We are officially mortgage-free!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The total interest on my loan added to purchase price would mean 30 years after I bought it, I’d need to be able to sell it for 25% more than I paid. Right now it’s sitting around +30-40% 5 years in.

Inflation adjusted I’m paying about 1000 more month PITI than what my rent was for 700 sf 1 bedroom 16 years ago.

My income has gone up by over 10x in that span.

If we are going to celebrate the people who borrowed and couldn’t wait to get out from under it because it was such a strain, we should also celebrate the people who have used leverage effectively to build wealth while staying well within their means.

Fine, go start your own thread celebrating that. No one is stopping you. But you folks never do that because what you really want to do is smugly assert to those of us who hate debt that your way is superior.

It’s been the objectively superior approach and we’re trying to warn others not to make the same mistakes. Who cares about debt when you can pay it off at any time. The bottom line is your net worth and your financial flexibility. Paying down your low interest rate mortgage hurts your net worth and gives you less flexibility. And you still have to pay taxes and insurance regardless so your payment isn’t gone.

Paying down a low interest rate mortgage goes against all basic fundamental financial principals/advice. People that ignored that elementary advice over the last 15 years left a ton only money on the table. It’s a warning to others not to take the same mistakes going forward…

Yeah, and what about the 10 years prior to that 15-year period? You'd have been down for over a decade, with two huge crashes (2000 and 2008), instead of having secured the roof over your head. Since we don't know the market returns in advance, some of us prefer taking some money off the table for fundamental things like a home. Oh, and the next 10 years are much more likely to look like 2000-2009 than 2010-2024.

You really hate math, don't you?

Down for over a decade? That's crazy. Yes, there were a couple years in which you would have been down. But, if you invested $500k in 1999, it would have been almost $635k in 2010. This period incorporates both of the downturns that you refer to.
- In 2001, it would have gone down to $474k.
- In 2002, it would have done down to $379k (a startling drop for sure but...)
- In 2003, back up to $487k
- In 2004, $516k
- In 2005, $568k
-In 2006, $644k
- In 2007, $635k
-In 2008, yet another drop, to $408k
-In 2009, back up to $545k
-In 2010, $634k

So yes, there were a few years that you kinda had to look away for a moment, and those turns do happen. But it is a couple years that you had to wait no longer than 2 years to have it be worth it. And, if you had kept it invested the whole time, it would now be $3.441M

Fine, if you want to change the dates so you get some of the dot-com bull market in 1999 and some of the post-GFC recovery in 2009 and 2010, I’m OK with that. And I’ll just accept that your portfolio figures are accurate.

From the beginning of 1999 to the end of 2010 is a 12-year period. Guess what the compound annual growth rate (CAGR) is when you go from $500K to $634K in 12 years? Drumroll please…it’s 1.98%!

So Option 1 was to go on a wild, 12-year roller coaster ride and end up with a return of 1.98%, which is still subject to capital gains taxes. Or Option 2 was to pay off a 6-7% mortgage, peacefully receive that guaranteed return (which was not subject to income or capital gains taxes), and eliminate one’s largest bill forever once the mortgage was paid off. If you can’t see why Option 2 has a place in many people’s lives, I don’t know what to tell you.

(Btw, I used a 6-7% mortgage because that was the average mortgage rate during that time. But frankly, Option 2 would still make a lot of sense even if one had a 3% mortgage.)

+1000

Game over. This should put an end, once and for all, to the claims that paying off a mortgage is dumb or results from a lack of financial education or an understanding of math.

You got it backwards. First, we are not talking about paying off a 6% mortgage we are talking about paying off a sub 3% mortgage. Second, you have cherry picked the worst time window for the market and in that worst case you basically break even. Anyone who thinks that over a 30 year period that the market will not return more than 3% clearly lacks financial education and makes decisions based on fear.

Good god, you people are stupid. You don’t understand that there are time periods other than 30 years that are important to people?

And no one has even mentioned valuations—stock market valuations right now are very similar to the start of the period that you have noted was “the worst time window for the market.”

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have 26 years left on a 2.25%

Same but 2.8%. Trying to get it done in 10 years.

Why? You can get 100% risk free guaranteed returns greater than 2.8%

Totally agree. Very dumb, PP. You should be putting that money into a HYSA at 4.2%. After paying at least 32% in taxes (24% federal and 8% Maryland), your 4.2% return becomes 2.85%.

