For me it’s about staying in the home when I retire. I cannot afford my monthly payment on my retirement income, but can afford taxes etc. So if I want to stay, I need to pay off my mortgage before I retire. That’s the only reason to do so.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:For us, paying off our house was freeing. We still saved for college and retirement but we had a lower-cost house. I don't see why you wouldn't pay it off. Now, if something happens we know we will be ok in terms of housing and can live on far less if we need to. Now instead of the mortgage, we can invest the money we would have spent on the mortgage or do things we might not have done otherwise.

I wouldn't pay it off because the math speaks in favor of keeping the mortgage due to low interest rates. I understand the emotional aspect of being mortgage free in case something happens. But I more of a risk taker and I value the returns more than the peace of mind. If I didn't have a risk taker mindset, I wouldn't have quit my good paying nine to five job to start my own business.
Most people are more conservative and play it safe. That's why most people aren't entrepreneurs. Just like they value the safety of a nine to five W2 job more, they will also value the safety of a mortgage free house more. People with entrepreneurial mindset think differently.

Wrong. I'm a business owner and value the security of a paid-off house precisely because I take more risk in my day job and my income is variable.

Wouldn't the amount of your mortgage in a higher interest-bearing account make you even more secure? Liquid cash/cash equivalents = more security than lack of low interest debt.

Anonymous wrote:

Anonymous wrote:For us, paying off our house was freeing. We still saved for college and retirement but we had a lower-cost house. I don't see why you wouldn't pay it off. Now, if something happens we know we will be ok in terms of housing and can live on far less if we need to. Now instead of the mortgage, we can invest the money we would have spent on the mortgage or do things we might not have done otherwise.

I wouldn't pay it off because the math speaks in favor of keeping the mortgage due to low interest rates. I understand the emotional aspect of being mortgage free in case something happens. But I more of a risk taker and I value the returns more than the peace of mind. If I didn't have a risk taker mindset, I wouldn't have quit my good paying nine to five job to start my own business.
Most people are more conservative and play it safe. That's why most people aren't entrepreneurs. Just like they value the safety of a nine to five W2 job more, they will also value the safety of a mortgage free house more. People with entrepreneurial mindset think differently.

Wrong. I'm a business owner and value the security of a paid-off house precisely because I take more risk in my day job and my income is variable.

Anonymous wrote:

Anonymous wrote:For us, paying off our house was freeing. We still saved for college and retirement but we had a lower-cost house. I don't see why you wouldn't pay it off. Now, if something happens we know we will be ok in terms of housing and can live on far less if we need to. Now instead of the mortgage, we can invest the money we would have spent on the mortgage or do things we might not have done otherwise.

I wouldn't pay it off because the math speaks in favor of keeping the mortgage due to low interest rates. I understand the emotional aspect of being mortgage free in case something happens. But I more of a risk taker and I value the returns more than the peace of mind. If I didn't have a risk taker mindset, I wouldn't have quit my good paying nine to five job to start my own business.
Most people are more conservative and play it safe. That's why most people aren't entrepreneurs. Just like they value the safety of a nine to five W2 job more, they will also value the safety of a mortgage free house more. People with entrepreneurial mindset think differently.

But when the mortgage interest rates are lower than what you can get in an FDIC insured bank cd or treasury ibond, paying off the mortgage is not about preventing risk. That's the situation most homeowners are in right now. It's not a choice of pay off the mortgage or invest that money in the market for more gain. It's pay off the market or put the money in the bank for more gain. It just doesn't make sense even if you're totally risk-averse.

Anonymous wrote:For us, paying off our house was freeing. We still saved for college and retirement but we had a lower-cost house. I don't see why you wouldn't pay it off. Now, if something happens we know we will be ok in terms of housing and can live on far less if we need to. Now instead of the mortgage, we can invest the money we would have spent on the mortgage or do things we might not have done otherwise.

I wouldn't pay it off because the math speaks in favor of keeping the mortgage due to low interest rates. I understand the emotional aspect of being mortgage free in case something happens. But I more of a risk taker and I value the returns more than the peace of mind. If I didn't have a risk taker mindset, I wouldn't have quit my good paying nine to five job to start my own business.
Most people are more conservative and play it safe. That's why most people aren't entrepreneurs. Just like they value the safety of a nine to five W2 job more, they will also value the safety of a mortgage free house more. People with entrepreneurial mindset think differently.

It's about risk management. We paid off our mortgage as a diversification strategy. Our house is less than 25% of our net worth at it's current value - the purchase price was only 12% of our current NW. Our 4.5%, 15-year mortgage was small enough and long enough into its term to no longer make sense to refinance to a lower rate or to push us into itemized deductions after the Trump tax law changes (SALT cap did us in). So... we paid it off. It didn't seem to be worth the gamble of paying 4.5% to a bank to use money that isn't guaranteed to do better in the market. We consider it a guaranteed 4.5% investment in this instance.

Anonymous wrote:I think the point is that if you're rich enough, it's not an either / or. You have a paid off house AND a ton of money in the market. I mean in theory you could keep a mortgage and make more in the market on the margins, but if it's only a tiny percentage of your net worth, it doesn't hurt to diversify.

I'm trying to figure out this balance myself. We want to upgrade our house and I think we could pay for it in cash, but it would be a huge chunk of our net worth and so that feels risky. So I want to take out a mortgage, but I don't know how much. The point is, though, that I'm not the super super wealthy. Deciding how to optimize $1 mil means a LOT to me. To someone else, it might just be a fraction of their portfolio.

