Author Topic: Mortgage Payoff Club!!  (Read 704989 times)

Askel

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Re: Mortgage Payoff Club!!
« Reply #2000 on: March 24, 2020, 09:09:53 AM »
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

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Re: Mortgage Payoff Club!!
« Reply #2001 on: March 24, 2020, 09:14:44 AM »
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

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Re: Mortgage Payoff Club!!
« Reply #2002 on: March 24, 2020, 09:18:40 AM »
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

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Re: Mortgage Payoff Club!!
« Reply #2003 on: March 24, 2020, 09:19:21 AM »
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.

Tdem

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Re: Mortgage Payoff Club!!
« Reply #2004 on: April 01, 2020, 09:23:09 AM »
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

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Re: Mortgage Payoff Club!!
« Reply #2005 on: April 01, 2020, 10:52:54 AM »
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.

Tdem

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Re: Mortgage Payoff Club!!
« Reply #2006 on: April 01, 2020, 11:28:26 AM »
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.

Money Badger

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Re: Mortgage Payoff Club!!
« Reply #2007 on: April 02, 2020, 06:02:24 PM »
@Tdem,  Not knowing your financial status or the reason for the prepaymemt penalty, will suggest what I know works in the US mortgage industry...

See what equity level and credit worthiness you need to refinance eventually to avoid a prepay penalty.   Save like mad to get there outside the mortgage.   Debt is an emergency.   Killing debt frees up options in your life.
Either pay off the mortgage with those savings if the math works for you... Or worst case, Refinance to a lower balance with a non-predatory lender that doesn’t penalize you for seeking early payment freedom from debt.   You may find your current lender amazingly waives the penalty when you ask for the payoff quote and tell them why by the way!   Happened to me long ago with PMI fees at least.
Do this payoff in 4 years or less.   Again, Debt is an emergency (now and waiting to happen in future)!    FWIW, I paid off $270K USD in 4 years from diverting my liquid, non-investment savings and lifestyle all towards the debt.   It simply saved my family from financial strain now that we are debt free and this downturn is upon us.   It changes your mindset vs others who panic at the downturn.   This wont be the last downturn in then world either by a long shot!   Be fearless.   Be relentless about payoff.   Get it done!   ✅

Askel

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Re: Mortgage Payoff Club!!
« Reply #2008 on: April 03, 2020, 05:10:41 AM »

SwordGuy

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Re: Mortgage Payoff Club!!
« Reply #2009 on: April 03, 2020, 07:33:08 AM »
I found this interesting and a good argument for having a paid of mortgage:

https://www.marketwatch.com/story/heres-the-hard-truth-about-the-mortgage-markets-that-isnt-being-told-2020-04-02

I don't see any logical connection between your statement and the contents of that article.

Could you explain your train of thought?

Tdem

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Re: Mortgage Payoff Club!!
« Reply #2010 on: April 03, 2020, 08:30:54 AM »
Thank you very much for thinking with me and sharing your thoughts. This helps!

Gardo

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Re: Mortgage Payoff Club!!
« Reply #2011 on: April 03, 2020, 08:37:41 AM »
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...

I will stay the course but only because I pay an extra on principal reduction that to me is not big enough to warrant any changes.  My mortgage is $600 a month and I pay $1,200 a month.   

talltexan

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Re: Mortgage Payoff Club!!
« Reply #2012 on: April 08, 2020, 09:00:50 AM »
Thank you!

And--if I may ask--how does your $600 overpayment compare to the amount you're putting into retirement investments?

Need2Save

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Re: Mortgage Payoff Club!!
« Reply #2013 on: April 26, 2020, 06:25:48 AM »
Before April Payment $43,333
Principle Paid this month: $5,197
New Balance: $38,123

SwordGuy

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Re: Mortgage Payoff Club!!
« Reply #2014 on: April 26, 2020, 07:37:34 AM »
Received a written offer for our old house late last night.   That's one mortgage that will be paid off in about 40 days.   :)

Depends on what the market's doing as to whether we take the proceeds and put it on the new mortgage or buy stocks.   If stocks are cheap enough, we'll buy and then pay off the new mortgage in a couple years with the recovered value.    If not, we'll knock 44% off our new mortgage. 

