Pay off mortgage early?

[hillview]

Anyone pay off their mortgage already/early. Are you happy you did or do you wish you had invested the money? Any btdt?

[georgiegirl]

We did. No regrets. However, we live in a low COLA and DH earns what would be considered a lot for a high COLA, so it didn't negatively impact our ability to invest for more than a year or so.

[schrocat]

I have friends who did so years ago and they have no regrets about it.

[jgenie]

We paid off our first house and are working hard to pay this one off too. Zero regrets for us.

[pastrygirl]

We didn't have a mortgage at our last house (14+ years) and we do now, and it's stressing us out!!! We will pay it off as soon as we can. We both are uncomfortable with this debt.

[BDKmom]

We paid ours off two years ago and don't regret it. But, we have a very healthy emergency fund and didn't have to sacrifice our other investing for very long to get it done. The only downside I see is needing the cash you put into paying off the house due to a situation where you income changes (job loss, etc.) or your financial needs change (medical bills or something similar). We have enough liquid assets to buy us a lot of time, so if we couldn't sell quickly, we should still be ok. Those were my main considerations when deciding to pay it off. I know others talk about how, with a low interest mortgage, your money can make you more than you save by paying off a mortgage, but I liked the piece of mind of owning our house.

[Kindra178]

Isn't it your only tax deduction?


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[klwa]

We did, about a year ago now. We're content with our decision. Now we put the excess towards additional retirement funds & the kids' college funds.

[cilantromapuche]

We did before we had kids and then moved and paid that one off two years later. It is such a freeing feeling and it has allowed us to put money in for college, retirement, buy a second home, etc. No regrets. The whole tax thing simplified is--you are paying a dollar to save .30 cents. With interest rates so low it probably isn't "worth" it but psychologically it has some great benefits :)

[abh5e8]

We only put extra money towards our mortgage after maxing out all of the tax advantaged investment accounts (401k, IRA. Hsa). I would not keep a mortgage just for the tax deduction... You are still paying more money in interest then you save in taxes.

[icunurse]

I would not keep a mortgage just for the tax deduction... You are still paying more money in interest then you save in taxes.

We are nearing the end of our mortgage with a relatively low rate. I played around with numbers when doing our taxes next year. We paid around $1200 in interest and it changed our return by $700ish. Ran this past an accountant and was told that's about right. I have grown up being told to keep it for the tax deduction when, apparently, that doesn't really apply to the average homeowner.

[*myfoursons]

Ours will be paid off next year. Dh is seriously debt averse, and hates the idea of owing anything to anyone.

[abh5e8]

We are nearing the end of our mortgage with a relatively low rate. I played around with numbers when doing our taxes next year. We paid around $1200 in interest and it changed our return by $700ish. Ran this past an accountant and was told that's about right. I have grown up being told to keep it for the tax deduction when, apparently, that doesn't really apply to the average homeowner.
Right... I would rather pay $700 in taxes than $1200 in interest... I come out with $500 more in my pocket.

[legaleagle]

The only hesitation is how it will affect your overall liquid assets - you don't want to be house poor if you don't need to be.

[cilantromapuche]

The only hesitation is how it will affect your overall liquid assets - you don't want to be house poor if you don't need to be.

Absolutely. If you don't have a savings cushion, then it makes absolutely no sense to pay off the mortgage.

[american_mama]

I am not that interested in paying off my mortgage early, although sometimes I wonder if my reasoning is flawed. With that admission, here are my reasons:

I assume you only reap the benefits if you expect to be in your house long-term, which has never been our situation.
You need to have good rainy day savings before you accelerate your mortgage payoff, and that has not been true for us for a while.
We have certain immediate desires, like travel, that we are not willing to sacrifice. Sometimes we have saved for our trips for years, sometimes for just one year, but they mean a lot to our whole family and, unless our finances changed for the worse, travel is not something DH and I are willing to trade for paying off our mortgage earlier.
Even when we've had extra cash, we put that in long-term savings(college and retirement) where you want the investment now so it can compound over time. I would prefer to pay off DH's student loan debt before our mortgage; his student loan balance is much less than our mortgage and therefore feels more achievable. So that would be my 3rd or 4th choice for financial goals, ahead of paying off mortgage early.
We are not debt averse. DH and I are fine having a mortgage. Student loan and mortgage debt are the only kinds of debt we've ever head; (well, I had a car loan for about 2 years in my 20's.)

Since the interest on your mortgage is tax deductible, it is not as expensive as other forms of loans, and our interest rate is low. Still, any interest paid is money wasted and lowering our lifetime interest payments is the one thing that really appeals to me about paying the mortgage off early.

I read a finance article once that said paying off your mortgage early isn't always great, depending on your situation and preferences. I fear that I sometimes cling to that article too much, but the above is my rationale for being ok with a mortgage for us.

[AnnieW625]

I am not that interested in paying off my mortgage early, although sometimes I wonder if my reasoning is flawed. With that admission, here are my reasons:

I assume you only reap the benefits if you expect to be in your house long-term, which has never been our situation.
You need to have good rainy day savings before you accelerate your mortgage payoff, and that has not been true for us for a while.
We have certain immediate desires, like travel, that we are not willing to sacrifice. Sometimes we have saved for our trips for years, sometimes for just one year, but they mean a lot to our whole family and, unless our finances changed for the worse, travel is not something DH and I are willing to trade for paying off our mortgage earlier.
Even when we've had extra cash, we put that in long-term savings(college and retirement) where you want the investment now so it can compound over time. I would prefer to pay off DH's student loan debt before our mortgage; his student loan balance is much less than our mortgage and therefore feels more achievable.
We are not debt averse. DH and I are fine having a mortgage.

Since the interest on your mortgage is tax deductible, it is not as expensive as other forms of loans, and our interest rate is low. Still, any interest paid is money wasted and lowering our lifetime interest payments is the one thing that really appeals to me about paying the mortgage off early.

I read a finance article once that said paying off your mortgage early isn't always great, depending on your situation and preferences. I fear that I sometimes cling to that article too much, but the above is my rationale for being ok with a mortgage for us.

We live on the west coast and in a high to very high col area, but mine and dh's thoughts are the same as the above. We have not moved a lot and we don't have any student loans, but paying off our mortgage early due to the high col area and our lower than upper class income has not been possible.

[squimp]

I'd probably look at the long term investment possibilities and decide to invest it. I assume that paying off the mortgage would mean you would put what you spend on your mortgage and invest it over time, rather than investing a large sum now. Most of our investments are making 8 to 10% in the long run, which is much more than my mortgage interest at around 4%. So we invest rather than paying off the mortgage. This doesn't even include the tax benefits, which we really need.

We run little spreadsheets to help us figure this out, there are also compounding interest calculators that could help. Hope this makes sense, I am still learning about all this stuff, but this is how we think it through.

[westwoodmom04]

I'd probably look at the long term investment possibilities and decide to invest it. I assume that paying off the mortgage would mean you would put what you spend on your mortgage and invest it over time, rather than investing a large sum now. Most of our investments are making 8 to 10% in the long run, which is much more than my mortgage interest at around 4%. So we invest rather than paying off the mortgage. This doesn't even include the tax benefits, which we really need.

We run little spreadsheets to help us figure this out, there are also compounding interest calculators that could help. Hope this makes sense, I am still learning about all this stuff, but this is how we think it through.

This, it very much depends on how you would invest the money otherwise, and what your mortgage interest rate is. If you have a super low interest rate on your mortgage, then it probably makes sense to invest the money elsewhere.