almost rich folks I know have paid off their mortgages, regardless of their age or terms of the loan. They have plenty of $$ for investments, etc and the mortgage does not even make a dent on their financial plans. Value of the home does not represent a large part of their overall NW.

However, the "aspiring rich" as many on this forum do not - they are just trying to get there. Most likely paying off the mortgage likely makes them house poor and leaves little $$ for other opportunities.

If you have plenty to go around it's not necessarily foregoing significant amounts in investments to pay off mortgage early. Some people just want to get it over with and free up the money that would normally go to the mortgage to whatever direction they want whether it's investments or something else.

The choice isn't between "invest in stocks" or "pay off mortgage." It's a matter of your total portfolio. We have several million dollars of exposure to stocks - mostly through our 401ks, and some in regular accounts. We accelerated paying off our mortgage. That just means a bit less in stocks, and a bit more in paying off the mortgage, which is effectively a guaranteed fixed return. It's not irrational, it's just a question of your risk/reward preference.

Anonymous wrote:

Anonymous wrote:Not paying off a mortgage is financially the right decision. However, the emotional aspect to finances is real and for some folks putting the mortgage in the rear view mirror brings a lot of relief. No judgement here.

In hot real estate markets, the only way to buy a house is to have a cash offer. And if you don't get the mortgage when you buy, you cannot just go get a mortgage on a home later.

Yes you can.

I'm not sure your premise is correct. I think plenty of rich people don't pay off their houses.

I am well off now due to an inheritance and am considering paying cash for a home. However, my financial advisors say that's a bad idea. That it is better to take out a line of credit or mortgage and invest the cash.

Given that I pay them a percentage of my assets in my IMA, I am not sure I should be trusting that advice. But I do think a lot of rich people take advantage of mortgages and lines of credit.

I was raised by depression survivors who learned to own something outright in case things go south. It is a form of insurance.

We paid cash outright. We’re probably not incredibly smart about money, but dealing with a mortgage is a hassle. More paperwork, more decisions to make, no thanks.

Anonymous wrote:

Anonymous wrote:Not paying off a mortgage is financially the right decision. However, the emotional aspect to finances is real and for some folks putting the mortgage in the rear view mirror brings a lot of relief. No judgement here.

In hot real estate markets, the only way to buy a house is to have a cash offer. And if you don't get the mortgage when you buy, you cannot just go get a mortgage on a home later.

+1000

Haven't had a mortgage in over a decade and haven't had a car loan in over 2 decades. It's nice to jump off the American way of financing everything.

Anonymous wrote:If they roll the cash over they avoid capital gains tax too. Buying with cash is certainly different than paying off a mortgage early.

I hate debt so I have a hard time with this. But out mortgage rate is 2.6% so I understand why that’s cheap money. It’s just feel nice to not have that bill. This isn’t a discussion for us for awhile, but I certainly don’t want to wait 28 years to pay it off (we refinanced in 2020 at the rock bottom).

I don’t know what this is trying to say, but there’s no avoiding capital gains taxes by doing something with cash.

Anonymous wrote:

Anonymous wrote:Generally you cant put your home into a trust unless it is paid off. So if you are wealthy enough that you are estate planning in this manner, you want to pay off your house.

Of course you can put your home in trust with a mortgage. You have to take it out to close on the loan but you can put it back in immediately afterward.

Last April we bought a house (condo) with mortgage that went directly into trust. Lender and title company wanted a copy of the trust, but it wasn't any problem.

Anonymous wrote:Most people would call us. We have a paid off $3m home. Rich people are not stupid. How do you think we got rich? Of course we understand economics, leverage, opportunity costs, capital investment, etc. If you have the $$ it's liberating to pay off of the primary family home.

THis^^^

Then you are free to invest that money wherever you want to. Right now that money can earn a guaranteed 5%+ in CDs---$150K/year in cash guaranteed

Anonymous wrote:Not paying off a mortgage is financially the right decision. However, the emotional aspect to finances is real and for some folks putting the mortgage in the rear view mirror brings a lot of relief. No judgement here.

In hot real estate markets, the only way to buy a house is to have a cash offer. And if you don't get the mortgage when you buy, you cannot just go get a mortgage on a home later.

Anonymous wrote:

Also in many real estate markets, when there are 5+ bids on every good home, you will never get a home if you insist on a mortgage---the seller is always going to take one of the many cash bids because it simplifies the process---you can close in 2.5 weeks versus 4-6 weeks with a mortgage.

Yes, but them most people get a mortgage immediately after closing.

Not true.

We paid ours off when DH hit 50. By that time out NW was between $5 - 7 m.

For us its peace of mind. Despite earning a lot we are wage slaves and its just one less thing to stress about.

Also in many real estate markets, when there are 5+ bids on every good home, you will never get a home if you insist on a mortgage---the seller is always going to take one of the many cash bids because it simplifies the process---you can close in 2.5 weeks versus 4-6 weeks with a mortgage.

Yes, but them most people get a mortgage immediately after closing.