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

[Stache Attack]

Very cool thread and I ponder this often personally. Wife and I live in an affordable house did a pretty good down payment on it after selling our last two houses. We have been paying minimum on the 6.37% interest mortgage. Using that money to put into 401k and Roth IRA(she was behind a bit…). Now I’m to the point I’m going to do a one time buy down and do bi-weekly payments with a bit extra. I want to be liquid if we do see this projected downturn so we could sell and build new, and/or pick up a cheaper vehicle compared to current markets. We both have stable jobs currently. She is looking for a new one, I told her to hold strong for now until we see what happens. I have turned down a couple offers as I do not want to be the most recent hire or in a new market.

This thread is very specific to each person, their age, income, home, mortgage, etc. Great thread though

 

[WaWox]

Wouldn't it make sense if you pay the $100k mortgage and sort out other bills as it goes. Emergency funds $20k to live on after taking care of the mortgage makes a lot of sense.

I dont think so, even with the extra 20k.

Think about your monthly expenses and a real bad downturn where you are out for 6-9months.

Let's say mortgage is 3k/mo and if you paid it off it drops to 500/mo (taxes + insurance). Lets say you are unemployed and COBRA is 1.5k/month. 2.5k/mo to live on otherwise (car + food + stuff). That's 4.5k/month without and 7k/month with mortgage.

Would you rather have 120k or 20k to last you 6 months? The 20k is literally not enough! But 120k lasts comfortably even with the higher monthly total

 

[greaser23]

This topic is always discussed as if you have to do one or the other.

Very cool thread and I ponder this often personally. Wife and I live in an affordable house did a pretty good down payment on it after selling our last two houses. We have been paying minimum on the 6.37% interest mortgage. Using that money to put into 401k and Roth IRA(she was behind a bit…). Now I’m to the point I’m going to do a one time buy down and do bi-weekly payments with a bit extra. I want to be liquid if we do see this projected downturn so we could sell and build new, and/or pick up a cheaper vehicle compared to current markets. We both have stable jobs currently. She is looking for a new one, I told her to hold strong for now until we see what happens. I have turned down a couple offers as I do not want to be the most recent hire or in a new market.

This thread is very specific to each person, their age, income, home, mortgage, etc. Great thread though

At 6.37%, I'd be paying that mortgage down. Sub 4% it's hard to argue paying that down instead of investing. Although this question always seems to be asked as if you have to do one thing or the other. Can very easily make additional payments towards the mortgage while still also investing, regardless of interest rate.

 

[NRA4LIFE]

I dont think so, even with the extra 20k.

Think about your monthly expenses and a real bad downturn where you are out for 6-9months.

Let's say mortgage is 3k/mo and if you paid it off it drops to 500/mo (taxes + insurance). Lets say you are unemployed and COBRA is 1.5k/month. 2.5k/mo to live on otherwise (car + food + stuff). That's 4.5k/month without and 7k/month with mortgage.

Would you rather have 120k or 20k to last you 6 months? The 20k is literally not enough! But 120k lasts comfortably even with the higher monthly total

Where can you live where your taxes/ins is 500 a month? Ours is well over twice that much.

 

[svivian]

Where can you live where your taxes/ins is 500 a month? Ours is well over twice that much.

I live in CO and mine is $308/mo

 

[NRA4LIFE]

I live in CO and mine is $308/mo

Dang, my insurance alone is more than that.

 

[neandth]

Dang, my insurance alone is more than that.

Well Washington is way more expensive.

 

[Tahoe1305]

I live in CO and mine is $308/mo

hahaha. I was thinking the same thing everything about CO is expensive. But I’m here too right at $500 for insurance and taxes too and by far the most expensive house I’ve ever owned (living in 6 different states). I guess it’s all relative.