Anonymous wrote:

Anonymous wrote:There are two considerations: emotional and financial. For many people there is a sense of pride and security in owning a house outright, and that is fine.
The financial side is a little more complicated. Essentially it makes sense if you are very conservative in your assessment of likely returns in the market.

I think it is often more complex.

Our retirement and post tax investment accounts are healthy (about $2.5 million) but we thought our mortgage debt ($800k at the time) was a limiting factor if we wanted to step off the hamster wheel and try a new career or retire early. Although we are still putting the max away in our 401k accounts and a very limited amount in our post tax accounts, all extra funds are being directed to our mortgage to get that off the books.

I am not saving money for the sake of saving money. I am saving money so that I have financial freedom. A large monthly bill limits that freedom.

But that's only an issue if you have problems pulling from your investment account. Personally I tend to lean towards the pay it down side, but mathematically the calculation doesn't change based on the reason you are saving money. It might change based on your discipline for saving money or your time horizon for withdrawing.

Anonymous wrote:There are two considerations: emotional and financial. For many people there is a sense of pride and security in owning a house outright, and that is fine.
The financial side is a little more complicated. Essentially it makes sense if you are very conservative in your assessment of likely returns in the market.

I think it is often more complex.

Our retirement and post tax investment accounts are healthy (about $2.5 million) but we thought our mortgage debt ($800k at the time) was a limiting factor if we wanted to step off the hamster wheel and try a new career or retire early. Although we are still putting the max away in our 401k accounts and a very limited amount in our post tax accounts, all extra funds are being directed to our mortgage to get that off the books.

I am not saving money for the sake of saving money. I am saving money so that I have financial freedom. A large monthly bill limits that freedom.

Anonymous wrote:

Anonymous wrote:Being debt free is priceless. Priceless.

I think I have to agree with you. Being debt free is the best way to go, especially during a recession.

What a timely question. I just paid off our mortgage at the end of January.

A little background. Borrowed 260K in 2002 when I bought my house, before I was even married. I was 23, what was I thinking. Refi'd into a 15 year loan in 2010 when I did a big remodel. House has grown with the family. Balance then was around...225K? I did a lot of the remodel myself and we paid with savings, so no added debt. By January this year, I realized that we had around $180K cash in the bank (savings, checking, etc) and that paying off the mortgage balance of $110K basically saved me 15K in interest over the next 6-7 years. Plus, as stated above, nothing is a good as being debt-free feels. We still have a nice cushion of cash, and any "emergency" that needs more than maybe 20K is likely an *insured* emergency and will have other resources to draw from. Medical issue, house fire, etc.

Also relevant info, we are a 5-person family, 3 children. We live on one income, presently, mine, and I earn around $160K a year as a federal employee with about 19 years in. We drive older cars but we own them, and when we replace them we will pay with cash. I have a TSP account that I contribute to, and I don't sit around worrying about "retirement" because some people never make it there. I also don't ignore the future and live like an idiot. Its not like we have a firehose of money on us, especially living around here. We make it work and it does fine.

No credit card debt, no automobile debt, no student debt, no mortgage debt. Do we have bills? Of course! If you're not paying bills, you're a child, or you're not vertical anymore. Nothing beats debt free. Some days, if I feel a little down, for whatever reason, a bit grumpy, kids whining about something silly, maybe something at work isn't ideal (though like my job a lot)....I just have to remember "I'm debt free." It never gets old.

As someone else wrote...if you try debt free and dont like it, just go take out another mortgage. (Maybe spend it on some fancy cars, then pay it off over 30 years when the cars are gone in maybe 10. ??)

Anonymous wrote:Being debt free is priceless. Priceless.

I think I have to agree with you. Being debt free is the best way to go, especially during a recession.

Anonymous wrote:

Anonymous wrote:It's about rate of return - if your mortgage is at 3%, but you can earn higher elsewhere, don't pay it off. Given equities have performed well over that I wouldn't.

+1 Another reason is liquidity. The cash you pulled out of your mortgage (and invested at a higher rate, perhaps) is liquid. You have it. If you are older, perhaps with a lower income and retired, you won't meet the income requirements for a new mortgage should you need the cash for an emergency.

This is one of the things that makes me hesitate. If you’re in a moderately expensive house in a hot real estate market, it’s less of a concern. But if you have a more expensive house that could take some time to sell, I’m not sure I’d want a large percentage of my net worth tied up.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We refinanced to 2.75% in 2012 and have 300k left. I want so much to pay it off, but reading the comments here I'm not sure now.

Pay it off. If you decide you hate being debt free, just take out a new mortgage on it

But now you can't deduct.

Yes, you can. Just not for mortgage debt over $750K. Under that and it's still deductible, assuming you itemize.

But I don't think we'll see 2.75% mortgage rates again for quite some time, if ever. I'd take my time paying that off as long as you have anywhere else to put money that is beating 2.75% (and right now, you do).

We paid it off in 10 yrs, this is after putting down 20% which was 100k. Immense value - peace of mind.

This allowed me to stay at home and have two kids and private. We did max out of retirement about 40k a year, and both drove cars for 15 yrs and took only 2 budget vacations a year. No eating out, or maid or hair or nail treatments. Very basic non professional clothes, hand me down but decent furniture. Now all in 2million at 45.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We refinanced to 2.75% in 2012 and have 300k left. I want so much to pay it off, but reading the comments here I'm not sure now.

Why not?

Very likely the stock market return will be more than 2.75 over 9 years. PP here.

Alot of experts are actually saying that real return for the next decade will be 2%. But no one really knows.

Anonymous wrote:The mortgage holders will always cite their market returns (looking backward over the longest bull market in history and assuming it will never end).

We paid our mortgage off 9 years ago, and plowed the money we would have paid the bank into our portfolio. Guess what? We enjoyed the same returns and we didn't pay a penny to the bank.

Not the same returns -- the money you used to pay it off would have been in the market for longer.

Anonymous wrote:

Anonymous wrote:We refinanced to 2.75% in 2012 and have 300k left. I want so much to pay it off, but reading the comments here I'm not sure now.

Pay it off. If you decide you hate being debt free, just take out a new mortgage on it

But now you can't deduct.

Anonymous wrote:We refinanced to 2.75% in 2012 and have 300k left. I want so much to pay it off, but reading the comments here I'm not sure now.

Pay it off. If you decide you hate being debt free, just take out a new mortgage on it

Anonymous wrote:

Anonymous wrote:We refinanced to 2.75% in 2012 and have 300k left. I want so much to pay it off, but reading the comments here I'm not sure now.

Why not?

Very likely the stock market return will be more than 2.75 over 9 years. PP here.

Anonymous wrote:We refinanced to 2.75% in 2012 and have 300k left. I want so much to pay it off, but reading the comments here I'm not sure now.

Why not?

Everybody keeps saying mortgage rate vs rate of return gotten somewhere else. Even if your mortgage is 1% the rate of return is the key. If a house that is worth 800k goes up 2% that is $16,000 and it makes no difference if you still owed a mortgage on it

1. There's a value to peace of mind of a paid-off mortgage.

2. You can't get _guaranteed_ returns better than your mortgage rate. The best guaranteed retrun (saving/money market) is 2% at best. Yes, investing may get higher returns, or it may not. If you put that money in QQQ (Nasdaq Index fund) on 10/1/18, you'd be down almost 5% based on today's price. If you put it in on 1/2/19, you'd be up 14% today. What level of risk are you willing to take?