##When to pay off your house
If you’re like many homeowners, you may be asking yourself, “Should I pay off my house?” This is a common question among those who have managed to save up a significant amount of money and are looking for ways to invest it wisely. There are a few factors to consider when deciding whether or not paying off your house is the right move for you.
###Current Financial Situation
Before making the decision to pay off your house, it’s important to take a look at your current financial situation. Consider your income, expenses, savings, and any other investments you may have. If you have a stable job and a healthy emergency fund, paying off your house may be a smart move.
###Interest Rates
One of the main factors to consider when deciding whether or not to pay off your house is the interest rate on your mortgage. If you have a low-interest rate, it may make more sense to invest your money elsewhere where you can earn a higher return. However, if you have a high-interest rate, paying off your house may be a good way to save money on interest in the long run.
###Peace of Mind
Paying off your house can provide a sense of security and peace of mind knowing that you no longer have a large amount of debt hanging over your head. This can be especially beneficial during times of economic uncertainty or job instability.
###Long-Term Goals
Consider your long-term financial goals when deciding whether or not to pay off your house. If you plan on staying in your home for the foreseeable future and are looking to reduce your expenses in retirement, paying off your house may be a good option.
###Consult with a Financial Advisor
Before making any major financial decisions, it’s always a good idea to consult with a financial advisor. They can help you analyze your current financial situation, weigh the pros and cons of paying off your house, and develop a plan that aligns with your long-term goals.
In conclusion, whether or not you should pay off your house depends on your individual financial situation, goals, and priorities. Take the time to carefully consider all factors before making a decision and consult with a professional if needed.
I’m conservative when in comes to debt(I count mortgage as debt ) and for me 6.4% is more then I would want to carry long term . I generally think of anything over 5% to be debt that I want not part of unless absolutely necessary.
That said I would make sure that you have 6-12 month of emergency funds over anything put towards the debt .
Homeownership can be expensive the last thing you want is to have to take out a loan if your HVAC goes or you have leak
I wouldn’t say it’s bad to pay down some but leaving yourself only $10k seems a bit thin. At 6.4%, you’re definitely in the range where it is worth it to pay extra… I would shoot for a good 3-6mo emergency fund, plus some housing expenses you might need.. we had to replace our roof and furnace in the first 5 years…
If you knew it was coming, it’s not an emergency.
Good work saving! Keep it up. Sounds like you’ll be paid off in the next few years!
With that 6.4% interest rate, you’d save a ton on interest over time. Just make sure you’ve got an emergency fund just in case.
I would Set my emergency fund and then absolutely pay down the mortgage at that rate. That’s a great guaranteed return.
Make an additional principal payment, separately from your regular payment, as often as you can.
Need more info. Your a “9-5” worker and plan to remain that way? Do you have a work 401k you contribute to? Do they match contributions? Do you have any investments etc? How much are you guys making a year?
Hey man I’m on the side of not having debt.. even though most would say mortgage is not a bad debt… but like what people are saying, keep 3-6 months of emergency funds and if possible just make sure 15% of your retirement income goes to a 401k or Roth.. after that, yea I would try to pay that down quick!
No brainer! You get an implied 6.4% on monies used to prepay! Worse you lose is a tax deduction!
Pay it off! It’s basically the reverse of investing and getting a 7% gain in the stock market. The market is up now so pay off the house and then save up for a dip in the market (if it ever happens) if not. You have a debt free home and you can start investing later.
Really depends on your total budget and any other long or medium term goals. I have never paid ahead on any mortgage, but I’ve also never held one at over 6%, so the math is different. In general, it’s a good idea to diversify. How much do you have in fixed income? How much in stocks? Come up with a ratio that makes sense for your target retirement date and work towards that. I personally have a high percent of my net worth in real estate right now (well over 80%), so I’m looking to put more into stocks. I like real estate investing, so I choose to be heavy on real estate, but I think 50/50 is reasonable. What ratio do you want and how far off are you from it now?
