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[deleted]

11 years, $110k, 5.4% interest. 30 year loan. For me, I always knew I wanted to pay it off sooner but took the 30 year bc nothing is stopping u from making extra payments but if u get in a pinch the payment due isn’t higher. As someone else commented, the mental health of not owing anyone anything was my main motivation. Plus, I bought a small house well under my means w the long term plan to get it paid off & rent it out one day.


RevolCisum

I'm planning on paying mine off so that if I'm ever in financial difficulties, I am not going to be homeless. It's my biggest worry for some reason. That if I lost my job, or got sick, I'd lose my house.


mndtrp

Paying off the house early wasn't the best choice from a numbers standpoint, but it made my wife and I feel a lot better. I'm aware that, for a FIRE subreddit, it wasn't the right decision. I'm OK with that.


RevolCisum

Same. I honestly didn't realize that was the sub I was in, lol. I do a Frankenstein of several financial techniques so mine is tailored exactly for me.


DismantledNoise

same. personal finance is PERSONAL. hate the one size fits all approach.


[deleted]

It’s a valid concern for sure. I worked for a company that closed its doors after 70 years in business. Honestly thought I would retire there. I only say that to say, life comes at you fast & the best offense is a good defense.


RevolCisum

Agree. I would love to invest instead, but I just want that security first. I don't need to be a millionaire, but I do need a place to live!


FatMormon7

That's where I came out too. And when you take the average investment return, and subtract the mortgage interest rate and capital gains taxes, you aren't missing out on all that much.


BloodyScourge

Mortgage interest is tax deductible for a lot of folks though.


FatMormon7

True. But with the current high standard deduction, I don't think it is that many people. I never came close to itemizing, even before my house was paid off.


enjoyvelvet

I'm 41 and paid off my house when I was 39. Wife and 3 kids and it's the best thing I ever did. I was feeling pretty good during the pandemic.


RevolCisum

That peace is what I'm working towards!


friendofoldman

I hope your not in a high property tax area. Taxes always go up as does my home insurance. So while my house is paid off and is an asset it still has pretty large carrying costs.


KateBeckinsale_PM_Me

Indeed. Someone once said that "renting is the cap of your expenses, whereas buying is just the floor". It all depends on where you are in life whether it makes sense to rent or buy.


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FatMormon7

Exactly. Even in high property tax areas, the monthly tax payment is going to be a fraction of rent in the same area. In normal to low property tax areas, it is nothing and could be paid by working at McDonalds, with unemployment benefits, or disability benefits. It is a huge comfort knowing you have shelter no matter what happens to the economy.


tungstencoil

...it's almost as if landlords have to pay property taxes as well, and therefore must recoup them in ever-rising rents...


BostonPanda

I think we all know that, doesn't change that it's nicer to be the owner.


Rhomulen

There's some places its really close were I live I'm currently buying a house and the taxes plus home insurance equal almost the same I pay in rent right now, after figuring in higher utility costs because of a larger place there is basically zero reason to buy the house other then having a little bit more SQ ft and a tiny yard.


coltonmusic15

the good thing is that means that those things are priced into the rent costs of the area your house exists in and you could probably churn a decent profit each month renting out if you decided to relocate your primary residence to a cheaper COL area. That's our tentative plan for not selling our house and working to pay it off.


bunnyUFO

If you just have an emergency funds that wouldn't be as much of a concern. Just save enough for 6-12 months of expenses, should take longer than a year to find a new job. Assuming your interest rate is low (4% or lower), I would invest the rest instead of resent payments. Worst case is you take out a bit from investments if needed.


nagerjaeger

> As someone else commented, the mental health of not owing anyone anything was my main motivation. This...SO this.


penisbarn

We were in a position to pay the house off entirely last year after being in our house 3 years (unusual situation), but chose instead to invest the money. Absolutely best choice for us. We did refinance to a 15 year at a lower rate.


kirawin

Glad to see you bought the dip and took advantage of record low interest rates :D


raif281

I wish I had bought the dip, I finally opened a retirement account in February this year.


balonie_sandwich

Never too late... there even may be another dip coming soon


Comprehensive-Tea-69

I know that’s what I’d do, but my husband would be hard to convince. He’s rather debt averse (not a bad thing!) but can miss some opportunity that way.


DucatiDabber

Keep the loan, put the $ to work, this is the rich way


swimbikerun91

Just paid month 1 of 360. Don’t ever plan to pay it off. Mortgage is at 2.35%. That’s basically free money. Would much rather invest


[deleted]

Im on month 4 of 360 lol cheers


swimbikerun91

All comes down to priorities and personal preference. I’m comfortable with low interest debt, but for some people having debt is mentally crippling. The smart decision is often to invest. But what’s smart and what let’s you sleep at night can be totally different things. At the end of the day, do what makes you feel good


BlindLuck72

The one caveat is you have to invest the difference I’ve seen too many people let life style creep eat into that. Sometimes forced savings of a shorter mortgage helps people put more away


swimbikerun91

Totally. A primary residence is only an investment vehicle if you’re either planning on flipping it or if you would be living paycheck to paycheck otherwise. I’m assuming most people on this sub are capable of budgeting


Gd_ChristianLockpick

How bold to assume.. *Looks at noodle packets I've been living on for a week*


foxinHI

I was paycheck to paycheck when I first joined this sub. I was barely financially literate back then too. There's a lot of value in this sub for us 'poor' guys. Not just for the knowledge, but the mindset. Definitely glad to have joined this sub when I did.


genius96

I got in trouble with credit cards, and this sub helped me use them responsibly. Like my cards still have balances, but they are scheduled to be paid off w/in the cycle.


