Deciding to pay off house with retirement savings...

dreamingbig

Senior Member
Joined
Feb 29, 2012
Messages
2,997
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Washington
The peace of mind with no mortgage payment is worth more than the interest IMO. The amount you can put away in the next couple years with no house payment will make it up so fast.

As far as the deduction, I’m with you on the math, paying 12k to save 3k is not saving money. Say you make the avg of 7% on 260k in a reasonably safe fund, that’s 18k. So you’d make a bit more than you pay in interest, but the peace of mind would make me happier than the extra few 1000’s.


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Compound interest vs. simple interest.


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bozeman

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Dec 5, 2016
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Alabama
Compound Interest vs Simple Interest is something to consider, but you also have to keep in mind investments all carry risk, so compounding is HIGHLY variable, simple interest is constant.
 

Outdoor Writer

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Joined
Aug 23, 2020
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185
Location
Glendale, AZ
You are absolutely spot on. I've thought about this A LOT! It would mean my full investments are now technically only in real estate. However, I did get a screaming deal on my home and its value has risen extensively in the last 6 years. It's also on 2 acres just outside of some big towns here in California and these properties are really getting more sought after and harder to come by. I'm really trying not to view it as an investment, because it quite honestly doesn't make sense as an "investment". I'm trying to justify it in my mind as just a purchase, that would make any future income catastrophes much more manageable without HAVING to make a payment. Like say I were to lose my job AND the market takes a shit. Now I need to withdraw money at a huge loss in order to make my mortgage, while looking for a job. If that makes sense?
Your house will appreciate whether it's paid for or not. So your gain, except for interest paid, would stay the same, so to speak, if you pay off the mortgage now or later.

I would look at one thing before I used my savings to pay off a mortgage, however, and that would be the interest rate. Thus, if I could invest my money and be pretty much be assured of a return that is better than the mortgage rate, I would go that route. Since last May, a modest mutual fund I have has gone from about $59K to $73K, or more than a 20% return. My mortgage interest is just under 4%. Even before this year, it had increased more than 4% annually except for one year with a minor loss. Over the LONG term, I doubt the markets will tank enough to make that investment bad news.
 

ScottRK

Junior Member
Joined
Jan 14, 2021
Messages
47
Not investment advise. Prenup?-If mentioned I missed it.You’ve got a pension? Talked to guys lost half of that.That’s fair game in addition to all your hard earned savings. Great money in pipe welding.
 
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huntnful

huntnful

Senior Member
Joined
Oct 10, 2020
Messages
203
Not investment advise. Prenup?-If mentioned I missed it.You’ve got a pension? Talked to guys lost half of that.That’s fair game in addition to all your hard earned savings. Great money in pipe welding.
Pre-nup for sure. Mentioned it the first day I even met my girlfriend. I'm not playing that game. Work with too many guys that have to work into their 60's because of divorces.
 

GHKYHunter

Junior Member
Joined
Jan 16, 2021
Messages
18
Many advisors that preach no debt strategies are still okay with a mortgage. But it’s very freeing to have absolutely zero debt. The key is making sure you have enough in a liquid savings fund to cover any emergencies that may happen.
 
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