by this while I'd paid off my mortgage a while ago and didn't get the economic relief others were receiving.

[SwordGuy]

I read that one policy being considered to help economic is suspending mortgage payments for the next few months. I'd feel pretty annoyed if I thought banks were being propped up by this while I'd paid off my mortgage a while ago and didn't get the economic relief others were receiving.

Suspending mortgage payments -- unless the government is paying the interest during the suspension -- isn't propping up the banks.   It's propping up those with mortgages.    If it's paying the interest, it's propping up both.

You had a mortgage at one time that wasn't paid off.   If you're like most people there's even a time before you had earned enough to have big savings or pay off the mortgage early.   It would have helped you if the action had happened then.

The above is a polite way of saying, "don't be a selfish dick".  I mention that not to attack, but to express my first thought and feelings upon reading what you said.   You might not have meant it quite that way and would want to know you had inadvertently communicated that.

[BlueHouse]

I read that one policy being considered to help economic is suspending mortgage payments for the next few months. I'd feel pretty annoyed if I thought banks were being propped up by this while I'd paid off my mortgage a while ago and didn't get the economic relief others were receiving.

I admit I sometimes have this feeling of not wanting someone else to benefit if you're also not benefiting.  But when I think about it logically, I cannot find a way that it hurts me.  How would this hurt you specifically?

[Eilonwy]

My mortgage is paid off and I'm nothing but happy at the thought that others who weren't as lucky can get the help they need in this time of crisis. I don't need help, why should I grudge those who do?

[paulkots]

Paid off my mortgage in December 2019 and in light of the current problems, I couldn't be happier. If the current problem progresses the way it seems to be heading, people will need help and I hope they get it. There are people that are losing it right now because of the virus plus the 25%+ stock market meltdown, its a major peace of mind knowing that your bills are minimal.

[Money Badger]

In a lot of ways, MMM is about the people who "get it" about achieving financial independence share their skills with those who didn't.  So, I am not begrudging people who may get assistance on paying bills for a short period.  A lot of the people are hourly and being put under water by mandatory "personal separation" policies, travel restrictions, etc..    May many of those same people with time on their hands find this Forum and learn and live the lessons that the FI folks in this community already have.

[talltexan]

Agreed that I see how appealing the reduced risk of the mortgage payoff path is at times like this.

We are selling a property that should close on Mar. 27. Ready to do whatever it takes to get to the finish line on that.

[Askel]

Well a couple more of these -10% days and I might give some credence to those "YOU SHOULD INVEST NOT PAY DOWN YOUR MORTGAGE" folks.  But really though, I fell very bad about being so goddam smug about having a paid of house right now.  :D

[KBecks]

Very thankful that we paid off our mortgage last year.  I just wrote our first home insurance check directly to the insurance company.  A new experience.  We also invest and I am waiting for some good buys in the stock market as we move forward. 

[moneypitfeeder]

Balance as of today: $11,956.69, payoff 4 months to go:) I realize I should be buying stocks like mad right now, but I'm more happy to secure our house as paid off!

[ender]

This month has certainly made me think that I want to pay down a mortgage fast, once we buy our house, heh.

[SwordGuy]

This month has certainly made me think that I want to pay down a mortgage fast, once we buy our house, heh.

It's really important to distinguish between "a paid off mortgage" and "a NON-paid-off mortgage that has been partly prepaid".

The former gives you extra "safety" in that you need much less cash to get by with.

The latter gives you LESS "safety" in that you still need more cash to get by with and you have lower reserves to pay the mortgage with.  The bank will foreclose because you didn't make current payments, it could care less that you made extra payments in the past.   In fact, you're just making it easier for the bank not to lose money if you pre-pay but don't pay off the mortgage.

[ender]

This month has certainly made me think that I want to pay down a mortgage fast, once we buy our house, heh.

It's really important to distinguish between "a paid off mortgage" and "a NON-paid-off mortgage that has been partly prepaid".

The former gives you extra "safety" in that you need much less cash to get by with.

The latter gives you LESS "safety" in that you still need more cash to get by with and you have lower reserves to pay the mortgage with.  The bank will foreclose because you didn't make current payments, it could care less that you made extra payments in the past.   In fact, you're just making it easier for the bank not to lose money if you pre-pay but don't pay off the mortgage.

Which is why I plan on generously recasting if we pay down early ;-)

[mrmoonymartian]

The bank will foreclose because you didn't make current payments, it could care less that you made extra payments in the past.

Well that's good then since it must care to some extent if it could care less.

Or did you mean it could not care less, meaning it doesn't care at all?

[Askel]

It's really important to distinguish between "a paid off mortgage" and "a NON-paid-off mortgage that has been partly prepaid".

The former gives you extra "safety" in that you need much less cash to get by with.

The latter gives you LESS "safety" in that you still need more cash to get by with and you have lower reserves to pay the mortgage with.  The bank will foreclose because you didn't make current payments, it could care less that you made extra payments in the past.   In fact, you're just making it easier for the bank not to lose money if you pre-pay but don't pay off the mortgage.