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #2015 on: April 29, 2020, 06:36:58 AM »

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...

I've only been paying a little bit over (because I like round numbers).  I'm very happy that I paid a lot down early and recast because now my payment doesn't scare the crap out of me. 
I did actually reduce the amount of overpayment even more though, mainly because I have always kept a (way too high) cash reserve and I FINALLY put it in the market in January.  Now I'm reeling from that and I want to build up my e-fund again.  I'm super cautious and I like to have a lot of cash on hand. I'm still maxing out all tax-advantaged accounts, and I've also pledged that anything over my tax-advantaged accounts will go to charitable causes this year - not all will be tax deductible or even traceable, but in addition to outright donations, I'm being super-generous with buying things from local businesses and tipping, etc.  I still save a shit-ton in 401K, so it's really just icing on the cake that goes to others. 

talltexan

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Re: Mortgage Payoff Club!!
« Reply #2016 on: April 29, 2020, 08:05:04 AM »
Thanks for answering.

There was a nice post on Financial Samurai about how being mortgage free makes him feel like he can invest in riskier stuff.

Link: https://www.financialsamurai.com/no-mortgage-more-courage-pay-off-all-debt-before-retiring/

It may seem annoying now, but your January investment won't look too different from a march investment by the time you reach the finish line. My wife and I put $6,000 into her Roth as one shot every year (backdoor), but we delayed that contribution from January to April because of other needs for the cash early in the year. It's just one year worth of contributions out of her (so far) thirteen.

SwordGuy

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Re: Mortgage Payoff Club!!
« Reply #2017 on: April 29, 2020, 08:37:33 AM »
Thanks for answering.

There was a nice post on Financial Samurai about how being mortgage free makes him feel like he can invest in riskier stuff.

Link: https://www.financialsamurai.com/no-mortgage-more-courage-pay-off-all-debt-before-retiring/

It may seem annoying now, but your January investment won't look too different from a march investment by the time you reach the finish line. My wife and I put $6,000 into her Roth as one shot every year (backdoor), but we delayed that contribution from January to April because of other needs for the cash early in the year. It's just one year worth of contributions out of her (so far) thirteen.

I think that guy has turned into a click-bait whore and a whiny one at that.     

BlueHouse

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Re: Mortgage Payoff Club!!
« Reply #2018 on: April 29, 2020, 09:25:33 AM »
It may seem annoying now, but your January investment won't look too different from a march investment by the time you reach the finish line.

I don't think that's quite true in my case.   In January, I dropped over $90K into investments ($50K was a payback from a loan, $40K was last year's max profit share into 401K and $7K into Roth.  In Feb, I tipped into the $2M liquid club and was seriously considering pulling the plug this year ahead of schedule.  So I was really really close to the finish line.   Still, if I don't change anything, I could prob still retire in 2 years (2022 is my goal) and by then if the market recovers AT ALL, I should have more than I will need -- assuming the insurance quandary becomes more settled. 

nereo

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Re: Mortgage Payoff Club!!
« Reply #2019 on: April 29, 2020, 09:53:46 AM »
Thanks for answering.

There was a nice post on Financial Samurai about how being mortgage free makes him feel like he can invest in riskier stuff.

Link: https://www.financialsamurai.com/no-mortgage-more-courage-pay-off-all-debt-before-retiring/

It may seem annoying now, but your January investment won't look too different from a march investment by the time you reach the finish line. My wife and I put $6,000 into her Roth as one shot every year (backdoor), but we delayed that contribution from January to April because of other needs for the cash early in the year. It's just one year worth of contributions out of her (so far) thirteen.

I think that guy has turned into a click-bait whore and a whiny one at that.   

you beat me to it @SwordGuy - once upon a time he had good financial information backed up with comprehensive math.  That was kind of his whole schtick... showing how various financial decisions panned out with realistic numbers.
Lately he's put out several click-bait articles which were so flawed with their assumptions as to be completely ludicrous. He's also discussed his efforts to monetize his blog more, and it appears this is how he is doing it.

moneypitfeeder

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Re: Mortgage Payoff Club!!
« Reply #2020 on: May 11, 2020, 06:03:08 PM »
So I just made my second to last mortgage payment (woot woot), I've found I have very few people that I can share this info with. Most of my friends/co-workers are all stuck feeding the mortgage beast and never have a paid-off house. I realize that many here feel it is better to invest than payoff a home, but all my stocks are in the crapper right now, and I feel great that next month we can request our payoff. Hope you all "in the club" are doing well and that the CV hasn't put a damper on your plans to payoff!