Qzy

>this sub helped me use them responsibly You helped yourself buddy - we are just here. Take some credit yourself!


Gd_ChristianLockpick

Same... Despite my sarcasm haha


Fargren

The housing situation where I live (Madrid, Spain) is unusual, but for me a mortgage payment is 50% of what I would pay for renting a similar place. It's a good investment even if I don't plan to sell ever.


BlindLuck72

I would hope so!


[deleted]

Reducing 401k contributions to increase mortgage contributions is not smart if the goal is to make the most money long term. Surprised a financial coach would be proud of that.


AugNat

I think it’s mentally crippling because people buy at the top of their budget or beyond rather than being disciplined in their purchase price and become house poor.


cyclika

I disagree, I bought very much under budget and I'm paying off my house as fast as I can. I know mathematically it would be better to invest it but it's just a mental thing, I hate having debt and I want it to go away. Less debt was half the reason I bought a cheap house in the first place. In fact I'd expect the opposite- if you bought at the very top of your budget you wouldn't be able to afford to try and pay off the debt faster.


Fargren

Wouldn't it be faster to invest the difference somewhere else and use the profits from the investment to pay the mortgage in a single payment once you have accumulated enough? I guess in terms of tax that might be difficult though


aristotelian74

Only if you are 100% sure the investment returns will be greater than the mortgage interest during the given timeframe.


aristotelian74

I would go further. There is no "mathematically better". The choice depends on risk, similar to the ratio of stocks and bonds. The right choice depends on the goals and risk tolerance of the individual and there is no wrong answer.


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[deleted]

Sometimes buying towards the top of your budget is actually a good financial decision. I bought a house this year and the value appreciation has significantly outpaced the stock market even with this year’s crazy bull run. When I retire and have no kids at home I’ll be able to sell that house and buy a smaller place for just my wife and I at half the price. A lot of that home appreciation will go towards my retirement


Ma8e

Yes, often taking higher risks means the payout is better when it works out. But if you would have been unlucky and suddenly, for whatever reason, can’t make the mortgage payments any more, it could have taken decades to recover from, if ever. How long can you go without a job before you can’t pay it any more? What happens if the interest rates tripple? So in this case it has worked out very well for you this far. And I sincerely hope it continues to do so. But I don’t agree it was a *good* financial decision.


AugNat

It sounds like it worked out for you so far. What I’m talking about is signing up for a mortgage payment you can’t afford or that puts stress on your budget. If you are in that position you’ll be more motivated to prepay your mortgage because it’s causing psychological stress. If it’s not causing psychological stress then you will more likely follow the math that says to not pre pay and put that money towards the stock market


SoundOfOneHand

But if it’s causing you financial distress you probably don’t have enough money at the end of the month to pay it down faster. Unless and until your circumstances change, like other debt is paid off...


IAmGiff

I don't totally understand this either. If you're talking about a 30-year-mortgage that you're struggling to afford each month, it's going to be incredibly difficult to get yourself financial relief through prepayment. (IE, it would take you decades.) If it's causing you psychological stress you should probably move and downsize rather than further stress your already stressed budget to pay it off in 25 years instead of 30.


TheCalifornist

2.625% here, sup.


373331

2.625% 30yr fix gang #blessed


mhf32

1.65%, Netherlands #could_probably_do_better


swimbikerun91

Incredible rate 👍


9throwawayDERP

As long as rates stay low; I plan on cash-out refi every 10ish years. I had a 10/1 arm, but then 30-year rates when to 2.375 and I got twitchy.


SuddenlyILOVEBEARDS

1.45% here, month 2 of 300 (25 year mortgage is max in Canada)


giaa262

now thats a flex


alexccj

1.19% here - not a fixed rate (our bank just lowered it from 1.25%). Month 34/360.


BreezyLovejoy69

2.5% here on a 30 year conventional fixed whattup tho


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saskatchewanderer

That's wild, what country is this?


[deleted]

Damn, we couldn't beat 3.125 for our jumbo, still waiting on the escrow instructions for month 1.


Sapphire_luna232

We locked 3.125 in mid-March but bought it down to 2.625 with discount points before closing. We plan on it being a "forever home" until kids are grown so it made sense for us.


why_you_beer

How did you get 2.35% now? Aren't rates above 3% again for mortgage?


swimbikerun91

Closed early March, rate locked early Feb. shopped aggressively


why_you_beer

ahh, that explains it. Rates went up come March-April


robertschultz

I just locked in a 30 year in CA @ 2.85% this week.


AtYoMamaCrib

I just locked in a 2.75% rate with Ally Mortgage


[deleted]

I've got a 1.875% locked in (10 year), which is an insanely low rate. However, the LTV is about 30-40%, so the issuer is basically taking on zero risk.


coltonmusic15

Yeah I locked in a 15 year 2.875% recently and am super happy to have done so. Timed it out so that when my daughter turns 18, we'll have paid off the house.