That 0.05% extra is huge. By paying off a $300,000 mortgage instead of keeping that amount in an HYSA, you’re giving up TWELVE WHOLE DOLLARS EVERY MONTH. Never mind that by paying off the mortgage, you would eliminate your largest monthly bill and protect that money from creditors—you gotta chase that yield!

Love this sarcasm post so much. Exactly what I wanted to post


To OP: congrats! Now you can take your mortgage payment and save/add to vacation fund/whatever. But you will never have a mortgage payment again

[Anonymous]

Anonymous wrote:There is a very important reason to respond to this thread. We don't teach financial education in high school, and that keeps people poor. This post was written as a self-congratulations for a goal that others might try to emulate. But they do so at their own expense, mostly due to a lack of education.

It is great to accomplish goals. But it is imperative that people understand they should do the math first.

OP here.

We did do the math. We have millions in the stock market. Our mortgage came to its natural end. We did not pay it off early.

Please calm down and stop trolling my celebratory thread!

[Anonymous]

Anonymous wrote:Imagine you had refinanced just say $500k during the pandemic when interest was low. If you had invested in 2020 in the S&P500, it would now be $889k. Why would you leave almost $400k on the table? Just so you could brag that you are so rich that it made you stupid?

Because in other 4 year periods that $500k would now be 350k

Paying mortgage is a guaranteed return, then you start to invest your mortgage payment

[Anonymous]

Congrats.
We decided to pay ours off with the Trump tax law change in 2017 that mostly took away our benefit of deducting the higher interest. It also took away the desire to refinance at 2.5%. It's no longer advantageous to pay interest if most of us get the same standard deduction. Oh well !!
Will be paid off in 6 months.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The total interest on my loan added to purchase price would mean 30 years after I bought it, I’d need to be able to sell it for 25% more than I paid. Right now it’s sitting around +30-40% 5 years in.

Inflation adjusted I’m paying about 1000 more month PITI than what my rent was for 700 sf 1 bedroom 16 years ago.

My income has gone up by over 10x in that span.

If we are going to celebrate the people who borrowed and couldn’t wait to get out from under it because it was such a strain, we should also celebrate the people who have used leverage effectively to build wealth while staying well within their means.

Fine, go start your own thread celebrating that. No one is stopping you. But you folks never do that because what you really want to do is smugly assert to those of us who hate debt that your way is superior.

It’s been the objectively superior approach and we’re trying to warn others not to make the same mistakes. Who cares about debt when you can pay it off at any time. The bottom line is your net worth and your financial flexibility. Paying down your low interest rate mortgage hurts your net worth and gives you less flexibility. And you still have to pay taxes and insurance regardless so your payment isn’t gone.

Paying down a low interest rate mortgage goes against all basic fundamental financial principals/advice. People that ignored that elementary advice over the last 15 years left a ton only money on the table. It’s a warning to others not to take the same mistakes going forward…

Yeah, and what about the 10 years prior to that 15-year period? You'd have been down for over a decade, with two huge crashes (2000 and 2008), instead of having secured the roof over your head. Since we don't know the market returns in advance, some of us prefer taking some money off the table for fundamental things like a home. Oh, and the next 10 years are much more likely to look like 2000-2009 than 2010-2024.

This!!!

The stock market is not a guaranteed return. So yes if you have a 2% mortgage, I might pay it down. But slower than a 6%+, paying it down is a guaranteed rate of return. Then when you don't have a mortgage you can invest it all (or use part for fun). And yes don't pay off your mortgage if you are not also able to save well for retirement and college, but once you've done that, it's a great plan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am so sorry you were not able to capture a large 30 year fixed rate mortgage under 3%. I am loving making my mortgage payments from my high yield savings account and watching the account go up every month.

I wish people would stop doing this. I'm not prepaying my mortgage personally, but people are allowed to have different goals! OP didn't say "I am mortgage free because it's the smartest financial move and anyone who operates differently is stupid!" There was zero reason to be defensive and snarky here. And the "pay down/don't pay down" mortgage divide seems to be the only place this happens, nobody jumps down an OP's throat when they say they've hit their 529 goal and screams YOU KNOW YOUR KID CAN JOIN THE ARMY AND THEN GET COLLEGE PAID FOR!

Congrats, OP, I hope you throw a party or something! And I hope you feel a sense of relief and security with so much cash freed up each month.

The reason people get fired up over it because it’s a simple math question that has enormous financial impacts from a pure dollars and cents perspective. Furthermore it’s risky to pay down a mortgage as you lose flexibility if the shit hits the fan, not to mention being more susceptible to inflation risk. It’s not really an argument and people treat it like one.

