Pay off mortgage early or invest

[Colonoscopy]

Small amount left on a mortgage. 115k at 25ish years left. Plan was/is to keep on as rental property investment. (although chance I go off-grid w/ truck camper and keep it my home-base)
Making a lot of money lately and could have paid off in next year or so.

Better investment to pay it off or just let the cash ride in a long-term investment?

Part of me just wants it off my plate since I can.

 

[Rifler]

Do both...

 

[Colonoscopy]

Do both...

Well investing anyway. Just thinking of the best use of the money.

 

[Rifler]

Well investing anyway. Just thinking of the best use of the money.

What's the interest rate on your note?

 

[Colonoscopy]

What's the interest rate on your note?

3.25 and I'm 40. Like 225k in interest to pay yet. (IIRC)

 

[ping72]

It depends how much you are paying in interest. Is it more or less than you can make on the money by investing it?

If you have a super low interest rate then invest the money. If your interest rate is high, then pay it off.

 

[ping72]

3.25 and I'm 40. Like 225k in interest to pay yet. (IIRC)

The last several years you would make 10% at least in the stock market. You’re much better off investing the money.

 

[Rifler]

3.25

You could probably invest safely for around 6% or a little better right now,.. I'd probably do that for awhile and pocket the difference,.. Then at some point down the road, just pay it off.

 

[HROT]

I would invest.

 

[Colonoscopy]

The last several years you would make 10% at least in the stock market. You’re much better off investing the money.

Yeah... that's where I haven't crunched the numbers in detail yet. Part of me likes the idea of taking the sure thing now. But I could be persuaded.

 

[hawkeyetraveler]

Invest is the only answer here.

At 3.2% you are essentially getting free money in the difference between your higher investment return and your lower mortgage interest rate. The only reason you should pay down your mortgage is if you believed your investment return would be lower than 3.2%, which would be hard/very unlucky to achieve. Hell while I would personally put the money in the stock market, you could find super safe CDs or other instruments that are significanly higher than your interest rate.

 

[WadeLookingbill]

Invest is the only answer here.

At 3.2% you are essentially getting free money in the difference between your higher investment return and your lower mortgage interest rate. The only reason you should pay down your mortgage is if you believed your investment return would be lower than 3.2%, which would be hard/very unlucky to achieve. Hell while I would personally put the money in the stock market, you could find super safe CDs or other instruments that are significanly higher than your interest rate.

Completely agree. Also, depending on your "investment," you should remain fairly liquid with your money (i.e. equities are a quick sell, etc.), rather than locking it up in home equity. To me that flexibility with your money is key.

 

[luvmyhawks]

Invest is the only answer here.

At 3.2% you are essentially getting free money in the difference between your higher investment return and your lower mortgage interest rate. The only reason you should pay down your mortgage is if you believed your investment return would be lower than 3.2%, which would be hard/very unlucky to achieve. Hell while I would personally put the money in the stock market, you could find super safe CDs or other instruments that are significanly higher than your interest rate.

Hell, money market and high yield savings are paying 5%+ right now.

 

[BlIIlken2]

I have no clue about investing outside a very generous company 401k. But the freedom of being debt free and having a roof over your head sounds very worth it. Gives you flexible freedom if something happens.

 

[jawatkins]

Dude even an onlin high interest account is at 5%

 

[ICWestfan]

3.25 and I'm 40. Like 225k in interest to pay yet. (IIRC)

It would seem to me if you can pay off the 115K and save yourself 225K in interest you should do that. 115k is a lot of money but you said things are going good and you want it off the plate my first inclination would be to do that.

Are you in an industry that has ebbs and flows income wise?

 

[hawkeyez]

It would seem to me if you can pay off the 115K and save yourself 225K in interest you should do that. 115k is a lot of money but you said things are going good and you want it off the plate my first inclination would be to do that.

Are you in an industry that has ebbs and flows income wise?

I'm not an accountant, but isn't the mortgage interest tax deductible?

 

[IACub]

I'm a mortgage lender. You don't have anywhere close to $225K in interest left to pay. Based on a 25 year amortization for $115,000 at 3.25%, your principal & interest payment should be around $560. This translates into a little over $53K in interest remaining to be paid over the next 25 years.

Conversely, if you put $115,000 into an investment today with a 6% return compounding annually, after 25 years that's worth over $493K.

Keep the mortgage loan and invest, it's a no brainer.

 

[IowaMeatMan]

Pay off your house,being debt free is a great feeling. And live your dream of off grid living.

 

[Colonoscopy]

I'm a mortgage lender. You don't have anywhere close to $225K in interest left to pay. Based on a 25 year amortization for $115,000 at 3.25%, your principal & interest payment should be around $560. This translates into a little over $53K in interest remaining to be paid over the next 25 years.

Conversely, if you put $115,000 into an investment today with a 6% return compounding annually, after 25 years that's worth over $493K.

Keep the mortgage loan and invest, it's a no brainer.

I was an idiot and posted before caffeination. I took all costs into that figure. (Taxes, insurance, principal)

Yeah, pretty clear win on investment side.

 

[Colonoscopy]

Pay off your house,being debt free is a great feeling. And live your dream of off grid living.

Yeah, that was at the root of it... Mentally would be nice.

 

[Here_4_a_Day]

3.25 and I'm 40. Like 225k in interest to pay yet. (IIRC)

Keep the mortgage if you think you can find an investment that yields more than 3.5%.

 

[General Tso]

I have no clue about investing outside a very generous company 401k. But the freedom of being debt free and having a roof over your head sounds very worth it. Gives you flexible freedom if something happens.

Spreadsheet math says invest, but got dam it's hard to quantify the psychological freedom of not having a mortgage.