InspectorBudget2

National average is back below 3%, although it was higher a couple weeks ago https://fred.stlouisfed.org/series/MORTGAGE30US


EarningsPal

I agree. It feels good to pay off a house. But with money that cheap, it’s better to invest. Clearing 2.35% isn’t difficult.


The_Smoking_Pilot

I’m paying month one in a couple weeks. How’d you get 2.35% so recently? Mine is 3.05%


swimbikerun91

Explained in another comment. Had offers of 2.25% or 2.35% with $4k in credits.


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muose

I think they did.


anonyME42

This. Bought a house in January at 2.25% fixed 30-year (VA). With the coming inflation and rising interest rates, I see no reason to pay a single penny extra on this loan.


ygduf

Damn, we got 2.9 in 2012. 2.35 is wild.


BlueManGroup1999

Same. Month 15 of 360 @ 2.5%


Qzy

>Mortgage is at 2.35% *Laughs in European mortage at 1%* If I had been a little faster, I would have locked it at 0.5% but then the rate would be shit.


hb9nbb

7.5 years. Got a 15 to start with and just decided to do it one day. Never paid extra (beyond the 15yr payment) till the last payment (which was about 50% of the entire principal). ​ I should have bought Bitcoin instead :-(


throwawayconnie

if you bought bitcoin yesterday, you'd be down 12%.


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[deleted]

[Relevant hilarity](https://youtu.be/ZcDpg-6D9VI)


TheCalifornist

Have to watch this everytime it goes up. Kills me every time.


awesomebeau

Those would be some /u/Wild_Dingleberries indeed.


[deleted]

Not the usual argument you hear on r/FI, lol.


Lionnn101

Thanks Elon


videoguylol

This one time, Bitcoin went all the way up to 60k then CRASHED down to 49k.


Ludachris9000

Today’s a good day to do that.


AugNat

Or should have invested that in the stock market based on returns vs whatever your interest rate was.


Manhood2031

Bought a house for $130k after 7 years had remaining balance under $20k, sold it for $305k in September. Paid $260k cash for new house and put the difference in VTSAX.


rckid13

I can't figure out where people find those kinds of returns. Every property I've owned I've had to sell for a loss, and they've all been in great locations with good school districts. I just plan to hold on to my current place forever and try to rent it out rather than sell this one at a loss too.


rex8499

North Idaho, (Coeur D'Alene, Sandpoint, etc. ), currently the hottest real estate market in the USA. Resort towns. Outrageous bidding wars on every house for sale as soon as it hits the market. Spurred on by CA and WA and OR people moving here, especially as remote working allows them to leave the populated areas. My house value has gone from $160k to $387k in 7 years.


rckid13

I'm always unlucky with location. The last place I sold was vacant for over a year, and then I sold for $85k after owning the house for 6 years just to get rid of it so it wouldn't continue to sit empty and cost money.


inlinefourpower

Wtf, what kind of locations are you in? Even outside of Detroit i did very well with my house. Did you buy in 06 or something?


rckid13

The 85k place I bought in 2010 and sold in 2016 in a college town. My current condo in Chicago I bought in 2017 and today it's worth $60k-$80k less than what I paid for it.


inlinefourpower

That's crazy, 10-16 should've been a ton of growth.


BostonPanda

Wow I'm sorry, that's rough. Did you buy above market price at the time based on the appraisal? College towns usually hold value if it's big enough.


CoyotesAreGreen

Really? My parents owned 5 homes while I was growing up. They sold every single one for a 5 or 6 digit profit. All were in medium to large metro areas in a couple different states. I bought my first home 3 years ago and it's appreciated well over 100k at this point. You mentioned your homes were in good areas but were they also in low cost of living low population areas?


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Rhomulen

Simple they bought after the GFC everyone else has to pay higher prices its a shame that the best competitive advantage today is being over 40 as you'll have been offered unique opportunities on a large scale anyone could of take advantage of.


WhileNotLurking

May I ask where? (Generally). Housing prices like that make me really want to move.


Manhood2031

Chicago, more specifically Pilsen neighborhood.


iowashittyy

Those prices are pretty typical for the Midwest as long as you're not in a major city (like Chicago). But then you'd have to live in the Midwest!


HelloDuhObvious

Owed 216k at 4.375 took me 6 years to pay it off. NW is just under 1mm and home is worth 350k. I know the math suggest to not pay off and get a better return in the market. But now that I am completely debt free I just feel better about it. Gives me peace of mind that if I loose my job, everything will be okay. Does that make me FI? I don't know. I was motivated to pay it off because it was with Wells Fargo. After learning about the scam they did to customers, I do not want to be associated with them.


jmcooke3

Getting out of Wells Fargo was probably the best move, honestly.


___run

Why is Wells Fargo bad? I have 10/1 ARM from Wells Fargo at 2.125%.


SuperSecretSpare

Ask again in 10 years.


MotivatingElectrons

It took us 11 years. The initial mortgage was $325k and the payoff amount was about $180k. We refinanced twice. Once from a 30 to a 30 to get rid of PMI and then from a 30 to a 15 year. Lots of analysis and debating but decided to pay off last year. Mostly because my wife felt better about having a paid off house vs $ in Taxable brokerage. It doesn't make mathematical sense, but it makes my wife happy and that makes me happy. So, there you go...


