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My wife did some of the math on our home as well and figured out how much sooner we could pay off our mortgage by putting in a little extra. I don't remember the numbers but that's why we put down extra. But then property taxes increased and cut into the extra we were putting down. Good that we were already paying extra to cover the cost but that was a little gut punchI dont know of one offhand but I could whip up something in excel pretty quickly that would be pretty close to right. Generally speaking extra payments early make a huge difference though.
Doing super quick and dirty math a 30 year loan on $445k with 4% interest compounding monthly and paying at 2130 per month pays off in 30 years. Rounding up to $2200 takes 22 months off of the loan. Make it $2300 and it takes 4 years off of the loan. Changing interest rates by even 1/10s of a point makes a big difference as well.
You didn't answer the questions. Why would I take an action that gives me less runway in the event of job loss and leads to my family having less money?
My wife did some of the math on our home as well and figured out how much sooner we could pay off our mortgage by putting in a little extra. I don't remember the numbers but that's why we put down extra. But then property taxes increased and cut into the extra we were putting down. Good that we were already paying extra to cover the cost but that was a little gut punch
Not having any payments is freedom beyond comprehension.
When you don't have a mortgage bill, your family has more money. The less bills you have, the less need you have for money.Why would I take an action that gives me less runway in the event of job loss and leads to my family having less money?
I've been thinking about this as well. I'm trying to balance paying down my 2.75% mortgage to shorten the loan and simultaneously putting enough away to build that positive interest/return. Doesn't make sense for me to push hard in either direction since my mortgage is small and only 15year.
You can always invest outside of a retirement account (flexible withdrawals) that way you can take advantage of higher yields and then choose to pay off your house in a lump sum down the road should you like.
If you fall on hard times (unemployment) you have a large sum of money to work with that's not "locked up" in your house or in a retirement vehicle.
I have a high yield savings account at ~4.25% as my cash reserve. That's where my extra cash is going. I'm stuck between wanting to look for a second house (renting the first) and doing what you said and lump summing the remaining mortgage when the time is right. I'm early in my journey, so those decisions will come later.
Yeah I’m in a similar spot. Sure would be nice to not have a mortgage but with 500k in equity at this point, when we do retire at some point in a couple decades we can downsize and own our home outright going into retirement.
A lot of us have mortgages with interest rates sub 4%. If you’re in that situation is there any reason to make additional payments toward the principal, or are you investing that cash with the expectation of earning a high percentage?