If you were to inherit $2 million, would you pay off the remaining $150k of your very low interest mortgage?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, we didn't inherit and paid off our mortgage. Its freeing.

Exactly.

If put the amount left on the mortgage in a HYSA that makes 1.25% more than my mortgage, set it on autopay, and forget about it (unless I need he cash), how is that any less freeing?

Because if your mortgage is switched to a different servicer and you don't get the memo, it could go into default while your autopay is merrily humming along.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is kind of an interesting question from the perspective of economic class. Like most people, I will never be worth $2 million and don't have any living relatives worth that much (our parents are dead anyway). I owe over $100k on my low interest mortgage and probably WOULD pay it off if I magically came into a huge windfall.

My reasoning is this: In my tiny experience, life has a way of chewing away at any money that might accumulate. An unexpected layoff, child's medical emergency, parental dementia, broken cars. At some point down the road, I know that the money will be all gone and the best move I can make for my mood is to remove that mortgage debt hanging over my head.

It's not rational but I know I'm not as clever as most of the folks on DCUM.

it is indeed a very very class based response. yours is a mentality of someone who will never create wealth and never teach your children how to create wealth. This is because you come from a scarcity mindset and have an emotional bond with money. Money sis. tool to create more resources not a resource ti spend down. you never spend more money than you are creating after you get to a certain point.

Whatever helps you sleep at night, bro. DP. MANY, MANY rich people carry no mortgage—at least on their primary residence, if not on all of their properties. I know a guy who is a C-level exec at one of the biggest Fortune 500 companies in the DC area, and he has previously held the same position with other Fortune 100 companies. He has no mortgage. Each of his stints lasts 3-4 years, and he is never sure if he will get another one (though he has been lucky to date). He makes a ton but is never sure if it will last. Plus, anyone can get MeToo'ed or DEI'ed out of a job with almost no notice.

The same mindset applies to other high-earners like business owners. Businesses don't last forever, and good times do not always abound. These owners are more than happy to take the safe return of a paid-off house to balance out the inherent risk of being self-employed and having an irregular income—and it's not like they don't also have sizable investments in the market as well.

This is why we paid it off - DH is always wary of layoffs. I heard that Dell laid off a dozen people in the Austin office last November and the common denominators were: white, male and 50+

If you’re worried about being laid off and the lack of cash flow wouldn’t you rather have money, liquid, in your bank account?

+1 how will the ^PP pay the insurance and property taxes? DH was forced into retirement (ie ageism) in tech - yep, white male. He talked about paying off the house. The rate is only 2.75%. There is no way we can get any kid of loan now for 2.75%. Luckily, we have a good amount of cash savings and investment, and I'm still working. But who knows.. I might get laid off, too, since I am 55+.

That $150K can last us more than a year in expenses, including the mortgage. If we paid it off, it would only save us $1400/mo. I still have to come up with $9K/mo to pay for other expenses. If you use that $150K to pay off the mortgage, now I won't have that to pay for the other expenses.

OMG, you people are absurd. If this is your mindset, you should never have bought a house in the first place – think of how many years of potential expenses you are giving up by making that $180K down payment.

Oh, and everyone should always have a car payment—you want to keep that $30K liquid in the event that you’re laid off! GMAFB, you weirdos.

[Anonymous]

Anonymous wrote:It doesn’t really matter either way in the grand scheme of things. If your mortgage rate is 2.5% and your after tax yield on savings is 3% you are only coming out ahead $750 a year by putting the money in a savings account. I would just pay it off to be done with it. It’s not worth the hassle for the measly amount of savings.

Again, put it in a HYSA, set it on autopay, and forget about it. At the end of each year, tak out the $750 and spend it on something you enjoy - one fabulous dinner, two very good dinners, whatever floats your boat. You are in exactly the same financial position, you've done something you enjoy, and there is no hassle at all.

