In a perfect world, I would be posting this elsewhere on this forum, but the mods have spoken, so here I am, sharing these golden eggs with the enlightened. At least it's good confirmation. Feel free to share it far and wide, if you find a place that seems appropriate and not inflammatory. After all, the people celebrating their payoffs don't want to hear from the Debbie Downers like us, lol.
I'll be the Debbie Downer here, at least as far as #3 goes (others have touched on the few Mustachians qualifying for the mortgage deduction these days).
(Though I sense I might offend sensibilities here,
this isn't a post telling people to pay off their mortgage. I just want everyone to have the right information to make the properly informed decision.)
3. Inflation offsets savings in interest
Despite the fact you can earn better returns by investing than by paying off your mortgage early, some people still prefer to prepay their mortgage. This may be because of an aversion to debt, or a belief it's better to get the guaranteed return that comes from mortgage prepayment, since there's no guarantee invested money will grow.
The problem is, you need to factor in inflation when deciding if this strategy makes sense. Due to inflation, your mortgage effectively becomes cheaper to pay over time since the value of your money erodes but your mortgage payment stays the same (assuming you have a fixed-rate loan). If you have a monthly payment of $1,500 today, in 25 years, the $1,500 you'll pay toward your mortgage would be the equivalent of around $942 of today's dollars -- assuming inflation of 2% annually.
Since your mortgage payment is continually getting cheaper over time, it seldom makes sense to prepay it. Don't forget that all the interest savings you net from paying off the mortgage early are also reduced by inflation, making this even less of a good deal over time. If you save around $80,000 in interest by paying off a $300,000 4.5% mortgage in 21.5 years instead of 30 years, you've actually saved less than $50,000 when accounting for the fact you don't benefit from the interest savings for more than two decades.
Inflation with regards to mortgages is a huge red herring for Mustachians. (Inflation may pay a role if you're living paycheck to paycheck, where the reduced inflation-adjusted mortgage payment may result in transitioning from high-cost debt to investment savings or to allow for more tax-deferred savings.) If you're already maxing all tax-advantaged accounts, inflation is irrelevant*.
A mortgage is a debt instrument. And it happens to be amortized, though it could have been structured as a percentage of the debt that covers interest and some of the principle (or in any other matter). This has nothing to do with inflation. In fact, a debt instrument could be structured to increase with some pre-calculated inflation rate (say, 2%), and still the amount you pay would be the same (whatever the interest rate is). In fact, from a long-term investment strategy, an inflation-adjusted amortization schedule would be the ideal approach since you can invest more money early in the accumulation phase (note that the time horizon here is relevant, not the inflation rate).
Generally speaking, inflation is irrelevant when comparing your investment and debt alternatives. If you have doubts, use a spreadsheet to compare paying off a mortgage (at say, 5%) with investing in a fixed income instrument at the same interest rate (feel free to use any inflation rate). The outcome will be identical.
I know I'm going to get blow-back on this, but I think this is one of the huge myths a lot of people cling to to not pay off their mortgage. If there is something I'm not properly considering, I'd love to be corrected otherwise.
*The obvious exception would be if you're considering investing in TIPS.
p.s. Merry Season of Family Gathering.