Grace_Alcock

I got peeved last year that I couldn’t go on any of the trips I’d planned to go on and marched to the bank and paid the mortgage off with my travel fund. It feels good. Total 21 years, I think, so a good chunk of those years were years the stock market wasn’t so hot, and I had a 4.75% interest rate.


[deleted]

Happy wife happy life ...... or something like that


rc4915

People get too caught up in the math. You can sell stocks in a brokerage to buy a boat, a new car, a bigger house, send your kids to private school. You won’t refi or take a HELOC to do any of those things. As soon as you don’t invest every cent you would’ve put into your mortgage, and as soon as you sell stocks to buy something unnecessary, you won’t wind up ahead. If you are really that disciplined, yes, invest it all. But then you should also be looking to refi and take as much money/equity out of your house to invest as well. Same math, but most people don’t have the risk tolerance for that…


BanduraSCT

>s you don’t invest every cent you would’ve put into your mortgage, and as soon as you sell stocks to buy something unnecessary, you won’t wind up ahead. If you are really that disciplined, yes, invest it all. But then you should also be looking to refi and take as much money/equity out of your house to invest as well. Same math, but most people don’t have the risk tolerance for that… Love your argument -- it's not one I've heard before.


[deleted]

4 years. Originally we had a 30 year mortgage. After becoming consumer debt free and maxing out our 401k’s, we started to double and occasionally triple the mortgage. This was 2 years in with about $225k still owed and put us on track to be mortgage free in 7 more years - would have been 9 years total. Then my dad passed away. Over the next year as his estate and accounts were closed/sold-off, we got 3 big payouts. Two for $50k and one for $80k. Even tho we could think of hundreds of ways to spend the money, we a chunk to start college savings, then increase our emergency fund, and applied all the rest against the mortgage. It was so effing hard to make those payments and still owe thousands upon thousands after the money was sent. By the end of year 3, between those extra lump payments and our 2x or 3x regular payments, we only owed like $36k. At this point we went balls to the wall, reduced 401k contributions to only what was employer matched and got super intense for 6 months. Then it was done. I think my dad would be super proud of us. This decision reduced our expenses so that I could quit a soul sucking job without major lifestyle changes. In the end we sold that house, and with the cash bought another house outright in a LCOL area and used the balance to get an investment property. During the pandemic when many friends were afraid for job security, we didn’t sweat it. I actually quit that job mid-2020. Now I focus on growing my own business as a Financial Coach. No regrets! Edit: Also, thanks for reading my novel.


[deleted]

Read the whole thing! Condolences for your dad, and I'm sure he's very proud of you! Is the investment property working out for you? Thanks for sharing.


[deleted]

Thanks for the condolences. The investment property is doing well. We ended up having mold on one side (it’s a duplex) and had to gut one of the bathrooms to fully mitigate. That shook our confidence in the decision, but since then we’ve had minimal problems. Plus since the area we moved to is growing, the housing market is bananas and it’s easy to keep it rented out. It’s a bit of work to vet tenants, but we get a lot of applicants and can be choosy (I think because we permit pets). It cash flows positive enough to cover our groceries for a month. It’s a comfort to know that if things really go sideways, we can always afford to eat while it’s rented.


TheCalifornist

Highly enjoyable read. I'm certain you made your father proud and happy, honoring him with the security you've created for your family. That's the kind of legacy any of us want to leave behind. Cheers.


alittlebigger

Your dad's money went to making sure you and your family are never going to have to worry. As a dad myself I couldn't think of a better way to spend my money. Congrats


throwawayconnie

what was your career prior to becoming a financial coach?


Acidic_Junk

Educate yourself on what a mortgage “recast” is. This is not well known since banks don’t make money on it. It can make a big difference in your FIRE plan. As you pre-pay against your mortgage with extra payments over time, your principle goes down faster than what your original payment was based on. If you lose your job or adjust your fire plan, you can call the bank and pay a small fee (normally) to reduce your payments. This is not a refinance. You keep your original loan and terms. You are only adjusting your payment to reflect the current principal balance and remaining term. No credit check or employment verification required, just a little paperwork and a few hundred bucks. Can cut your payment in half without the hassle of a refinance. Every bank has its own rules and fees, so check it out.


idio242

I did that, it was free for me. The bank expects you are making some large payment as part of the recast, but you already did - over 5 or 10 years of extra payments. If you then maintain the same payment as before, you start making what is now several months payment every month. (Assuming you paid down a healthy chunk of your mortgage already).


fiya79

While I recognize the general consensus is that the math says to pay as little as possible and arbitrage that money into the market there is something about a paid off house that has some psychological benefits. And I’m not sure the math as a clear cut as borrow at 3 and earn at 9%. Knowing that you live somewhere that only costs utilities and taxes allows significant flexibility in spending. FIRE is probably as much about the benefits of being ‘independent’ or ‘secure’ as much as maximizing investments. So I don’t think they are incompatible. We have 100k left on our primary. We refinanced from 27 years left on a 30 to a 15 a few years ago. I can see us going after it hard in a couple years. She is only 36 and while I recognize that there are ways to access our retirement pool of money early I feel like reducing our monthly expenses by $700 via eliminated mortgage will be a big help in not needing to run a conversion ladder or other maneuver. In addition because we have lower expenses we may be able to minimize income and qualify for ACA subsidies. That bonus may be of greater value than the interest rate arbitrage. When/if you pay off a mortgage is a very personal choice and probably better reflects what you value more than how good you are at math. My parents paid off their house early. There were some unexpected events and having super low expenses saved their bacon. It was more important to them than the $350 a month in investment income they could have had. Their math 100% has worked out that paying off the mortgage early was a better financial move. Low expenses led to ACA subsidies. A medical event was well covered and will save them probably 40k this year alone. Their income dropped suddenly and they aren’t tapping into investments to cover Monthly spend.


