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Pay off mortgage or invest?

Husk in butt

Bronze Knight
Sep 23, 2018
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I'm lucky enough to be 43 years old with zero credit card debt, no car loans, and a mortgage in arms reach of a payoff. 4.375% rate on mortgage. I'm debating on just knocking out the mortgage. I'm investing in high yield stocks, doing 10% in a 401k, etc. I feel like with the market run I could go with the lock paying off the mortgage. On the other hand I'm investing in companies that yield 3.5-6%, but that is taxable and not guaranteed returns.

Anyone in this scenario? No real correct answer without a crystal ball. Kevin O'Leary says pay off your mortgage by 45 if I go with his advice.
 
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I'm lucky enough to be 43 years old with zero credit card debt, no car loans, and a mortgage in arms reach of a payoff. 4.375% rate on mortgage. I'm debating on just knocking out the mortgage. I'm investing in high yield stocks, doing 10% in a 401k, etc. I feel like with the market run I could go with the lock paying off the mortgage. On the other hand I'm investing in companies that yield 3.5-6%, but that is taxable and not guaranteed returns.

Anyone in this scenario? No real correct answer without a crystal ball. Kevin O'Leary says pay off your mortgage by 45 if I go with his advice.
Pay off the house as fast as you can. As long as you don’t kill your emergency fund, then knock it out. No sense paying someone else extra money if you don’t have to.
 
Im not in your spot, but I would pay off the house. Because every month after you’ll have nothing but that extra $$ to continue to invest, spend, etc.

It’s the sure thing.

Bingo. Pay off the house and you have an extra mortgage payment (minus what would go to escrow for property taxes/insurance/whatever else) in your pocket every month. Plus, that has to feel awesome to pay off the house lol
 
I’m often asking the same thing to myself. We’ve got tons of equity in our house, no other debt, and our payment is minuscule. It’s roughly 8% of our take home monthly so it’s not even really noticeable.

I’ve been investing heavily for the past 10 years which is paying off bigly but now I’m inching toward just pulling the band aid and paying off the mortgage . Even with a really good rate.

We also love our house but the prices around us make it so tempting to test the sellers market. A house with the same build but less features down the road just sold for $75K more then we bought ours for just in 2015
 
I’m often asking the same thing to myself. We’ve got tons of equity in our house, no other debt, and our payment is minuscule. It’s roughly 8% of our take home monthly so it’s not even really noticeable.

I’ve been investing heavily for the past 10 years which is paying off bigly but now I’m inching toward just pulling the band aid and paying off the mortgage . Even with a really good rate.

We also love our house but the prices around us make it so tempting to test the sellers market. A house with the same build but less features down the road just sold for $75K more then we bought ours for just in 2015

You can do both. Pay it off, pocket/invest the previous payment for a bit then see where the market is and what you want to do going forward.
 
Are you talking about taking money out of the market to pay off the mortgage? If so, bad idea. If you are talking about putting money towards the mortgage vs putting it in the market, it may still be a bad idea.

If your annual return in the market is 7-10% it's larger than the 4.375% you are paying on the mortgage. Investing is a long play, don't cloud it up by thinking that zero debt is the greatest thing in the world.

Now if you can pay off the mortgage and still contribute to your investments at a healthy pace then go for it.
 
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Are you talking about taking money out of the market to pay off the mortgage? If so, bad idea. If you are talking about putting money towards the mortgage vs putting it in the market, it may still be a bad idea.

If your annual return in the market is 7-10% it's larger than the 4.375% you are paying on the mortgage. Investing is a long play, don't cloud it up by thinking that zero debt is the greatest thing in the world.

Now if you can pay off the mortgage and still contribute to your investments at a healthy pace then go for it.

It would be new money. My thoughts with markets at fair value levels it just makes sense getting the sure thing and paying off the mortgage. I looked at creating a portfolio for the new money that would yield at least 4% and hope I get growth of 3-5% in the investments. I'm leaning towards a payoff and use the money I would have paid dollar cost averaging back in the market with the additional savings.
 
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It would be new money. My thoughts with markets at fair value levels it just makes sense getting the sure thing and paying off the mortgage. I looked at creating a portfolio for the new money that would yield at least 4% and hope I get growth of 3-5% in the investments. I'm leaning towards a payoff and use the money I would have paid dollar cost averaging back in the market with the additional savings.