Exactly! For many of us (worth $40M+) we see no need to have a mortgage. If your $10M in houses is only 20% of your total NW, there is no need to "invest more to make more money". We don't need any more to fund the lifestyle we desire. Right now we can make more off the part in CD/MM than we would need in a year--right now we are getting about 2x what we might spend on the high end (and that includes buying new cars, traveling 2-3 months of the year, traveling business/first, nice hotels, 5 star restaurants, living the good life, etc). Given that we are still working bringing in more than that amount, we are content just earning 5%+ in CDs on a good portion and preserving the capital while earning a guarnateed good rate, and having about 40% in the market to capture the market upswings (and downswings). At some point, you simply don't need more money and preserving a portion of your capital is more worthwhile

I think the point is that if you're rich enough, it's not an either / or. You have a paid off house AND a ton of money in the market. I mean in theory you could keep a mortgage and make more in the market on the margins, but if it's only a tiny percentage of your net worth, it doesn't hurt to diversify.

I'm trying to figure out this balance myself. We want to upgrade our house and I think we could pay for it in cash, but it would be a huge chunk of our net worth and so that feels risky. So I want to take out a mortgage, but I don't know how much. The point is, though, that I'm not the super super wealthy. Deciding how to optimize $1 mil means a LOT to me. To someone else, it might just be a fraction of their portfolio.

For us, paying off our house was freeing. We still saved for college and retirement but we had a lower-cost house. I don't see why you wouldn't pay it off. Now, if something happens we know we will be ok in terms of housing and can live on far less if we need to. Now instead of the mortgage, we can invest the money we would have spent on the mortgage or do things we might not have done otherwise.

Anonymous wrote:

Anonymous wrote:The only "rich" persons I know who have not paid off the mortgage are practicing "stealth wealth". There is zero mortgage (and they pay cash for all else) but they want everyone around them to think they are "just like them" with a fake mortgage. BTW...I'm one of them. Home paid off but never reveal how rich we really are.

Huh?

+1 How does anybody know whether you have a mortgage or not? I think of stealth wealth as just avoiding conspicuous consumption.

Anonymous wrote:We are 58/59, own two properties and haven't had a mortgage in over two decades.

I hated paying interest, when I could be investing that money instead of giving it to a bank. And not having that big bill every month gave us a lot of flexibility in terms of where we worked and how much we needed to earn.

Basically, we semi-retired the day we stopped having a mortgage payment, because we could.

Well, I didn’t “semi” retire. I fully retire with a mortgage, and I was able to do that because instead of sinking all of my money into a house I invested the money elsewhere and made way more money that I would have saved by paying off the mortgage.

Anonymous wrote:The only "rich" persons I know who have not paid off the mortgage are practicing "stealth wealth". There is zero mortgage (and they pay cash for all else) but they want everyone around them to think they are "just like them" with a fake mortgage. BTW...I'm one of them. Home paid off but never reveal how rich we really are.

Huh?

Anonymous wrote:You folks who think you have paid off your mortgage and are now free....do you not have taxes, and insurance, and utilities, and upkeep?

Those four items cost me more than the mortgage on my house - and my mortgage payment is fixed, while all those other expenses keep growing. You are not free of anything after you pay off your mortgage.

This
My parents home in New Jersey was paid off but it was almost foreclosed due to unpaid property taxes. Taxes in NJ are so ridiculously high that they make up almost 50% of your PITI. Paying off the mortgage doesn't really make you totally free. And taxes increase every year. That so called mortgage freedom is an illusion. You may be free from the bank but Uncle Sam still keeps you on a short leash.

Anonymous wrote:The only "rich" persons I know who have not paid off the mortgage are practicing "stealth wealth". There is zero mortgage (and they pay cash for all else) but they want everyone around them to think they are "just like them" with a fake mortgage. BTW...I'm one of them. Home paid off but never reveal how rich we really are.

That may be true for the middle class 'rich' but not for the upper class 'rich'. The middle class 'rich' are afraid of debt. They understand that any moment a wrong move can push them back to being poor. So, they don't take fewer risks. The upper class 'rich' aren't afraid of debt. In fact, they embrace debt and use it as a leverage. Most of them got where they are by leveraging good debt. They don't live in fear of losing it.

Anonymous wrote:Can we stop this false narrative now. Most wealthy people do not have mortgages. Full stop. Some do and the reasons why are on this thread. But most do not. Most use money from outsized market gains like before last year’s meltdown and pay off any debt. Why? The really wealthy 25 million plus do not want to deal with debt and are uninterested in the arbitrage. The wealthy 10- 25 million know how quickly the world turns on you and that debt should disappear in good times. Below 10 you are doing great but you are not wealthy.

You have to stop this false narrative that wealthy people do not take mortgages. Maybe that's true for the small UMC DCUM rich. But the true wealthy people do take mortgages.
I used to work in real estate in New York and I can tell you that 90% of people buying expensive properties had a mortgage. No rich person in their right mind would buy a $10M property and pay cash when they know they can borrow that money at 3% and instead invest the cash in a hedge fund for a much higher return.

Explain to me why Zuckerberg, Buffett, Elon, etc... take mortgages. Do you think they are stupid?
https://www.fool.com/the-ascent/mortgages/articles/why-did-mark-zuckerberg-get-a-mortgage-on-his-home/