Reply to Spouse Insistent on Paying Mortgage Off Early

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Do NOT pay off mortgage early. If he wanted a shorter mortgage, he should have requested a shorter term. We just paid off a 15 year old mortgage, which comes with far less interest than a 30 year. If you pay off a 30 mortgage early, you're still paying more interest. It negates all the benefits of having that longer term.

Invest the money in the stock market instead. Apple, Nvidia, Microsoft, Alphabet (Google), Netflix, Meta. Maybe not Tesla.

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Awful advice. First, if they pay it down faster, all amounts over the regular monthly amount come straight off principal, so it's wise to do so.

Second, investing in a handful of stocks is highly risky because it's not diversifying. Most of those stocks have really high P/E ratios too = potentially overvalued.[/quote]

PP you replied to. I stand by what I said. You don't seem to understand that "the regular monthly amount" is made up of more interest than if you'd chosen a shorter-term mortgage! So they're making you pay the interest first anyway.

Picking a shorter term mortgage and not paying it in advance has worked well for me. I'm 100% in stocks I hand-picked myself and that has led to a rapid wealth accumulation. But beyond anecdotal data, the math is sound. We can talk about a stock market bubble if you want, but personally, I think stock market investment is still the way to wealth.

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Different poster here. This is completely wrong. If you have a 30 year mortgage and pay more than the minimum monthly payment, the additional comes from principal, not interest. Interest rates may be slightly lower for a 15-year mortgage, but many borrowers might prefer the flexibility of getting a 30 and deciding whether to overpay, vs locking into the higher payments over 15 years.

I have a 15 year mortgage, but it can make financial sense to get a 30 year.[/quote]

Yes.  Years ago with my first  30 year mortgage, I sometimes received unexpected financial windfalls of around d $20,000.  Putting the windfall on the principal the first year of the mortgage saved me a decade of interest, since at the beginning most of the monthly payment is interest.  If you don't understand this, look at your amortization schedule.[/quote]

It doesn't matter if you have a 15 or 30 year mortgage.  Every single monthly payment calculates interest as current balance x interest rate / 12.  The reason you pay more interest early is because the balance is higher.  The reason you pay more interest on a 30 year loan is because you pay off the principal lower so the balance remains higher for longer. [/quote]

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