Buying past "prime" home buying years

[Anonymous]

Anonymous wrote:

Anonymous wrote:The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

This. We do something similar. However we allocate money at the end of the year. We live on the basics each month and dump all extra in cash savings. On Dec 15th we then allocate what is left between the 529, roth, market investments, what we want to keep on cash and the remainder goes to the mortgage. Sometimes we have 25k at the end of the year, sometimes we have 75k.

Amazing to me that most people believe that a 30 year loan MUST be paid off in 30 years, or that a refi necessarily pushes your payoff date out by another 30 or 15 years. There are million mortgage calculators on the web - plug in your desired payoff period and it will tell you exactly how much extra to pay each month to make a 30 year loan a 25 year loan, for example. This is not that hard.

Also, you can try the biweekly payments approach, which pays off a loan 5 years early with almost no perceptible change in payments.

[Anonymous]

worst case - you pay off in your 70's. If you decide to rent, won't you still be paying rent in your 70's and you'll have nothing to show for it. Either way - you'll be paying something in your 70's. Rent or mortgage. At least with the mortgage you have the chance of the house price increasing.

Don't forget - rent will always increase.

[Anonymous]

Anonymous wrote:worst case - you pay off in your 70's. If you decide to rent, won't you still be paying rent in your 70's and you'll have nothing to show for it. Either way - you'll be paying something in your 70's. Rent or mortgage. At least with the mortgage you have the chance of the house price increasing.

Don't forget - rent will always increase.

If you pay off your house, you will not be paying rent or a mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

This. We do something similar. However we allocate money at the end of the year. We live on the basics each month and dump all extra in cash savings. On Dec 15th we then allocate what is left between the 529, roth, market investments, what we want to keep on cash and the remainder goes to the mortgage. Sometimes we have 25k at the end of the year, sometimes we have 75k.

Amazing to me that most people believe that a 30 year loan MUST be paid off in 30 years, or that a refi necessarily pushes your payoff date out by another 30 or 15 years. There are million mortgage calculators on the web - plug in your desired payoff period and it will tell you exactly how much extra to pay each month to make a 30 year loan a 25 year loan, for example. This is not that hard.

Also, you can try the biweekly payments approach, which pays off a loan 5 years early with almost no perceptible change in payments.

Right, but some of us want to keep our extra money in the market. I've been making consistenely 9.5%/yr on my investments. I purchased my home 10 years ago. Between now and then, I've taken 125k and it has grown to 310k. I even did 10% down at the time, which was the minimum down payment required to hold onto cash. Completely separate from that initial investment, I put extra cash, outside my emergency reserves each uear into more funds. Im in an exponentially better place NOT using money that is earning money to pay doen a chreap loan. Whatbis amazing to me, is that people even bother paying down a mortgage when there is free money to be had. My annual gains from investments now exceed my annual mortgage payments. Had I paid down my loans instead, I would be worse off for it. I also not even high income, but I've realized that the only way to wealth is through investments because my paycheck won't get me there.

[Anonymous]

I'm 40 and DH is older than me. We live in a townhouse we own right now but want to move up to a SFH in the next couple of years. Our children are young like yours (kindergarten and preschool) but with daycare costs, we simply couldn't afford moving up to a SFH until now. By the time we buy, I will likely be 42 or 43. It does make me nervous carrying a mortgage into my retirement years but it is what it is.

FWIW, I come from a military family and we moved to this area in the mid-80s and rented until my parents finally bought a house in 1991. They are in their mid-70s and have another four years left on their mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

This. We do something similar. However we allocate money at the end of the year. We live on the basics each month and dump all extra in cash savings. On Dec 15th we then allocate what is left between the 529, roth, market investments, what we want to keep on cash and the remainder goes to the mortgage. Sometimes we have 25k at the end of the year, sometimes we have 75k.

Amazing to me that most people believe that a 30 year loan MUST be paid off in 30 years, or that a refi necessarily pushes your payoff date out by another 30 or 15 years. There are million mortgage calculators on the web - plug in your desired payoff period and it will tell you exactly how much extra to pay each month to make a 30 year loan a 25 year loan, for example. This is not that hard.

Also, you can try the biweekly payments approach, which pays off a loan 5 years early with almost no perceptible change in payments.

Right, but some of us want to keep our extra money in the market. I've been making consistenely 9.5%/yr on my investments. I purchased my home 10 years ago. Between now and then, I've taken 125k and it has grown to 310k. I even did 10% down at the time, which was the minimum down payment required to hold onto cash. Completely separate from that initial investment, I put extra cash, outside my emergency reserves each uear into more funds. Im in an exponentially better place NOT using money that is earning money to pay doen a chreap loan. Whatbis amazing to me, is that people even bother paying down a mortgage when there is free money to be had. My annual gains from investments now exceed my annual mortgage payments. Had I paid down my loans instead, I would be worse off for it. I also not even high income, but I've realized that the only way to wealth is through investments because my paycheck won't get me there.

What you're missing is that once you repay a dollar on your mortgage you never pay interest on it ever again. Also the interest you pay is on the total balance. So 4.25 percent of your mortgage balance can be more than earning 9.5 percent on your investments. Fwiw you probably won't earn 9.5 percent or more on your investments every single year. Take a look at your mortgage interest statement to see how much you spend annually on interest.

