Pay off mortgage or make monthly payments and invest the rest?

While I agree that most dont have an extra grand to throw at mortgage, I ran the numbers if I did and its pretty surprising.

Current mortgage is 4.99%.

Minimum payment = total principle and interest = 747000. Pay off is 2052
Minimum plus 1000 = total principle and interest = 584750. Pay off is 2039

Savings between the two is 162300.

Now if I took that 1000 per month and could turn 4% yearly on it. It would be worth 685000 in 30 years which would be 2052.

Contributions = 360000
Interest = 325000

If I waited until my house was paid off and then threw my minimum payment plus 1000 into the same parameters as above from 2039 to 2052. It would be worth 610000.

Contributions = 468000
Interest = 142000

Just some realistic numbers for people to look at. Keep in mind that I also have a higher interest rate on my mortgage than what you can earn. Those that have them below what you can earn, go run your numbers.

Numbers are rounded to the nearest hundred for ease. Its also been a day, so if I did the math wrong, please point it out.
Show your details/methodology...
 
While I agree that most dont have an extra grand to throw at mortgage, I ran the numbers if I did and its pretty surprising.

Current mortgage is 4.99%.

Minimum payment = total principle and interest = 747000. Pay off is 2052
Minimum plus 1000 = total principle and interest = 584750. Pay off is 2039

Savings between the two is 162300.

Now if I took that 1000 per month and could turn 4% yearly on it. It would be worth 685000 in 30 years which would be 2052.

Contributions = 360000
Interest = 325000

If I waited until my house was paid off and then threw my minimum payment plus 1000 into the same parameters as above from 2039 to 2052. It would be worth 610000.

Contributions = 468000
Interest = 142000

Just some realistic numbers for people to look at. Keep in mind that I also have a higher interest rate on my mortgage than what you can earn. Those that have them below what you can earn, go run your numbers.

Numbers are rounded to the nearest hundred for ease. Its also been a day, so if I did the math wrong, please point it out.
You should also consider your house value as well.

I’m not in either camp, but being debt free is the ultimate goal. I also don’t have to have a multimillion dollar investment portfolio. I have a pension, and contribute a fair amount into a 401k. I would agree for myself adding investments outside of the 401 would be a great addition, but truthfully I’m not sure where to start on that lol.
 
I had $20k left on my mortgage. It was going to be like three years before it paid off in full. I said screw it and just paid it off. I retired at age 53. There is nothing sweeter than not having that monthly outflow of cash each month.

Yes, in a perfect world you probably should not pay it off. But the world is not perfect, nor is anything guaranteed. This decision is not purely a discussion about about maximizing a return on your dollar.

I have minimal expenses today. It's hard to put a price tag on that type of piece of mind.

Full disclosure. My wife and I are big savers. Pretty much any raise or additional income was stashed away while we worked.
 
This would be much closer to reality for most people. And might be more than most could pay extra. You could potentially get better ROT using something other than a hysa, but it’s a good conservative start. That’s also basing on staying with the extra $250 for more than the loan term is IMG_0702.png
 
Here’s what that would look like for my current situation. Couple things to consider…. Instead of 25 years of saving the $250 my house is paid off in 10 years instead of the 15ish I still owe. You could change the graphic from my other post to reflect that a bit better. IMG_0703.png
 
You should also consider your house value as well.

I’m not in either camp, but being debt free is the ultimate goal. I also don’t have to have a multimillion dollar investment portfolio. I have a pension, and contribute a fair amount into a 401k. I would agree for myself adding investments outside of the 401 would be a great addition, but truthfully I’m not sure where to start on that lol.
Are you saying consider it as in what it would be worth in the 30 years?

If so, I didn't do that because this discussion largely revolves around what to do with extra funds.
 
Are you saying consider it as in what it would be worth in the 30 years?

If so, I didn't do that because this discussion largely revolves around what to do with extra funds.
I would consider the value at both 30 years and when you could potentially have it paid off if you paid it off early. It may not even matter.
 
I would consider the value at both 30 years and when you could potentially have it paid off if you paid it off early. It may not even matter.
For the purpose of this thread, I dont think its important. The discussion is around what is the best use of extra money you have. Either throw it at your mortgage or invest it? The value of my house doesnt matter for this discussion.
 
