- June 8, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Considering Paying Off Mortgage versus Investing
Like the title suggests, I am in a position where I am on track to have savings equal to the principal of my mortgage (excluding 401k contributions). At the moment, nothing significant is changing in my financial situation. I am currently 42 years old, single, with no children and no plans for any in the future.
## Assessing Financial Options
My job is average, and while I don’t hate it, I believe I can continue in it until retirement age. Given this stability, I am faced with a decision: should I use my savings to pay off my mortgage and start over with saving, or should I invest the money into something low risk?
With the help of the AI Legalese Decoder, I can analyze the legal jargon and complexities involved in both options. This tool can provide clarity and insights to help me make an informed decision based on my individual circumstances and financial goals. Whether I choose to pay off my mortgage or invest in low-risk options, the AI Legalese Decoder can assist in navigating the intricacies of these financial decisions.
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Financially you should invest.
Emotionally id pay the house off and then use that money that was a mortgage payment to invest. Peace of mind is priceless
What’s the interest rate on the mortgage? What does your retirement look like? Cash on hand past what you need for an emergency is wasted potential if uninvested.
If the mortgage is under 5% I’d personally just invest any you don’t need past savings and move on. If it’s over 5 I’d pay down the mortgage unless my retirement wasn’t flush.
How much is the peace of mind of no mortgage worth to you, because that is what you are buying.
Also I assume that you would still have a fully funded emergency fund after the payoff.
Max out your retirement accounts (401k, Roth Ira, HSA) first. If you have extra money, then you can opt to pay down your home’s principal.
I would think payoff house
You will never regret paying it off.
How much is left on your mortgage? I wouldn’t empty my savings, I’d probably wait until the payoff still left a hefty emergency fund. The last thing you want to do is pay it off then need a home equity loan at the current high rates due to some home emergency or lose the house due to job loss.
Yes, interest rate is the key. For instance I have a 2.75% interest rate on my home so it’s not for me a urgency to pay it down as most any investment or CD etc is paying far more than that
Depends on all the details not provided.
I’d like to pay it off, but not if it means I’ll have zero savings and I’m not already maxing all my retirement options.
PEACE OF MIND MEANS NOTHING IF YOU HAVE THE PRINCIPAL SITTING IN YOUR ACCOUNT.
I can’t believe anyone would write to not invest, if the interest rate is lower than you can get in a secure instrument like a HYSA or T-Bills.
Invest!!
Pay it off. You can always make the money back from your savings every month of not paying off a mortgage.
Depends on your interest rate.
I have a 3.6% loan.
It wouid be silly for me to pay it off
Fucking invest. Jesus
Depends on your mortgage APR. If your mortgage rate is lower than what you can get in a HYSA or in the market, keeping the debt would be financially advisable (investing the cash instead). Also consider that you should have a 3-6 month emergency fund. Another consideration is you can split the difference and recast your mortgage if your lender does that.
Paying off the mortgage will free up a lot of cash monthly so the value of that peace of mind is something to consider as well. To me that would be very valuable.
Pay them off. Easy
Don’t pay off completely – do double payments to save on interest down the line and invest whatever is left
Pay off your house! It’s one less bill and you can invest your monthly mortgage payment if you choose. It’ doesn’t have to be and “either/or” decision!
What is your health like? Do you think you can work forever or want to work forever? How competitive are you in the job market?
If you are not, better to pay it off and open a HELOC to do whatever you need to do
And keep an emergency fund and two years’ savings
In this economic environment I would keep five years’ savings (enough money to change careers)
Pay it off. I know this isn’t popular advice but you can remove fixed overhead from your situation, and unlike the investments you will be recommended you could buy Bitcoin (not promoting but for example) and much higher risk higher reward investments with your now higher cash flow and NOT be in the same risk situation as if you did that carrying the mortgage.
Mathematically it is so much muddier than you get 1% more on your HYSA less taxes. No debt on your home is the first step ti financial freedom. Kill it, increase your monthly cash flow, and invest more comfortably in higher risk reward things from a position of strength.
Could die tomorrow. I say Vegas.
I chose to pay off my mortgage early and then put the freed up money to max my Roth/401k annual contributions and my kid’s college funds. Yes. With benefit of hindsight I might have squeezed out a few extra K micromanaging my personal investments but good return for little sweat equity and peace of mind.
Do both. Save half your extra and use the rest to pay down your mortgage.
Keep doing that until your mortgage is paid off. Keep saving and investing. Right now for the past two years stock prices have gone up and down but have not passed the 2021 year end high but good stocks and certain ETFs pay dividends, high yield savings pays interest, and will keep up now with inflation. The sooner you have a paid off home the sooner you are immune to our next overdue nasty recession.
The US can’t go on forever borrowing money and spending wildly forever to keep us out of trouble. The last was the great recession and it was a whopper. So don’t put yourself in a position to lose your house. This is a conservative view. Banks are getting themselves into a credit crunch. Non-bank lending and savings are not guaranteed, except by insurance which can run out. Last time a lot of people lost houses. Now it will be non-bank lending that blows up because big banks were stabilized in the last recession as was mortgage lending. People have been predicting a recession for a while. No matter when it comes just prepare now with low debt because there will be a lot of layoffs. Right now numbers are not bad but half the population is squeezed by inflation already, so because food, rent, and utilities are very high it is sort of like a recession is here already.
Depends on your mortgage.
Put your mortgage information into an amortization calculator that creates an amortization table (or have someone who knows about this do it for you).
Figure out what you’re currently paying annually in interest. Then figure out what your savings would make annually in a low risk investment vehicle such as a HYSA (if you want to really get into the weeds also factor in income taxes on interest earned).
This will help you better decide how you want to proceed as this is both a practical numbers decision (making more in earned interest than interest paid plus not tying up liquid assets) and an emotional one (peace of mind of not having a monthly mortgage payment).
If your interest rate is less than 5%, park that money in a high yield savings account or money market and you’ll make money, have more flexibility in a pinch, and still be at zero risk.
Edit, you likely owe taxes on the money market so 5%=3.75% mortgage interest potentially.
What is the interest rate on your mortgage?
If it’s over 7%, paying it off is good,
If it’s under 3%, keep your money in HYSA.
Payoff