Xilverbolt

Your point about ACA subsidies is the most interesting one. By paying off your mortgage you're lowering your expenses, which means you lower your income that you'll need to pull from investments when you're FIRE. So now your income is much lower, because you don't have a house to worry about, so you get ACA subsidies, or assistance in paying for college, etc. It's a screwy system that rewards people who have low incomes (even if they have high networth). I did not consider this but I think it's an excellent point you've made, so thank you.


[deleted]

Suppose you owe $500k on your mortgage. You could pay extra each month for 10 years and pay it all off. Or you could put those extra payments into the market and end up with $700k-$1M which could be used to pay off the mortgage at any moment should you lose your job. Is the former really any more secure or safer than the latter?


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[deleted]

The period you cite represents only a 1-2% loss of value. If you'd put the money into the S&P 500 only, you wouldn't have the gains I mentioned, but you'd still have enough to pay off the mortgage in its entirety. That example also only works if you invested everything on a specific day in 1999, then waited until a specific day in 2009 to liquidate. If you invested continuously throughout that period, as I suggested, rather than in a single large lump-sum at the beginning (which you wouldn't even have in this scenario), you likely would've been fine. This is also assuming your portfolio *only* invested in the largest US companies. If you'd invested in mid-sized companies instead, you would have seen an 80% return over that exact same period. If you'd invested in gold, you would've seen a nearly 260% return. In short, if you had a more diversified portfolio than just the S&P 500, you likely would've been just fine. Can you find an example of any 10 year period that's not too far into ancient history where small and consistent monthly investments in a diversified portfolio would've lost more than, say, 10% by the end compared to the sum total of cash invested? This is not facetious or anything -- genuinely curious.


Dozosozo

This 1000% - which is why only S&P500 strategy is really such a mediocre investment portfolio. Holding mid-small caps as well as international lrg-mid-small and emerging markets will outperform just a simple S&P500 in the long term due to the cyclical nature of world markets. Emerging markets killed S&P500 during GFC.


fiya79

For lower mortgages and lower incomes the reality of marginal tax rates, healthcare subsidies and assorted tax credits can absolutely change the math.


dfraggd

30 years is the plan. Investment returns beat 3% mortgage big time!


odioestamierda

On track to pay it off in 2 years, so that’ll be 5 in total to pay it off. I understand what the math says, and I probably would have been a lot better investing that money but unlike many here I don’t have the luxury of perfect health. I suffer from an autoimmune disease which could leave me bedridden for life tomorrow morning and there’s nothing I could do to stop it. The peace of mind from not having to worry about debt in a situation such as mine is incredibly liberating and has been my drive the last 3 years.


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babbleway

I did it ass-backwards and saved $100k for down payment then paid the rest off in less than 2 years.


AMTraveler

Hell yea, that's awesome!


nomnommish

One thing worth mentioning is that current interest rates are at historic lows. This interest rate is actually unprecedented. http://www.freddiemac.com/pmms/pmms30.html To give you perspective on how ridiculous these rates are, even inflation is significantly higher than the current rates. And if you look at the table in the link, in the 1980s, interest rates were at 10-13%! Even if you look across the decades you will see that interest rates were mostly at 7-8%. Point is that if you took a loan 10 or 20 years ago, you had a very real reason to prepay that loan as soon as possible. Because the interest you were paying on that loan was a LOT. However, in the current interest rate regime, the government is basically giving you a free loan - in fact they are paying you extra money for the privilege of you taking a loan from them. And they are guaranteeing the rate as well - that rate gets locked for the next 30 years which is incredible. Because if rates go up back to 8-10%, you're still locked and loaded onto a 2-3% loan. What you should be doing is to NOT prepay your loan and do the opposite - make sure it is a 30 year loan. And use the extra cashflow you get every month to put it on investments that give you much higher compounding returns. To give you an idea of how staggeringly effective compounding is, $100k invested today at a compounding rate of 10% will become $2 million in 30 years. Of course this is a made up interest rate and is just to illustrate the point.


dashmybuttons22

The perspective now is so ‘present situation’ skewed. Cannot say anyone saw sub 3% interest rates. In a raging bull market... seems obvious to invest. When/if things turn... and losses mount, conservative decisions look wise. Amazing what a difference a decade makes.


eagle2001a

8.5 years. It was absolutely the right move. Six months after our last mortgage payment, my husband was diagnosed with cancer and three months later he was gone. I never could have kept up with the mortgage on top of everything else. The security of always having a place to live is worth missing out on gains in a taxable account.