This is true, but hopefully if you're in a position to pay down your mortgage, you're also in good enough shape to avoid missing a bunch of mortgage payments.

Also, paying down your mortgage gives you more equity which also gives you lots more options. Home values tank and you need to sell? No worries about being underwater. Financial emergency and you need some extra cash? Hello HELOC.  Sure, a fat investment account can also bring these same benefits, but a home sale is not subject to taxes.  Lots of trade-offs to consider for your given situation.

For those of us who live in areas with relatively stable real estate prices, keep a significant chunk of our portfolio in home equity can be a good bet. 

[BlueHouse]

It's really important to distinguish between "a paid off mortgage" and "a NON-paid-off mortgage that has been partly prepaid".

The former gives you extra "safety" in that you need much less cash to get by with.

The latter gives you LESS "safety" in that you still need more cash to get by with and you have lower reserves to pay the mortgage with.  The bank will foreclose because you didn't make current payments, it could care less that you made extra payments in the past.   In fact, you're just making it easier for the bank not to lose money if you pre-pay but don't pay off the mortgage.

This is true, but hopefully if you're in a position to pay down your mortgage, you're also in good enough shape to avoid missing a bunch of mortgage payments.

Also, paying down your mortgage gives you more equity which also gives you lots more options. Home values tank and you need to sell? No worries about being underwater. Financial emergency and you need some extra cash? Hello HELOC.  Sure, a fat investment account can also bring these same benefits, but a home sale is not subject to taxes.  Lots of trade-offs to consider for your given situation.

For those of us who live in areas with relatively stable real estate prices, keep a significant chunk of our portfolio in home equity can be a good bet.

After 2008, I had lost so much in the market and was just starting to rake in the big bucks.  I bought a large house in a HCOL area specifically because I wanted an asset that couldn't just go "poof" up in smoke.  That was before I found MMM so I really didn't feel confident with my investments "strategy".  I wanted a tangible asset.  I've paid the house down enough (and recast) that my payments are now the equivalent of a 1 bedroom apartment in my HCOL area.  I have a lot of equity and I'm pretty confident the house will continue to appreciate in value due to its location.

[Money Badger]

@BlueHouse,  Always enjoy your posts and good work on paydowns.   This Corona-virus situation is what makes the paid off home so key... The likes of Warren Buffett still teach that the irrational fear market event makes the intelligent (ie, home debt free) investor able to win when others are worried about their debts and other obligations.    The Intelligent Investor by Ben Graham
is playing out 1970s lessons today!  It just changes EVERYthing to be able to be agressive when others are fearful.   Warren has $120B to now go for deals... The mortgage free need to
be agressive now.  Nuff said.

[MissNancyPryor]

Popping in to add my voice to the "yes" pay off your mortgage chorus and offer encouragement. 

I went around the barn with B42 myself on the topic and realized there is no convincing some.  I am sure if B42 was still on the boards he would simply be doubling down right now that we are all fools because < reasons >.  The simple fact is that money is emotions, not just math, and these days of stock market panic prove that once again. 

I have to say that my debt free home and life is the #1 reason I am sleeping at all these days.  I can crank my spending down to 1% of my net worth in the days of corona-geddon and this would not have been possible if I was still sending my money to a mortgage lender. 

Rock on with your bad selves, mortgage burners!  Way to go.   

[ender]

Popping in to add my voice to the "yes" pay off your mortgage chorus and offer encouragement. 

I went around the barn with B42 myself on the topic and realized there is no convincing some.  I am sure if B42 was still on the boards he would simply be doubling down right now that we are all fools because < reasons >.  The simple fact is that money is emotions, not just math, and these days of stock market panic prove that once again. 

I have to say that my debt free home and life is the #1 reason I am sleeping at all these days.  I can crank my spending down to 1% of my net worth in the days of corona-geddon and this would not have been possible if I was still sending my money to a mortgage lender. 

Rock on with your bad selves, mortgage burners!  Way to go.

People also have different risk tolerances. Some people can legitimately not be bothered by having a mortgage. I am not one of them ;-)

[Monocle Money Mouth]

Popping in to add my voice to the "yes" pay off your mortgage chorus and offer encouragement. 

I went around the barn with B42 myself on the topic and realized there is no convincing some.  I am sure if B42 was still on the boards he would simply be doubling down right now that we are all fools because < reasons >.  The simple fact is that money is emotions, not just math, and these days of stock market panic prove that once again. 

I have to say that my debt free home and life is the #1 reason I am sleeping at all these days.  I can crank my spending down to 1% of my net worth in the days of corona-geddon and this would not have been possible if I was still sending my money to a mortgage lender. 

Rock on with your bad selves, mortgage burners!  Way to go.

I concur with MissNancy. Perfect is the enemy of the good when it comes to money. My wife and I paid off our house about 4 years ago and I'm glad we did. I wasn't anticipating a decline of this magnitude, but I knew at some point the economy would slow down. If shit gets real and one or both of us gets laid off, we'll be fine. Since our house is paid off, our expenses are super low and we can afford to live off of our emergency funds for well over a year. We're not stressing about any of this. In the meantime, I can afford to keep adding to my investments while the stock market is in the toilet. I wouldn't have been able to afford to do that when we had a mortgage.