Buffaloski Boris

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Re: Mortgage Payoff Club!!
« Reply #2021 on: May 11, 2020, 07:13:41 PM »
So I just made my second to last mortgage payment (woot woot), I've found I have very few people that I can share this info with. Most of my friends/co-workers are all stuck feeding the mortgage beast and never have a paid-off house. I realize that many here feel it is better to invest than payoff a home, but all my stocks are in the crapper right now, and I feel great that next month we can request our payoff. Hope you all "in the club" are doing well and that the CV hasn't put a damper on your plans to payoff!

Congrats! Given the fairly low expected returns for stocks going forward, mortgage payoff may well become more fashionable.

moneypitfeeder

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Re: Mortgage Payoff Club!!
« Reply #2022 on: May 11, 2020, 08:54:00 PM »
Thanks Boris! I hope you and your family are doing well, and are still on your planned track!

Trifele

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Re: Mortgage Payoff Club!!
« Reply #2023 on: May 12, 2020, 06:36:36 AM »
So I just made my second to last mortgage payment (woot woot), I've found I have very few people that I can share this info with. Most of my friends/co-workers are all stuck feeding the mortgage beast and never have a paid-off house. I realize that many here feel it is better to invest than payoff a home, but all my stocks are in the crapper right now, and I feel great that next month we can request our payoff. Hope you all "in the club" are doing well and that the CV hasn't put a damper on your plans to payoff!

Congrats @moneypitfeeder!  Nearly there!

Steveray7071

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Re: Mortgage Payoff Club!!
« Reply #2024 on: May 14, 2020, 02:06:13 PM »
I've had my current mortgage since 6/1/2013 - $235K

1/1/2019 - 191K
4/1/2019 - 178K

Goal is to pay off by 8/1/2020.

Currently at $168K

Putting $30K on this week (sale of a property).

EOW: $138K

Down to $75K!


Down to $13K!

8/1 is going to be tight, I should be able to do it, if not it'll be later in the month

SwordGuy

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Re: Mortgage Payoff Club!!
« Reply #2025 on: May 14, 2020, 03:10:14 PM »
Had my old home under contract for sale on 6/8/2020.    Buyer backed out. :(

I was so close to paying off the old mortgage and cutting the balance on my new house mortgage by 40%.   

Damn.

Still hoping to get it sold this year and the new mortgage paid off by 12/31/2021.

moneypitfeeder

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Re: Mortgage Payoff Club!!
« Reply #2026 on: May 14, 2020, 06:21:43 PM »
@Steveray7071 that's awesome, hope you meet your goals, and to @SwordGuy I'm sorry your buyer backed out, hopefully you'll get a new stronger offer!

Buffaloski Boris

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Re: Mortgage Payoff Club!!
« Reply #2027 on: May 17, 2020, 08:33:06 AM »
Thanks Boris! I hope you and your family are doing well, and are still on your planned track!

We're doing well, thanks.  I almost hate to admit it given the amount of suffering out there, but we're doing pretty darn well under lockdown.

Now I've got to chuckle about the planned track: it implies that I have one.  I do have a planned track, but it's sort of like the "Pirate Code" in Pirates of the Caribbean. And always subject to change.  Part of the reason I've been sniffing around POYM of late.  I don't like debt, hard stop.  But with a locked in 30 year mortgage that's in the mid-threes, it's been tough for me to justify attacking it. 

Happily, sacred cow is back on the menu!  Lessee.  We're looking at forward PEs for the SP 5+495 above 20.  We're also looking at short term deflation, not inflation.  Oh, and the tax law has rendered mortgage interest mostly or entirely nondeductible for most/some of us. The stars seem to be aligning pretty well for a POYM strategy.