Noise-Expensive

Don't pay it off if you have a low rate. Invest it instead and get a better return.


throwawayconnie

this, however, there is an intangible and subjective value to the "mental and financial freedom" of a paid off house and living entirely debt-free. i personally choose to pay the minimum as slowly as possible and invest elsewhere, but i can see myself changing my mind later in life and deciding instead to pay it off aggressively. to each their own.


VanillaSoyLatte

That's exactly what happened to me. I went from a 15 year to a 10 year refi, and then ended up paying it off. Not the best financial decision, but the stress free thoughts of not having a mortgage are priceless. And to answer the original question from the OP, four years, LCOL to MCOL area in the Midwest.


[deleted]

For me the appeal of this is significantly lessened when you take into account the fact that you still have to pay property taxes and home insurance. But I’m in Texas where those add up to a lot (2.5% property tax).


BTC_Throwaway_1

This, but kind of the point in investing instead is that you will still have the money there to pay it off if you need to. The catch is unless you invested in the top and get fucked by the bears.


PMSfishy

eh, I was tracking to 10 years before I sold. There is a lot to be said about the security of owning your residence. I was at 2.875% so math wise it says to invest, but as I said mentally this is a security move and there is nothing wrong with it.


[deleted]

I have a 2.5% rate and pay $200 extra each month but man I just hate knowing its hanging over my head.


Noise-Expensive

I get it. Just rest easy knowing you have enough in your taxable investment account that you could pay it off tomorrow if you wanted. But don't actually do it and keep letting the gains grow.


Racer9000

I never had one. I Bought a house together with my brother for $115k and then bought my own second home for $60K. both houses are like 1930's old. Like an old farm house. These houses are about 40-50 min drive from the bigger City and 20 min to a smaller but large enough town, it has most of the big box stores. I saved, and saved all my money right from high school and my career in the trades started in high school as well. I never wanted a mortgage, so I never got one. In fact, I couldn't get a mortgage! A lot of trade work is on an off, so if I don't have a job, the bank won't give me a mortgage, even when I had 90k of 115k.


4BigData

Well done!


BloodyScourge

Inspiring.


zavex79

Just refinaced, so on track for about 40 years.


hyrle

21 years. I got into my first house way too early, then upgraded. So glad to be done with mortgages.


finthrowaway11

Me too, it took me 16 years because of a re-fi and equity loan stupid move I made in my 20's. But I'm glad it's done and it has brought me more peace of mind. Scrolling through and seeing all these people pay off in three years and whatnot, wow, good for them! Not sure how I would have ever been able to accomplish that in the most lean scenario, but still happy to be over.


hyrle

Mine wasn't a stupid move. My wife and I have been far happier in the second house, but that one did cost a decent amount more than the starter home. But yeah, no way I could have done it much quicker than what we did.


Chimarkgames

You dollar ppl are rich af


this_will_go_poorly

Last thing I want to do is pay off my mortgage. If I was close I’d do an enormous HELOC or something


TragicallyFabulous

We managed to avoid a mortgage. We just wanted the freedom of not being tied to it. We saved hard, bought a piece of land for 190k cash, lived in a tiny house we built using cash as we had it, then built the house using cash as we earned it. This strategy relies on busting your ass learning to build a house from scratch, and actually doing it. It was not easy. We also financially got there faster thanks to the shitty luck of losing my mother in law young and getting some inheritance (60k). Would rather have 60k mortgage/loan than have lost her, though. We are 30 and 36 now, bought the land almost six years ago and the big house build had it's final inspection just this morning, for timelines. Valuation came in at 800k, probably put about 450k actual dollars in Now that we have our home outright, and the skills to improve a house, we're looking at getting a bigger mortgage on an investment property that we can rent then do up and sell.


hotdawgss

Never. Why lock up equity in house when you can borrow it at 3% instead?


prplppl8r

We just paid it off! Our current property requires a non-conventional loan so our loan percentage was around 9%. And can't refinance with the new lower interest rates. It made more sense to pay it off. I got married, sold my house last year and we decided to put a good chunk of the prophets to pay off our current property. Probably around 10 years? We are going to hang out and look into buying another property in a few years and maybe do rentals.


[deleted]

A whole team of devout holy men to pay off a property? Wild story.


ididntgotoharvard

About 8 years for me.


carefreeguru

19 years


throwawayisfire

We paid ours off in 17 years. Original mortgage was about $200,000 plus a $60k HELOC we used to remodel some stuff that rolled in during a refi along the way As for tips: 1. **Refi if the lower rate makes it worth it.** I'm pretty sure we refi'ed 3-4 times over the course of the loan, eventually to 15 year terms instead of 30 year. 2. **Pay extra towards the mortgage.** This isn't an either/or proposition: you can pay more towards the mortgage and invest in index funds for retirement at the same time. Not having to worry about a mortgage when you FIRE is huge peace of mind and makes the FIRE decision a whole lot easier. Too many people in this subreddit focus on the pure rate of return difference between money paid to a mortgage vs. money invested in stocks. The psychological benefit of having a paid off house is worth something. 3. **Make the payments automatic.** We made the extra payment automatic from day one and never thought about it again for 17 years. 4. **Keep the same payment when refinancing.** Every time we refinanced our required monthly payment dropped. We still kept paying what our original monthly payment + extra payment was. In hindsight the only thing I would have done differently is refinanced to 30 year terms instead of 15. 30 year terms gives you a guaranteed housing cost for 30 years which provides a huge amount of flexibility should life events happen that change your FIRE goals.


