S/o unpaid mortgage: pay off house faster?

[Anonymous]

We bought two years ago and our mortgage rate is very low, just over 3%. Would you pay more than the minimum? We are in our late 30s. It would be nice to have the house paid off before our 60s, but I feel like we should save more for retirement, instead.

[Anonymous]

There are many, many threads here on this exact topic, some very recent, so do a search. But it basically boils down to whether you will make more in the market over time saving the same money in a retirement investment vehicle then the 3% you're saving by paying down the debt. With a ridiculously low interest rate, and the power of compound interest since you are so young, I think the choice is clear. But undoubtedly someone will come on here and disagree with me if they haven't already well I was posting.

[Anonymous]

PP again. I will say that's when we refinanced two years ago, we were given the choice between a 30 year and a 15 year. We chose the 30-year, and it lowered our payment from $5100 to $3300. For a while, we kept paying the $5100 anyway, and calculated that overpaying that munch every month would essentially turn the loan into a 15-year. Then we met with a financial planner and found much better things to do with our money.

[Anonymous]

Even with crazy low interest rates, we are paying more here and there.

Of course, we bought our house in our 40s and want to pay it off before retirement if possible.

[Anonymous]

OP here. Yes, logically it depends on rate of return elsewhere, but with the stock market ups and downs you never know how long it will take before you reach that rate if return. We definitely need a financial planner. Been meaning to get one but not sure how.

[Anonymous]

I agree with the PP, but still chose a 15 year mtg because I don't know if my wife and I would have the discipline to save that much. This way it is forced. We max out our 401K and save extra where we can, but with the 15 year mtg I know we are not going to waste money on expensive cars and furniture because we don't have it to spend.

[Anonymous]

No that is stupid. Take the extra money and put it somewhere else.

[Anonymous]

Anonymous wrote:No that is stupid. Take the extra money and put it somewhere else.

yeah, to a new car or vacation? Americans spend what they have in the bank. We all know that. I guess it depends on your personal discipline. Personally, I prefer paying down $30K/year to my principal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:No that is stupid. Take the extra money and put it somewhere else.

yeah, to a new car or vacation? Americans spend what they have in the bank. We all know that. I guess it depends on your personal discipline. Personally, I prefer paying down $30K/year to my principal.

A lot does depend on your personal behavior-- and how you'll feel when the market is down. I switched to 15 year mortgage because while I put a lot into stocks in my retirement account I am happier paying down my mortgage with other money.

[Anonymous]

I'd consider paying down the mortage to be *one* potential investment avenue, not some talisman to be brought down to $0 before you can dare do anything fun or invest in anything else, or something to be avoided because, "Hey, the Dow went up 30% last year!"

[Anonymous]

We paid ours off after maybe 10 years..and now we are taking the payment and saving for college every month. Working out well for us. I am not sure it is the absolute best in terms of finances..but it is a GREAT feeling.

[Anonymous]

Low mortgage rate means that paying the mortgage will never be an issue for you.

So, take the extra money and invest for retirement.

[Anonymous]

Anonymous wrote:Low mortgage rate means that paying the mortgage will never be an issue for you.

How can you possibly know that? What if they lose their jobs?

I'm not necessarily advocating paying off the mortgage early, I think you could make a good argument to do it (safety) and a good argument not to do it (probability of earning more by investing the money), but no one can ever say that there will not be a point that the mortgage payment is an issue. I am assuming that is why you are even considering paying it off: for the security of knowing that if your finances go downhill you can probably keep the roof over your head.

[Anonymous]

Long term stock returns are around 8-9%, almost 3 times more than the return you'd earn pre-paying your mortgage! Definitely max out all tax-advantaged retirement vehicles before you pre-pay that mortgage. If you want to pre-pay an extra $50-100 per month, like, round up the payment to the nearest 100, sure, go ahead. But no more.