You are in a great situation either way. Don't overthink it.

Your wife will probably want you to pay off the house. Women usually vote for security first.

If you invest in the market .... think long term (10-20 years out) ... not the next 2-3 years. You never know what the market will do next year .... but you have a pretty good idea where it will be in 10-20.
 
The math says to invest.
The mind says to pay off the mortgage.

I, admittedly, have gone with the mind. However, my plan is to retire early and partially rely on income from my home being rented. I want my house paid off in 12 years (17 total.)
 
The math says to invest.
The mind says to pay off the mortgage.

I, admittedly, have gone with the mind. However, my plan is to retire early and partially rely on income from my home being rented. I want my house paid off in 12 years (17 total.)

From my years being a landlord one tip. Don't rent the home you previously lived in if you have a large appreciation in the home. If you sell the primary residence with living in it two out of the last 5 years, you pay no taxes. Huge! Sell that house and pay no taxes. Buy something else with the current prices.

For the investing vs payoff. The market could go nowhere for 5-7 years and even those dividends could be cut depending on the next decade. My gut says if I try to get stocks in the 4% dividend range with at least 2% appreciation I would make out better. My other gut (lol) says just take the guaranteed option with mortgage savings.
 
My only advice is that if you have found yourself in a good enough position that this is the kind of thing you are debating, don't change what you've been doing. I know that's a pretty broad answer, but you're the only one who is able to really look at your personal situation and know all of the details of why you're here and where you're wanting to end up.
 
My only advice is that if you have found yourself in a good enough position that this is the kind of thing you are debating, don't change what you've been doing. I know that's a pretty broad answer, but you're the only one who is able to really look at your personal situation and know all of the details of why you're here and where you're wanting to end up.
^ Yep, pat yourself on your back, and keep on saving for retirement and/or kids college
 
I'm lucky enough to be 43 years old with zero credit card debt, no car loans, and a mortgage in arms reach of a payoff. 4.375% rate on mortgage. I'm debating on just knocking out the mortgage. I'm investing in high yield stocks, doing 10% in a 401k, etc. I feel like with the market run I could go with the lock paying off the mortgage. On the other hand I'm investing in companies that yield 3.5-6%, but that is taxable and not guaranteed returns.

Anyone in this scenario? No real correct answer without a crystal ball. Kevin O'Leary says pay off your mortgage by 45 if I go with his advice.
My initial thought is pay it off, however, you may want to consider what you pay annually in interest as this can be written off your taxes.
 
My initial thought is pay it off, however, you may want to consider what you pay annually in interest as this can be written off your taxes.
Unfortunately because the interest amount isn't that much I hit the standard deduction anyway. There isn't a tax benefit for me with the mortgage. On the investment side I'd have to pay taxes on dividends and capital gains. So I figure i'd at least need to make 5.25% on investments to make a wash since I'll be taxed.
 
Unfortunately because the interest amount isn't that much I hit the standard deduction anyway. There isn't a tax benefit for me with the mortgage. On the investment side I'd have to pay taxes on dividends and capital gains. So I figure i'd at least need to make 5.25% on investments to make a wash since I'll be taxed.
If you can pay it off without killing your emergency or other funds in case you get 'wiped out,' then do it.

Once you own your home outright, it's the one thing no one can take from you in bankruptcy.
 
If you can pay it off without killing your emergency or other funds in case you get 'wiped out,' then do it.

Once you own your home outright, it's the one thing no one can take from you in bankruptcy.
Not true. They can't take tools of the trade away from you in bankruptcy. That can include vehicles and real estate.
 
Not true. They can't take tools of the trade away from you in bankruptcy. That can include vehicles and real estate.
Except your primary home, sorry, meant to clarify that. They can take cars and real estate, but not your primary home, even if they can take almost everything in it.
 
Unfortunately because the interest amount isn't that much I hit the standard deduction anyway. There isn't a tax benefit for me with the mortgage. On the investment side I'd have to pay taxes on dividends and capital gains. So I figure i'd at least need to make 5.25% on investments to make a wash since I'll be taxed.
Yea, pay it off.
 
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