Our household is probably a couple years from FIRE, though it depends on how markets go over the next couple of years. Since we live in the Bay Area, housing costs are quite high for us. We pay probably about $37k/yr on PITI. There's this voice in my head that says if we pay off the mortgage, we can reduce our housing costs to around $13k/yr (we have high property taxes). 25k/yr translates into $625k less that we need in our 'stache. However, I've read the mortgage payoff threads and know it doesn't make sense, since our mortgage rate is only 3.25%, and we make good use of the mortgage interest tax deduction.
It got me thinking though about going the other direction. If we don't want to pay off the mortgage, what about taking on a bigger mortgage? We could probably refinance and take out another 600-700k out. Lets say we take out $500k. At 4%, this would translate into another 32k/yr in mortgage payments. We don't need the cash so all of it would just go to investments. Given our plan to fire in a couple of years, our income in a couple of years will go way down and we should be able to pull out LT capital gains at 0% rate. So the thing that we would need to is just average over 4% returns on our investments to break even with this plan. Assuming we average 6+% we would be in great shape. However on paper, it doesn't help as 25 x $32k = $800k, so adding $500k to our stache doesn't help us FIRE any sooner.
[/size]Anyway, just wondering if anyone has thoughts about this plan.
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