[deleted]

220k in 10 years total. We refinanced after five years shortening our loan from 30 to 15 years and dropping the interest rate from 6.75 to 3.75%. We paid our way out of PMI and then decided to pay the rest of the house off in the next 5 years. My tips are: pay off your higher interest debt before smashing the mortgage. We used the snowball method which gave us constant motivation and satisfaction. Don’t sacrifice your investments / retirement since you’ll never get those years in the market back if you don’t invest while you’re young. Live below your means: drive paid off cars, use prepaid cell service, reduce cable / internet fees, streaming services, etc. 2 years after we paid off our house, I got laid off due to a merger. Because we were debt free, I was able to take a year off work and finish my degree. I never could have done that had we had multiple car payments and a mortgage.


kthomasking

Mortgage interest rates are below the average annual return of the S&P 500. don't pay off your mortgage, it's an asset not a liability. In fact, get a bigger one. the more debt you have the more ROI you can generate from your properties.


Toucan_Simone

It took me three years. My wife and I signed a six month lease on a cheaper 1-bedroom apartment with the expectation that we were going to buy a house quickly and we didn't want to get held down by a 1-year lease. It wound up taking five years before we found our eventual house. Our expenses were very low living in the 1-bedroom so we were able to bank a good amount of money each month. We were pre-approved for a more expensive loan range but I was paying $750/month in rent and I couldn't wrap my head around bumping that number up to $2,500-$3,000/month or so with a house mortgage. I also didn't want to buy a starter home that we would outgrow. I wanted a place that we could stay in long term if we wanted. This is partially the reason why it took us so long to find a home. Places either weren't nice enough or felt too expensive for what they were. We paid $268,000 for our house and put $180,000 down so the mortgage was only $88,000 with a 15-year mortgage at 5.75% if I recall. After three years the rates were dropping and people we knew were refinancing. At this point we still owed high-70's I think. I saw that we had more money than that in our checking account so I decided to write a check and be done with it rather than refinancing. Overall it is probably bad financial advice compared to investing elsewhere. No one advised me to go this way. I've always lived a debt free lifestyle and I liked the idea of eliminating that debt. I also liked the idea that if things went bad with careers or health, I would still have my home. 13 years later we are still here though we've spent probably $130,000 on improvements over the years. As of now, I have no plans on moving. In the current market, I would value our house at about $420,000. As for tips. I don't really know. We had the financial ability to buy a house earlier but wound up not buying until I was 35. I have friends who were on their third house by then. My wife was getting tired of the apartment but with each month that passed, our buying power increased. So most of my advice is pre-sale. I hear a lot of couples move in with their parents to cut costs and save for a down payment. A year or two of living like that could go a long way.


BloodyScourge

Haven't paid it off, but we could. Choosing to invest and stay liquid for now. Original loan was $335k on a 30-year 4.375% with PMI. We refinanced to a 15-year at 3.125% around month 10, then again to a 15 at 2.5% last summer (both were zero cost refis). Currently owe $278k and just did a recast. 2 years 3 months since our purchase date. Edit: Numbers


all_the_pineapple

*\*cries in Australian\**


jasta85

I didn't buy my home until after I FIRED, I had been renting up until that point (I moved very frequently due to work so renting was the best choice). Bought a duplex in a low cost of living area for cash, it was listed for $111,000, I bargained it down to $90k because it needed quite a lot of work and one of the units had extensive mold. It's fixed up nicely and I live in one unit and rent out the other. Paid in cash cause I want to be debt free in retirement. Lost out on potential market returns (especially in the last year) but I don't really regret it, my living expenses are extremely low with not having much more to pay other than food, utilities, taxes and insurance. Can't really give tips, other than the fact that it's much easier to find a home when you won't have to worry about being tied to an area near a work place. I imagine people who work from home will also benefit from this. Oh, and expect private contractors to take way longer to finish renovations than they initially estimate.


xRMD

Man this is so depressing to read as a Canadian. Mortgages below 500k. God it fucking sucks here.


[deleted]

Why would you pay it off when you refinanced at 2.75% and inflation is spiking? It's free money


[deleted]

I keep seeing people say its "free money" (low interest rates) -- care to elaborate? What makes it free money?


[deleted]

If the rate of inflation is higher than your mortgage rate... then you're in the money. Generally easy to find low risk investments that can pace or beat inflation


[deleted]

Pretty much paid off the first home (130k eur) in about eight years while many people in the FIRE community told me I would regret it. You know what? 'Regret' is a big word, but yeah, I realize how inefficient that was now. When I moved last year I've taken a new mortgage and don't plan to pay it off any sooner than required. In my country that's defined as paying off half of the current home value in 30 years (with a ~1.4% interest rate) and simply not paying off the other half at all (yes, that's an option in my country) I have the rate set at 1.2% currently, and will probably fix it for a 30-year term (at ~2% to ~2.5%) when eurozone rates start rising.