Regardless you're doing a great job. I decided to take an approach where we invest heavily but also pay down our mortgage like it is a 15 year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

This. We do something similar. However we allocate money at the end of the year. We live on the basics each month and dump all extra in cash savings. On Dec 15th we then allocate what is left between the 529, roth, market investments, what we want to keep on cash and the remainder goes to the mortgage. Sometimes we have 25k at the end of the year, sometimes we have 75k.

Amazing to me that most people believe that a 30 year loan MUST be paid off in 30 years, or that a refi necessarily pushes your payoff date out by another 30 or 15 years. There are million mortgage calculators on the web - plug in your desired payoff period and it will tell you exactly how much extra to pay each month to make a 30 year loan a 25 year loan, for example. This is not that hard.

Also, you can try the biweekly payments approach, which pays off a loan 5 years early with almost no perceptible change in payments.

Right, but some of us want to keep our extra money in the market. I've been making consistenely 9.5%/yr on my investments. I purchased my home 10 years ago. Between now and then, I've taken 125k and it has grown to 310k. I even did 10% down at the time, which was the minimum down payment required to hold onto cash. Completely separate from that initial investment, I put extra cash, outside my emergency reserves each uear into more funds. Im in an exponentially better place NOT using money that is earning money to pay doen a chreap loan. Whatbis amazing to me, is that people even bother paying down a mortgage when there is free money to be had. My annual gains from investments now exceed my annual mortgage payments. Had I paid down my loans instead, I would be worse off for it. I also not even high income, but I've realized that the only way to wealth is through investments because my paycheck won't get me there.

What you're missing is that once you repay a dollar on your mortgage you never pay interest on it ever again. Also the interest you pay is on the total balance. So 4.25 percent of your mortgage balance can be more than earning 9.5 percent on your investments. Fwiw you probably won't earn 9.5 percent or more on your investments every single year. Take a look at your mortgage interest statement to see how much you spend annually on interest.

Regardless you're doing a great job. I decided to take an approach where we invest heavily but also pay down our mortgage like it is a 15 year.

I realize that and I've done the math. The investments still fare better, plus i get about 7k back in my pocket in tax relief. For sure the 9.5 has been over the life, but i did get 12% in 2016 which will offset a year i might hit 3%.

I obviously cannot predict the market, but the last decade has been good to me and if i could do it over again i would invest even more and completely never pay an extra penny towards mortgage, but i still have that traditional compulsion to throw at least some into principal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The safe choice would be to take the 30 year mortgage and pay extra each month as if it is a 15 year fixed. There will be months when you need the extra money for other purposes so you won't be tied to the higher monthly payment.

This. We do something similar. However we allocate money at the end of the year. We live on the basics each month and dump all extra in cash savings. On Dec 15th we then allocate what is left between the 529, roth, market investments, what we want to keep on cash and the remainder goes to the mortgage. Sometimes we have 25k at the end of the year, sometimes we have 75k.

Amazing to me that most people believe that a 30 year loan MUST be paid off in 30 years, or that a refi necessarily pushes your payoff date out by another 30 or 15 years. There are million mortgage calculators on the web - plug in your desired payoff period and it will tell you exactly how much extra to pay each month to make a 30 year loan a 25 year loan, for example. This is not that hard.

Also, you can try the biweekly payments approach, which pays off a loan 5 years early with almost no perceptible change in payments.

Right, but some of us want to keep our extra money in the market. I've been making consistenely 9.5%/yr on my investments. I purchased my home 10 years ago. Between now and then, I've taken 125k and it has grown to 310k. I even did 10% down at the time, which was the minimum down payment required to hold onto cash. Completely separate from that initial investment, I put extra cash, outside my emergency reserves each uear into more funds. Im in an exponentially better place NOT using money that is earning money to pay doen a chreap loan. Whatbis amazing to me, is that people even bother paying down a mortgage when there is free money to be had. My annual gains from investments now exceed my annual mortgage payments. Had I paid down my loans instead, I would be worse off for it. I also not even high income, but I've realized that the only way to wealth is through investments because my paycheck won't get me there.

What you're missing is that once you repay a dollar on your mortgage you never pay interest on it ever again. Also the interest you pay is on the total balance. So 4.25 percent of your mortgage balance can be more than earning 9.5 percent on your investments. Fwiw you probably won't earn 9.5 percent or more on your investments every single year. Take a look at your mortgage interest statement to see how much you spend annually on interest.

Regardless you're doing a great job. I decided to take an approach where we invest heavily but also pay down our mortgage like it is a 15 year.

I realize that and I've done the math. The investments still fare better, plus i get about 7k back in my pocket in tax relief. For sure the 9.5 has been over the life, but i did get 12% in 2016 which will offset a year i might hit 3%.

I obviously cannot predict the market, but the last decade has been good to me and if i could do it over again i would invest even more and completely never pay an extra penny towards mortgage, but i still have that traditional compulsion to throw at least some into principal.

So do you give in and pay the principal?

[Anonymous]

We have a 15 year mortgage.