[talltexan]

Polite DNPYMer here: I raised the issue with the other side about how they were all feeling right now. If you have no mortgage, you are obviously insulated from much of the market risk that is making people so cautious at the moment. But for those of you who are overpaying, do you plan to modify those large overpayment plans in the short term? Sincere question...

[Askel]

Nope. I'm a firm believer in never trying to time the market- up or down. 

But then again, I locked myself into an "overpayment plan" with a 15 year mortgage, so the bank would be kind of upset with me if I changed my mind. ;) 

If I lived in the lands of expensive real estate, I might be tempted to include home equity into some kind of portfolio rebalancing strategy, but given my home's value- the benefits of such greatly outweigh the ease and simplicity of just pressing the rebalance button on my investment accounts. 

[Car Jack]

This is where "investments" should be well separated from money needed to live, to pay bills, to pay mortgage, for emergencies.

If you have done this and still have the same amount of money coming in from a job, there's no reason to vary from extra payments.  In my case, I don't have a mortgage so the money coming in is being used as usual....extra 1% on top of normal rate at Ally, savings bonds ($5k coming in paper bonds from the feds), paying car expenses (son crashed one, so paying deductible), doing some normal manufactured spend, so paying the CC off.  Our taxes have been completed, so some of our money and our refunds will go into Roths, thus converted to the investment side of the wall.

[Need2Save]

I'm coming over from the MPC $50+ thread to officially join this one with a remaining balance of around $43,333.

To answer the question above, our plan will still be to pay off the mortgage this year. Our original target was November of this year, but we were able to move it up to July of this year just by shuffling around some cash flow priorities and our healthy annual bonuses. In the end, I'm not sure if we'll still pay it off by July or keep to the original November target, but given that we are roughly two years from pulling the plug - I feel confident we will stick to paying off in 2020.  I don't see a major difference between July and November but we may just see how we feel after the next few weeks of up and downs go.

For the time being, we both feel pretty good about job security. I know that is not true for others so if you are feeling like you may be facing a possible furlough or layoff, I could see dropping down to just the amount required each month and assessing as it developes.

[paulkots]

In times like these, I would definitely make sure I have a 3-6 month EF, more like the 6 month EF.

On market timing, I would/will/did buy at certain levels but because we don't know when the knife will stop falling, I wouldn't jump all in. After this initial panic, we will have a reality that market is just not the same. Businesses have already suffered and they will not snap back as quickly as they went down.

[FinanceFreaky]

Great to read all your mortgage stories! :-)

I have a question for you and am curious to hear your opinion. With our mortgage we are allowed to pay off 10% extra every year. If we want to pay off more than the 10%, we have to pay a penalty.

If we continue like this and pay off 10% extra every year, we can be rid of the mortgage in 5 years. Otherwise it will be 4 years.

What would you do? Pay, next to the buffer, as much extra as possible? Or only the 10% extra per year?

[SwordGuy]

Great to read all your mortgage stories! :-)

I have a question for you and am curious to hear your opinion. With our mortgage we are allowed to pay off 10% extra every year. If we want to pay off more than the 10%, we have to pay a penalty.

If we continue like this and pay off 10% extra every year, we can be rid of the mortgage in 5 years. Otherwise it will be 4 years.

What would you do? Pay, next to the buffer, as much extra as possible? Or only the 10% extra per year?

It will take you longer if you pay extra?   I'm assuming that's a typo and you mean 14 years with no extra payments?

As long as you've got a solid cash reserve to get you thru bad times for a couple of years, paying early on the mortgage isn't a bad idea.  Just remember, you can be foreclosed on if you can't make payments whether you've paid extra in the past or not.

[FinanceFreaky]

Great to read all your mortgage stories! :-)

I have a question for you and am curious to hear your opinion. With our mortgage we are allowed to pay off 10% extra every year. If we want to pay off more than the 10%, we have to pay a penalty.

If we continue like this and pay off 10% extra every year, we can be rid of the mortgage in 5 years. Otherwise it will be 4 years.

What would you do? Pay, next to the buffer, as much extra as possible? Or only the 10% extra per year?

It will take you longer if you pay extra?   I'm assuming that's a typo and you mean 14 years with no extra payments?

As long as you've got a solid cash reserve to get you thru bad times for a couple of years, paying early on the mortgage isn't a bad idea.  Just remember, you can be foreclosed on if you can't make payments whether you've paid extra in the past or not.

Oops, sorry if I was not clear. There are three options:

• The mortgage will be paid off in 25 years (if we don't take any other actions).
• If we pay off 10% extra per year, it will take us 5 years to kill the mortgage
• If we pay off more than 10% extra per year, it will take us 4 years to kill the mortgage. Then we also have to pay a fine for every extra payment above the 10%. The good thing is that we are rid of the mortgage sooner.