Your 529 example is just not at all relevant to this discussion. Joining the army is equivalent to investing in S&P 500 index funds?

The 529 example is very cogent when one factors in aid awards. Why save money for college when all that does is lower the financial aid offer?

For starters, many on scum won't get any financial aide. So it's kind of not smart to not save. Cannot imagine making $400K+ per year and telling my kids "sorry you have to start at Cc because we didn't save anything for college"

[Anonymous]

Anonymous wrote:

Anonymous wrote:There is a very important reason to respond to this thread. We don't teach financial education in high school, and that keeps people poor. This post was written as a self-congratulations for a goal that others might try to emulate. But they do so at their own expense, mostly due to a lack of education.

It is great to accomplish goals. But it is imperative that people understand they should do the math first.

OP here.

We did do the math. We have millions in the stock market. Our mortgage came to its natural end. We did not pay it off early.

Please calm down and stop trolling my celebratory thread!

I’m not sure how you could have a 15 year mortgage come to a natural end in 2025. Did you not refi in 2012 or 2021??

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There is a very important reason to respond to this thread. We don't teach financial education in high school, and that keeps people poor. This post was written as a self-congratulations for a goal that others might try to emulate. But they do so at their own expense, mostly due to a lack of education.

It is great to accomplish goals. But it is imperative that people understand they should do the math first.

Except nowhere does OP say that they prepaid the mortgage. I will be very excited to pay off my mortgage and be done with that bill - which will happen 360 months after we signed the documentation. You're making an assumption and then castigating someone based on it.

They got a 15 year mortgage instead of the standard 30. This is a forced prepayment plan.

You have a 40 year mortgage, then, rather than the "forced prepayment" standard 30? Way to live your principles!

That’s not a standardly available product such that you can compare rates on the open market. Also unless you get a 2% on that, you would have to refi anyways.

[Anonymous]

Anonymous wrote:

Anonymous wrote:There is a very important reason to respond to this thread. We don't teach financial education in high school, and that keeps people poor. This post was written as a self-congratulations for a goal that others might try to emulate. But they do so at their own expense, mostly due to a lack of education.

It is great to accomplish goals. But it is imperative that people understand they should do the math first.

OP here.

We did do the math. We have millions in the stock market. Our mortgage came to its natural end. We did not pay it off early.

Please calm down and stop trolling my celebratory thread!

So you got a 15 year mortgage in 2010 for presumably around 4.1%. Not bad at all. About a $500k home (assuming 20 percent down payment). Not bad at all.

But, had you refinanced in 2012, you would have had a 2.93%. At that point you would have had about 360 left on your 400k mortgage. And you were paying $3000/month, $1750 of which was going to principal. For the past 13 years, you could have been paying $2,450 a month, which would have saved you $63k. Why didn’t you do this?

In 2021, you could have gone to 2.27%. If you had your original mortgage at that point (I guess cause you had bad credit?), you would have $131k left. Let’s say you wanted to pay it off in the 4 years (retiring and no savings, I guess?). Then you could have refinanced, reduced your payment to $2,857, and saved yourself almost 7 grand.

Im not understanding the decisions. Since you did the math, can you explain how my calculations are wrong?

[Anonymous]

Anonymous wrote:

Anonymous wrote:There is a very important reason to respond to this thread. We don't teach financial education in high school, and that keeps people poor. This post was written as a self-congratulations for a goal that others might try to emulate. But they do so at their own expense, mostly due to a lack of education.

It is great to accomplish goals. But it is imperative that people understand they should do the math first.

OP here.

We did do the math. We have millions in the stock market. Our mortgage came to its natural end. We did not pay it off early.

Please calm down and stop trolling my celebratory thread!

I’m absolutely not trolling. I’m doing the math so that other people don’t wipe their butts with cash out of ignorance too

[Anonymous]

Anonymous wrote:

Anonymous wrote:There is a very important reason to respond to this thread. We don't teach financial education in high school, and that keeps people poor. This post was written as a self-congratulations for a goal that others might try to emulate. But they do so at their own expense, mostly due to a lack of education.

It is great to accomplish goals. But it is imperative that people understand they should do the math first.

OP here.

We did do the math. We have millions in the stock market. Our mortgage came to its natural end. We did not pay it off early.

Please calm down and stop trolling my celebratory thread!

Good for you, OP! Please keep celebrating.