[Anonymous]

Anonymous wrote:

Anonymous wrote:To those of you that wouldn't pay off the mortgage, how many times in life do you spend money on yourself that you don't need to spend, like on an expensive vacation, jewelry or a new car? Those expenses are more wasteful than paying off a mortgage.

+100

The whole "I'm more interested in optimizing my money" philosophy rings hollow unless you are extremely frugal in all other regards, which many on DCUM are not, as evidenced by all the "We make $350K but live paycheck-to-paycheck" threads.

This is just late-stage bubble stuff that happens after a 16-year bull market, and we've seen this before. I've watched all of Berkshire Hathaway's annual meetings, and there are instances of Buffett in the late 90s talking about how unrealistic expectations had become, citing a survey showing that investors were now expecting to get 16-17% a year from the market based on returns from the early 80s through the late 90s. And, of course, shortly thereafter, we began a "lost decade" for stocks. How many people who inherited $1M in 2008 were likely eager to put it all in the market instead of using a small fraction to secure their family's home and eliminate their largest bill??

This is so stupid. I am more interested in optimizing my money So I can do things I enjoy - such as take a nice vacation, etc. I don't do it just to accumulate more money and not use it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is kind of an interesting question from the perspective of economic class. Like most people, I will never be worth $2 million and don't have any living relatives worth that much (our parents are dead anyway). I owe over $100k on my low interest mortgage and probably WOULD pay it off if I magically came into a huge windfall.

My reasoning is this: In my tiny experience, life has a way of chewing away at any money that might accumulate. An unexpected layoff, child's medical emergency, parental dementia, broken cars. At some point down the road, I know that the money will be all gone and the best move I can make for my mood is to remove that mortgage debt hanging over my head.

It's not rational but I know I'm not as clever as most of the folks on DCUM.

it is indeed a very very class based response. yours is a mentality of someone who will never create wealth and never teach your children how to create wealth. This is because you come from a scarcity mindset and have an emotional bond with money. Money sis. tool to create more resources not a resource ti spend down. you never spend more money than you are creating after you get to a certain point.

Whatever helps you sleep at night, bro. DP. MANY, MANY rich people carry no mortgage—at least on their primary residence, if not on all of their properties. I know a guy who is a C-level exec at one of the biggest Fortune 500 companies in the DC area, and he has previously held the same position with other Fortune 100 companies. He has no mortgage. Each of his stints lasts 3-4 years, and he is never sure if he will get another one (though he has been lucky to date). He makes a ton but is never sure if it will last. Plus, anyone can get MeToo'ed or DEI'ed out of a job with almost no notice.

The same mindset applies to other high-earners like business owners. Businesses don't last forever, and good times do not always abound. These owners are more than happy to take the safe return of a paid-off house to balance out the inherent risk of being self-employed and having an irregular income—and it's not like they don't also have sizable investments in the market as well.

As a RE business owner tied up to rentals, I prefer to diversify my portfolio by maintaining healthy CDs/brokerage/401k accounts. If I have a really bad string of years, this cash will help me staying afloat. Not sure how prepaying the mortgage would make me feel more secure: I’ll gave to borrow against equity which is 7.5% at the moment

Paying off a mortgage is for people who can do that AND still have EF/enough cash flow for 99% of situations that would occur.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, we didn't inherit and paid off our mortgage. Its freeing.

Exactly.

If put the amount left on the mortgage in a HYSA that makes 1.25% more than my mortgage, set it on autopay, and forget about it (unless I need he cash), how is that any less freeing?

Because if your mortgage is switched to a different servicer and you don't get the memo, it could go into default while your autopay is merrily humming along.

Exactly! With our last mortgage (over a decade ago), it was sold 6 months after it started and continued to be sold 1-2 times per year after that. It was a royal pain in the a$$ each time. And yes, the home owner is the one who gets the late fees if not paid on time, no matter how many times it is sold. Once our mortgage was such a small portion of our NW, we decided it was just simpler to pay it off and not have to deal with that.

