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I had a related thread from a while back, but i wasn't able to find it for some reason.
I was on the fence as far as the decision to pay off my low interest mortgage.....reluctantly, i decided to pay off the mortgage (3.25%) aggressively until done. We bought 5.5 years ago in Northern VA for 375k, and now the house is worth 550k.
Long story short, i just ran the numbers, and i think the thing will be paid off by the End of October! There's about 58k remaining as of right now; That said, i'm not sure how i feel....part of me is happy and relieved....the other part realizes that i missed out (and still am missing out) on a great bullish market that i 'could have been' a part of! (currently up 9% or so?)
I made a conscious decision though earlier this year and knew there was a chance (maybe a pretty good chance actually) that the market would outperform the measly 3.25% interest i was paying. Anyway, i guess i still could change course and pay into the market instead of paying it off in Oct. but...i'm just so close...
anyone face the same dilemma/situation? any thoughts?
I've heard people say that they've never regretted paying off their mortgage...i hope that's true.
I can understand your situation perfectly. I did a rather unusual maneuver lately. I had a car that was almost paid off, but I chose to refinance it and take out a loan for about 18k. I combined that with with my annual bonus and hammered by Mortgage for 28k and requested a re amortization. The result is that I have a seperate "sub mortgage" that's at an even lower rate than my mortgage that I can pay off relatively soon. At 2.5% it's easy to beat in the market, but writing the check every month for the next 5 years drives me crazy.
I can't offer you support, because I'm doing the exact opposite and using the low rates to my advantage. The only thing I can offer is the reality of "It probably doesn't matter" because if you look at the average return, your interest rate isn't a bad rate by any means.
You probably could have been better off by investing, but you definitely beat a "savings account" rate.
If not having the debt brings you peace of mind then it's worth it. I'm in a 5/1 io arm @ 2.5% and I'm using the low cost leverage to my advantage. Our mortgage balance is on par with our annual income so it's something we have under control
I had a related thread from a while back, but i wasn't able to find it for some reason.
I was on the fence as far as the decision to pay off my low interest mortgage.....reluctantly, i decided to pay off the mortgage (3.25%) aggressively until done. We bought 5.5 years ago in Northern VA for 375k, and now the house is worth 550k.
Long story short, i just ran the numbers, and i think the thing will be paid off by the End of October! There's about 58k remaining as of right now; That said, i'm not sure how i feel....part of me is happy and relieved....the other part realizes that i missed out (and still am missing out) on a great bullish market that i 'could have been' a part of! (currently up 9% or so?)
I made a conscious decision though earlier this year and knew there was a chance (maybe a pretty good chance actually) that the market would outperform the measly 3.25% interest i was paying. Anyway, i guess i still could change course and pay into the market instead of paying it off in Oct. but...i'm just so close...
anyone face the same dilemma/situation? any thoughts?
I've heard people say that they've never regretted paying off their mortgage...i hope that's true.
You can always invest an amount equal to your payment back into the same thing you liquidated to pay it off.
In effect you invested in a loan to yourself. Where else can you get that rate risk free?
I had a related thread from a while back, but i wasn't able to find it for some reason.
I was on the fence as far as the decision to pay off my low interest mortgage.....reluctantly, i decided to pay off the mortgage (3.25%) aggressively until done. We bought 5.5 years ago in Northern VA for 375k, and now the house is worth 550k.
Long story short, i just ran the numbers, and i think the thing will be paid off by the End of October! There's about 58k remaining as of right now; That said, i'm not sure how i feel....part of me is happy and relieved....the other part realizes that i missed out (and still am missing out) on a great bullish market that i 'could have been' a part of! (currently up 9% or so?)
I made a conscious decision though earlier this year and knew there was a chance (maybe a pretty good chance actually) that the market would outperform the measly 3.25% interest i was paying. Anyway, i guess i still could change course and pay into the market instead of paying it off in Oct. but...i'm just so close...
anyone face the same dilemma/situation? any thoughts?
I've heard people say that they've never regretted paying off their mortgage...i hope that's true.
I forgot to say...congrats on paying the house off (if a bit early to say this)!
You can always invest an amount equal to your payment back into the same thing you liquidated to pay it off.
In effect you invested in a loan to yourself. Where else can you get that rate risk free?
you know, that was the thought process earlier this year. i knowingly accepted the risk of making less, but making a guaranteed return. I'll miss the interest write off....that's for sure....but the last time i did the calculations, (and took into account the peace of mind), it seemed worth it.
Quote:
Originally Posted by ncole1
I forgot to say...congrats on paying the house off (if a bit early to say this)!
haha thanks. you are officially the first person to congratulate me on this! lol especially since nobody knows yet....not even my wife. she's under the impression that it'll be paid off around september of next year....i've been paying extra, and i think she'll be pleasantly surprised come October 31.
I can understand your situation perfectly. I did a rather unusual maneuver lately. I had a car that was almost paid off, but I chose to refinance it and take out a loan for about 18k. I combined that with with my annual bonus and hammered by Mortgage for 28k and requested a re amortization. The result is that I have a seperate "sub mortgage" that's at an even lower rate than my mortgage that I can pay off relatively soon. At 2.5% it's easy to beat in the market, but writing the check every month for the next 5 years drives me crazy.
I can't offer you support, because I'm doing the exact opposite and using the low rates to my advantage. The only thing I can offer is the reality of "It probably doesn't matter" because if you look at the average return, your interest rate isn't a bad rate by any means.
You probably could have been better off by investing, but you definitely beat a "savings account" rate.
So the next question is, when you pay that off, will you save the monthly amount to buy your next car cash or will you put it onto your mortgage to pay it down and then finance the next car?
So the next question is, when you pay that off, will you save the monthly amount to buy your next car cash or will you put it onto your mortgage to pay it down and then finance the next car?
That is a good question. Most likely I'll start to save up cash again since 5 years from now I'll be getting to the point where I need to worry about that again in the relatively near future(sooner than I'll pay off my mortgage at least) and will need some time to build up savings. I've only ever financed cars out of convenience, never out of necessity, and I'm hoping to keep that trend going.
I really wanted to pay off our mortgage until I did a little math exercise a few months ago. First, I did see the return on our investments this year and their growth was double our mortgage rate (3.8%) if not higher. At this stage of my life (mid 30's) I really do want to maximize potential passive income.
But most importantly I realized that even if I pay off the mortgage early I will NEVER owe less than $600 a month to the two HOAs, taxes and insurances. What's the point in paying off the note... I'm never going to stop paying on this place... I'm never really going to "own" it either: It's a delux rental where we collectively share property management responsibilities.
It's fine for us, but I'm in no rush to reduce the mortgage. If I had a SFH I would probably be more like you.
That is awesome! Congrats! Are you going to paint the front door red or have a party? I've heard of people doing that...
Congratulations! I hope to be right behind you in May of 2015.
To me the freedom of getting rid of that monthly payment translates into so many other options; freedom to maybe take a vacation longer than 3 days, or I can quit a dead end job and try something totally different and not have to worry about taking the highest paying job, or just banking/investing all that extra money each month!
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