Ok, we’ve seen enough pay off your mortgage or not threads here.
I am firmly in the Do Not Pay Off Your Mortgage camp.
But I have a new question I’ve been sitting on for the past 2 months.
We recently received an unexpected large inheritance, with the instructions that it’s to be used to pay off our mortgage. It is a huge 6 figure sum, enough to cover our mortgage save for about 4 more months of payments. It was given to us as a cash sum, as in, the estate didn’t pay the mortgage bank directly. The cash is now in our possession in our interest bank account. We are incredibly grateful for it.
My initial impulse was wanting to put it all into our index funds. My reasoning is that we were instructed to use the inheritance to “pay off the mortgage”, not specifically to “pay off our mortgage in lump sum”. The original capital would earn dividends and capital gains, and since money is fungible, and I would still be paying off the mortgage with it, just in monthly installments. My wife thought that would piss off the karmic gods.
So my options are:
1. In the “spirit” of the inheritance, pay down the mortgage in lump sum now.
2. Put the money in Vanguard, continue to make monthly payments on the mortgage, “technically” following the inheritance instructions of paying off the mortgage, just monthly.
3. Some convoluted scheme of pay off the mortgage, then take out a HEL to put into the market. This would incur the most fees and take the most “work”, but I do use the inheritance as intended and I still get a lump sum to invest.
As with common advice I’ve heard, we’ve sat on this cash for about 2 months now. My wife and I are reasonable people and the emotion of this whole process has died down, and we are ready to move the cash into action now. We’ve not increased or changed our spending habits. This will basically move up our FIRE date to by 10+ years, with whatever we decide to do, so again, we are so very, very grateful. I asked my parents, and they weren’t much help, they basically said, “well, the money is yours now, do whatever you want with it.”
I guess this wouldn't be such a hard decision if I wasn't so firmly in the DNPOYM club.