However, I don't recommend paying off a mortgage until you have enough cash flow for 99% of all emergencies. Once you have that, pay it off, take your mortgage payment and invest it however you desire (CD/Treasuries/MM/Stock market) But keep a mortgage if you don't have an EF

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, we didn't inherit and paid off our mortgage. Its freeing.

Exactly.

If put the amount left on the mortgage in a HYSA that makes 1.25% more than my mortgage, set it on autopay, and forget about it (unless I need he cash), how is that any less freeing?

Because if your mortgage is switched to a different servicer and you don't get the memo, it could go into default while your autopay is merrily humming along.

If you are so incompetent that you can't manage to change an autopay, I agree, you should just pay it off. For those of us who can manage in modern society, we'll take our changes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It doesn’t really matter either way in the grand scheme of things. If your mortgage rate is 2.5% and your after tax yield on savings is 3% you are only coming out ahead $750 a year by putting the money in a savings account. I would just pay it off to be done with it. It’s not worth the hassle for the measly amount of savings.

Again, put it in a HYSA, set it on autopay, and forget about it. At the end of each year, tak out the $750 and spend it on something you enjoy - one fabulous dinner, two very good dinners, whatever floats your boat. You are in exactly the same financial position, you've done something you enjoy, and there is no hassle at all.

And if your mortgage gets "sold" several times in the year, it's not just "put it on autopay". It's reset up autopay multiple times, and many times having to make the first payment yourself, as autopay takes a week+ for them to establish. So it can be a bit of work. My time is worth more than that---I don't need to spend 10-15 hours each year making sure my mortgage gets paid to earn $750, of which I will owe 40%+ in taxes (Fed+ State is 47%). So 10+ hours of managing my mortgage for $400. No thanks, I will pay it off, and re-invest my mortgage payment as I see fit (that can be automatic) and not worry about paperwork/mortgage management. And god forbid if the mortgage company makes you jump thru hoops to pay your own Property taxes and insurance each time (yes that happens).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:To those of you that wouldn't pay off the mortgage, how many times in life do you spend money on yourself that you don't need to spend, like on an expensive vacation, jewelry or a new car? Those expenses are more wasteful than paying off a mortgage.

+100

The whole "I'm more interested in optimizing my money" philosophy rings hollow unless you are extremely frugal in all other regards, which many on DCUM are not, as evidenced by all the "We make $350K but live paycheck-to-paycheck" threads.

This is just late-stage bubble stuff that happens after a 16-year bull market, and we've seen this before. I've watched all of Berkshire Hathaway's annual meetings, and there are instances of Buffett in the late 90s talking about how unrealistic expectations had become, citing a survey showing that investors were now expecting to get 16-17% a year from the market based on returns from the early 80s through the late 90s. And, of course, shortly thereafter, we began a "lost decade" for stocks. How many people who inherited $1M in 2008 were likely eager to put it all in the market instead of using a small fraction to secure their family's home and eliminate their largest bill??

This is so stupid. I am more interested in optimizing my money So I can do things I enjoy - such as take a nice vacation, etc. I don't do it just to accumulate more money and not use it.

Depends where you are at in life and finances. For me, my time is worth a lot. I don't micromanage to save just a "small amount". We use our money, but I prefer not to spend 10-20 hours to "save $400" per year.

[Anonymous]

I would. I value simplicity and peace of mind more than gaming interest rates on a $150,000 loan and/or taxes (though I doubt a $150k mortgage does much for your taxes). It's so tiny relative to what it sounds like you have that it's not worth the mental load of carrying the mortgage anymore.