For the purpose of this thread, I dont think its important. The discussion is around what is the best use of extra money you have. Either throw it at your mortgage or invest it? The value of my house doesnt matter for this discussion.


Yup - and it cannot be overstated. We are talking about 100% liquid cash in the same amount of the mortgage payoff. Not touching retirement, pensions, selling something to GET the money - it's just sitting in the bank or in a mattress. I think this is what some folks are missing - it's why for some who do have good savings and retirements, they would rather be rid of of the mortgage burden than squeeze more money that they don't really even need 30 years on. people who save and set themselves up well during work rarely go nuts when they stop - they know that, so they would rather be free of the bills sooner than later. They aren't counting on needing that money... really.
 
Yup - and it cannot be overstated. We are talking about 100% liquid cash in the same amount of the mortgage payoff. Not touching retirement, pensions, selling something to GET the money - it's just sitting in the bank or in a mattress. I think this is what some folks are missing - it's why for some who do have good savings and retirements, they would rather be rid of of the mortgage burden than squeeze more money that they don't really even need 30 years on. people who save and set themselves up well during work rarely go nuts when they stop - they know that, so they would rather be free of the bills sooner than later. They aren't counting on needing that money... really.
While yes, having equal cash to debt has been discussed. The original topic of this thread is what to do with extra monthly funds.

I wouldnt be doing what I am suggesting to fund a retirement completely. I am suggesting it because one can make more money doing it than not. I have a 401, Roth, HYSA, CD and Tbills. Its all just another way to make money for me. Although, it is actually costing me money currently but I am ok with that because I like liquidity.

If one takes the extra 1000 a month and put it in a HYSA. Eventually that will be worth enough to pay off your mortgage. You could either lump sum it at that point or take funds out monthly and pay your mortgage. If your earning more than your paying, doing this will get you to your pay off or not needing income to pay your mortgage quicker.

All I have been saying is that if you actually take the money your paying extra to pay off a mortgage faster and actually put it to work for you. You will be further a head in the long run and that has never been easier and/or safer than what many can do with the current market.
 
Yup - and it cannot be overstated. We are talking about 100% liquid cash in the same amount of the mortgage payoff. Not touching retirement, pensions, selling something to GET the money - it's just sitting in the bank or in a mattress. I think this is what some folks are missing - it's why for some who do have good savings and retirements, they would rather be rid of of the mortgage burden than squeeze more money that they don't really even need 30 years on. people who save and set themselves up well during work rarely go nuts when they stop - they know that, so they would rather be free of the bills sooner than later. They aren't counting on needing that money... really.
It’s gotta be a balance. If you’re saving, what’s the harm in paying a little extra on the mortgage. What works for one wont work for another. Peace of mind is worth something as well.
 
I’m sub-3%. I also will always have property taxes and insurance. My plan is to invest in what is 8-10% over the long haul instead of the 3%.

If you do the math you’ll lose out on a lot of money.

What’s 25 more years of mortgage payments. 😭
 
I have and am learning more from this thread. Essentially it is about compound interest and risk tolerance levels. I personally HATE paying interest. So have to compare options carefully. Investments are different for different people as well. Income levels are widely variable from area to area as well as person to person. In essence there is no right answer ,one has to work within their means and personal beliefs/restrictions to come up with how they operate. Been an interesting read.
 
I have and am learning more from this thread. Essentially it is about compound interest and risk tolerance levels. I personally HATE paying interest. So have to compare options carefully. Investments are different for different people as well. Income levels are widely variable from area to area as well as person to person. In essence there is no right answer ,one has to work within their means and personal beliefs/restrictions to come up with how they operate. Been an interesting read.
There is also the desire to pay it off to not have the stress of the debt or the risk of you get laid off of not being able to make payments.
 
There is also the desire to pay it off to not have the stress of the debt or the risk of you get laid off of not being able to make payments.
Theoretically, if you had 100k cash and owed a 100k on your mortgage, then paid it off. You would be in a much tougher spot if you got layed off and just payed off your mortgage vs. If you didnt pay off your mortgage and invested the money. You now have no money left liquid, if your layoff is an extended one. If you compare to investing in safe liquid funds, (hysa, short term tbills) you now have 100k in accounts in which you can ride out your layoff ( hopefully) and make minimum monthly mortgage payments, all while leaving the bulk of you liquid cash invested at a higher rate.
 
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