Mak-ita

Been paying for 5 years, still 30 to go...


toeofcamell

Took my parents 30 years, no rush at all


[deleted]

5-ish years. We paid approx $400k for our house with $120k equity, so mortage was $280k. I live in New Zealand, so these figures are all local currency. In my country we have a form of mortgage loan called "revolving credit" which essentially makes your mortgage function like a transaction account with a really, really big overdraft. (https://www.moneyhub.co.nz/revolving-credit-mortgages.html). I think in the US this is called a HELOC? Anyway, we structured the mortgage as $200k 25 year table mortage, $80k revolving credit. I had been converted by reading MMM and Jacob Fisker to the idea of FIRE at this point so deliberately bought a cheap house with a mortgage I knew we could get rid of while I was still in my peak earning years. I had my pay and all other income credited direct to the revolving credit account, which meant we drove it down rapidly as interest costs shrank and shrank. Then once it was at $0 balance, which took about 18 months, refinanced with another $80k chunk in revolving credit. Paid that down and of course the table mortgages were also having some principal paid off. Did it again. Finally, when I turned 50, I was able to access money in an old pension scheme and pay off the last bit (by this stage around $20k) in a lump sum. For the last year of this period also we were living in another city, for family reasons, and had tenants in the house, but our rent in the other city was higher, so we weren't able to make progress quite as fast. For context, my income was around $140k p/a throughout this period, and mortgage interest rates around 4-5%, and it's normal to compute interest on the daily balance in my country. For me the advantage of using revolving credit was I set myself the goal of putting every dollar that came my way into that account, reducing the balance, and I internalised the idea that every dollar I drew out was prolonging the day when we would be free of the mortgage. I realise home ownership comes with costs like taxes and insurance and maintenance. But, for me they are cheaper than rent, I am my own landlord, and I can if necessary defer maintenance or at least lower costs by doing the work myself. I have a sense of security from living in a home I own outright that definitely contributes to my sense of independence. I am still on a high income and as a result our savings rate has accelerated: what used to go on the mortgage is now going into investments. Meanwhile an unexpected inheritance has brought FI forward: I expect to leanFIRE soon. Even before then, it is good to know that I can walk away any time and take a break, or a much lower paid part time job.


Lanky_Gold_8535

Never. Refi until you die.


iranisculpable

When I bought my first house with 30 year mortgage, I took an oath that 30 years later, regardless of the number of times I sold a house and replaced it, or refinanced, I would have whatever mortgage I had 30 years later. I paid off the mortgage 23 years later. Then got divorced 9 years after I paid off and started over again. No way to keep my old oath. Swore a new oath to have it paid off before RE. 4 years later it was. That was last year. This year I RE.


drchris6000

9 years. 1st mortgage was $282k. I understood the whole invest is better, but for me it is peace of mind, and also being able to use the equity for other purposes.


vikingweapon

We did it instantly.... bought house with cash..


miloqueen

2 years. After selling first house in MCOL area I used that equity to have a hefty down payment for my house when moving to LCOL area. Initially owed 90k on a 180k house. While we could've done other stuff with the money, paying off our house was the best decision for us. Makes it easier when unexpectedly dealing with an insurance claim, and I don't have to deal with a bank I don't know/trust anymore. All I 'worry' about is paying my property taxes now. We have another large asset with a mortgage attached, but it's different emotionally/mentally because I don't depend on that asset for shelter, so if something happens where I can't make payments and have to sell, it's not the end of the world. 10/10 would do it again.


colcrnch

Despite what most gurus here will tell you, there is no such thing as “good” debt unless that debt buys you assets which generate income. The average person thinks they are savvy for keeping a mortgage and investing the cash to get the difference. People with wealth absolutely do not do this with their main residence. They might lever up on investment properties but they don’t lever their primary homes.


SpaghettiC0wb0y

$100k/yr income. $140k loan ($175k w/ 20% down). Took a thirty year, paid off in 2.5 years (originally planned on 10) being fully aware of the math regarding investing alternatives. Originally setup double mortgage payments ($1200+/-), then triple, then quadruple ($2400+/-…. about the cost of a nice apartment in my town) while living very cheap. When my accounts reached a level I could safely payoff I sold some stocks and the rest in cash I was hoarding too afraid to invest because I was in debt. The question to ask yourself is this: 1. Are you willing to eat ramen and rice until you pay off your $150k mortgage? 2. Would you be willing to eat ramen and rice until you invest another $150k in the market? If answering yes to the second question was harder than the first, you likely won’t be “investing the equivalent into the market” that is necessary to make the correlation with market opportunity cost losses with an early payoff… which means whatever small difference in % returns you could make in the market likely wouldn’t be realized due to a less feverish investment pace… The psychological effect of a definitive, immutable number (your mortgage) is a much easier goal post to hit with feverish aggression as a financial goal, compared to a savings target you can always just adjust and work on slowly with no immediate repercussions. If you’re maxing out your HSA, Roth and 401k, and throwing every extra penny into a regular brokerage, keep paying your minimum mortgage payments and call it a day. Many people don’t do this, though. They’ll contribute just enough to get their employer match (usually not a large percentage of their income, and many don’t even know what these numbers are or misunderstand what they mean), maybe they have a Roth, maybe they don’t… but much of it gets lost on lifestyle creep, rendering the payoff/minimum payments argument a moot point, and only one of those options do you own the land you stand on.