[Anonymous]

OP - wow! What a great collection of responses. We'll discuss with our financial planner but lots of food for thought.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DH and I inherited $3M in 2021 after having just refinanced our $750K mortgage into a 2.4% 30-year fixed. We donated half of it to charity (as I assume you did as well, OP), which left us with $1.5M. We used half of that to pay off our mortgage so that we have no debt of any kind. The remaining $750K was invested in the stock market and we now have almost $3M again…plus no debt and the satisfaction of having donated $1.5M to help those less fortunate than us.

DP but yeah, uh, no. If I receive a potentially life-changing inheritance, it's going to be used to...actually change my life and that of my family. Especially if I still have a mortgage!

I honestly don't understand charity. I do know for sure that once I've achieved financial independence, I wouldn't continue the same meaningless job in the financial industry and could very well end up working in some low-paid endeavor in which I strongly believe. But that's totally different from giving up half of the money that would actually give me the independence.

Ironic that you’re willing to accept a gift but you aren’t willing to give one to someone else. It’s called greed and it’s one of the seven deadly sins: congrats!! Your talk of financial independence sounds strikingly similar to not wanting to work. That’s called sloth and now you’re 2 for 7.

Guess we can thank people like you for everything that is wrong in our society.

What a crazy comment!
My mom and dad worked hard to leave me an inheritance, should I now give a big chunk of it away? Why can't I leave what was left to me to my child so she can have a good life?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, we didn't inherit and paid off our mortgage. Its freeing.

Exactly.

If put the amount left on the mortgage in a HYSA that makes 1.25% more than my mortgage, set it on autopay, and forget about it (unless I need he cash), how is that any less freeing?

Because if your mortgage is switched to a different servicer and you don't get the memo, it could go into default while your autopay is merrily humming along.

If you are so incompetent that you can't manage to change an autopay, I agree, you should just pay it off. For those of us who can manage in modern society, we'll take our changes.

Obviously we can manage it. But when it's sold multiple times in a year, it's a pain to have to do all of that. My time is worth something, and having to spend time managing that is not worth it, all to save $400-500/year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DH and I inherited $3M in 2021 after having just refinanced our $750K mortgage into a 2.4% 30-year fixed. We donated half of it to charity (as I assume you did as well, OP), which left us with $1.5M. We used half of that to pay off our mortgage so that we have no debt of any kind. The remaining $750K was invested in the stock market and we now have almost $3M again…plus no debt and the satisfaction of having donated $1.5M to help those less fortunate than us.

DP but yeah, uh, no. If I receive a potentially life-changing inheritance, it's going to be used to...actually change my life and that of my family. Especially if I still have a mortgage!

I honestly don't understand charity. I do know for sure that once I've achieved financial independence, I wouldn't continue the same meaningless job in the financial industry and could very well end up working in some low-paid endeavor in which I strongly believe. But that's totally different from giving up half of the money that would actually give me the independence.

Ironic that you’re willing to accept a gift but you aren’t willing to give one to someone else. It’s called greed and it’s one of the seven deadly sins: congrats!! Your talk of financial independence sounds strikingly similar to not wanting to work. That’s called sloth and now you’re 2 for 7.

Guess we can thank people like you for everything that is wrong in our society.

What a crazy comment!
My mom and dad worked hard to leave me an inheritance, should I now give a big chunk of it away? Why can't I leave what was left to me to my child so she can have a good life?

You can---that is what 99% of people would do. If your parents wanted it gifted to charity, they would have done so before giving you your inheritance. Save for yourself and set your kids up for college paid for and weddings paid for, and whatever else you value.

[Anonymous]

Anonymous wrote:I would. I value simplicity and peace of mind more than gaming interest rates on a $150,000 loan and/or taxes (though I doubt a $150k mortgage does much for your taxes). It's so tiny relative to what it sounds like you have that it's not worth the mental load of carrying the mortgage anymore.

This is my mindset too. I agree that paying off the mortgage for the peace of mind when someone already has enough for investments isn’t a bad idea.

And an unintended consequence is one less bill for your heirs to deal with down the road. As someone who has had to manage several estates the simpler the better!