 

[BlIIlken2]

Spreadsheet math says invest, but got dam it's hard to quantify the psychological freedom of not having a mortgage.

Yeah it does. Just something about being able to have basically unlimited flexibility in times of need.

Can’t pay into investments as much on month because of an emergency, no big deal.

Can’t pay mortgage due to hardship or emergency…much bigger deal.

 

[onlyTheObvious]

I always assume I can do 8% in investments.

 

[1inamillion]

Small amount left on a mortgage. 115k at 25ish years left. Plan was/is to keep on as rental property investment. (although chance I go off-grid w/ truck camper and keep it my home-base)
Making a lot of money lately and could have paid off in next year or so.

Better investment to pay it off or just let the cash ride in a long-term investment?

Part of me just wants it off my plate since I can.

Buy crypto

 

[kwik44]

Keep it on investment side.

If you absolutely hit rock bottom, you can at least sell your home and go a different route with the equity.

If you're still torn, do some of both. Go to the bank and deposit 20k into your principal. I bet you'll feel pretty good just doing even that.

 

[RollingBallofButcherKnives]

I have no clue about investing outside a very generous company 401k. But the freedom of being debt free and having a roof over your head sounds very worth it. Gives you flexible freedom if something happens.

And the money you were giving the bank with interest every month recuperates quickly. Even when you spend some of it and enjoy life now. No guarantees you will be around later. Life isn’t a financial contest. Get out of debt, spend and save wisely and enjoy life now.

 

[NoleATL]

Small amount left on a mortgage. 115k at 25ish years left. Plan was/is to keep on as rental property investment. (although chance I go off-grid w/ truck camper and keep it my home-base)
Making a lot of money lately and could have paid off in next year or so.

Better investment to pay it off or just let the cash ride in a long-term investment?

Part of me just wants it off my plate since I can.

I'd pay it off and then invest what you were paying monthly on your mortgage. For us, there is peace of mind in knowing you have a paid for house regardless of what life throws at you... even if investment gurus tell you you're leaving some questionable amount of money on the table.

 

[Titus Andronicus]

I would put my toe into the stock market, avoiding anything with fees (such as mutual funds or "products" sold by banks, insurance companies, or brokers.)

Best to buy individual stocks with a buy and hold strategy. Stick to stocks with actual assets that are reflected in a book value that is growing on a steady basis (The BV, I mean). Avoid "Story" stocks as if they were the plague. Stories with no asset base and no sales base are a recipe for disaster.

The goal here is to become a savvy investor over the next ten years or so, not necessarily to make a killing. It will take a couple of cycles to figure things out. You can do this at the same time as you are paying off your mortgage.

Study or read up on it to figure things out; Do it personally to REALLY figure things out. This knowledge gained from experience is the overlay gained by adopting a mixed strategy of paying down your mortgage AND investing in the stock market simultaneously.

..............................................................................................

P.S. Read the fricking annual reports that come ... even if you just look at the pictures and only read the letters from the Chairmen and Presidents. You will come to know what matters to these companies along with where they operate and what they actually do.

 

[Sharky1203]

Small amount left on a mortgage. 115k at 25ish years left. Plan was/is to keep on as rental property investment. (although chance I go off-grid w/ truck camper and keep it my home-base)
Making a lot of money lately and could have paid off in next year or so.

Better investment to pay it off or just let the cash ride in a long-term investment?

Part of me just wants it off my plate since I can.

Win the lottery, that way you can do both and not worry about it.

 

[General Tso]

Anybody getting 6.9%?

 

[Dirt Boy 2]

I do both because old habits die hard. I have a super low mortgage rate and pay a couple extra payments a year. I never know what my next move will be so it is nice to have more money paid down for the next house.
Investing is still a priority. I’m on the downhill side so having a healthy retirement is important. I’m eligible in 12 years but have young kids so will have to see who wins out, sending the wife back to work or me retiring.

 

[MargarettConnors]

Your situation sounds like a good problem to have! Paying off the mortgage or investing the cash both have their perks. It's understandable wanting to clear that financial slate, especially with the potential off-grid adventure looming.

I once faced a similar dilemma. Instead of paying off my mortgage early, I opted to invest in a diversified portfolio. But here's the twist - I stumbled upon this strategy called a backdoor Roth IRA during my research. It allowed me to maximize tax advantages and build a robust retirement fund while still having flexibility with my mortgage. It might be worth looking into given your situation.

 

[Colonoscopy]

Your situation sounds like a good problem to have! Paying off the mortgage or investing the cash both have their perks. It's understandable wanting to clear that financial slate, especially with the potential off-grid adventure looming.

Tit pics or gtfo

 

[TylerJ23]

I will never regret saving and paying cash for my home.

Sure, I could of made more money investing, but some things are bigger than that, including having a paid for home.

But I'm a Dave Ramsey guy, so take it for what it's worth.

 

[The Tradition]

We have about $85K left on the mortgage. Still contributing to my 401(k), wife's IRA, HSA, etc.

However, we see a path to burning that mortgage book by next March. Not gonna live like a pauper to do it, and not going to stop investing, but just having some restraint on non-essential spending should get us there.

Hell, we have $55K (our emergency fund) just sitting in a money market doing next to nothing.

 

[Brian_Fantana]

I know this is an old thread but common topic. It isn’t as simple as others state; but obviously you could make more in the market than your 3.25 interest. You also need to consider tax write offs and compounding interest on future investments if you did pay this off and suddenly have an extra $2k (or whatever your monthly payment is) going into an investment vehicle vs MTG. At that low total, you are probably better off clearing the debt and investing: but just a guess without doing the math

 

[An Iowa fan]

3.25 will never be back.