I’m older than you but otherwise in a similar situation (similar price for house, put down 20%), but with 5.5% interest rate and I’ve been debating how much extra to do.
Also have healthy savings. A few months in I put an extra $5,000 toward principal but otherwise haven’t done extra
If you do put down a large chunk after checking on your emergency fund, you could potentially recast your loan and then just keep the same payment and pay down quicker.
No go invest. You can’t borrow for retirement.
Your interest rate is only 1% above T-bill rates.
Interest rate on a HELOC if you needed to access those funds is >9%.
I think it just depends on your emergency fund and risk tolerance.
> I have another 110k saved, is it worth putting a large down payment of 100k into my mortgage
If you only have 110k I would NOT put 100k towards your mortgage. **Unless** you really think 10k is enough for an emergency fund of 3-6 months worth of expenses.
I would pay it off. 6.4% for 15 or 30 years is a huge amount.
Your money invested safely can’t earn 6.4%
Pay off the mortgage asap
It’s basically a zero risk 6.4% return, on the other hand it is much more expensive, a hassle, and potentially impossible to get any of that money back out. I would weigh how much you might need that money again in the future and would probably keep at least 6 months worth of expenses, which is probably more than the $10k you’re thinking of keeping.
Do you have anything in retirement?
Whatever gives you a good nights sleep! Financial people will say it’s dumb blah blah you can earn more in the stock market. I would love a paid off house
Paying off the house has the benefit of leaving you able to survive in leaner times if need be.
Do in this order:
– make sure that $110k is in a high yield savings account. Minimum 5% interest
– max retirement for you and spouse
– leave 6 months of expenses in savings
– put the remains towards principal
I’m 38 and we paid off our house this year.
I cannot explain how chill it is to be debt free. Highly recommend
No, and yes. **Don’t** make extra payments into the mortgage but **do** pay it off early if that is your goal and gives you peace of mind.
Note: it doesn’t reduce your overall interest until you **completely** pay off the mortgage… Putting extra money into your mortgage monthly is like storing your money in someone else’s savings account; you get no benefit yourself. Just keep saving/investing it in another account until you have enough that you can pay it off completely in a lump sum. You will earn interest off your money in the mean time.
Scenario A: you put an extra $500 a month into your mortgage and pay it off 5 years early. You save XX amount of interest on the mortgage since you paid it off early.
Scenario B: you put $500 a month into a high yield savings account or equivalent, make interest off of it, and end up with enough to pay it off 5.5 years early, saving more than XX interest. Plus, since the money is not tied up in your mortgage, you can use it whenever you need should anything happen.
(your mortgage company down-voted me lol $$$)
At your age investing 100k into the S&P 500 (SPY ETF for simplicity) would be absolutely life-changing. $4,000,000+ at retirement kind of life-changing. That’s the kind of lump sum that very few people get to invest at your age. Just simply game changing. You would just have to sit through big ups and downs and try to forget it is there. You would be pretty much free to forget about saving for retirement and focus on other things. Personally, I would wait and refinance the home loan to a lower rate while making extra payments toward the principal. Paying an extra hundred or two toward the principal per month can drastically shorten the loan period.
The answer is almost certainly no. You will be much better off investing that money in an index fund. Put 10k away for emergencies and dump the rest into the stock market.
Let’s say you find an index fund paying 12 percent. If you put 100k in it would take 6 years before that money generates enough interest to fully pay your house off.
Now let’s say that you put that in and find a fund that pays 12 percent consistently for the next 40 years. You would have 9.3 million dollars by age 65. Even if you only got 7 percent return for 40 years you would still be at 1.5 million
What’s your tax benefit on your house? What would be the benefit of paying it off? Do you plan to live there for another 50 years? You are only 25.
Without even knowing I’d say no. Invest your money in the stock market and an investment property
Drop 50k on it.
Save up as much and as fast as you can. When you have enough to pay it off + 20k more in the bank… Write the check.