landmanpgh t1_jaa9mv6 wrote on February 27, 2023 at 11:56 PM

Assuming your interest rate is fairly low, it's usually better not to pay off your mortgage.

That being said, we're also human, not robots. Some people aren't disciplined enough to have extra money in their accounts each month and won't actually invest it. In that case, paying off the mortgage faster is smarter than nothing.

Youre definitely not going to complain that you have too much equity in your home or that you don't have a mortgage because you paid it off early. Could you have made more money in the market? Probably. But that's assuming you would've actually invested.

2giornot2gi OP t1_jaabj7d wrote on February 28, 2023 at 12:09 AM

My interest rate is quite low for now. What's the reasoning behind not paying off the mortgage?

znark t1_jaad0sr wrote on February 28, 2023 at 12:20 AM

One is that stock market grows faster on average. You make more money by investing.

Two is liquidity. It is much better to have money in brokerage account than in equity in house. The equity is harder to access when you need it, you have to sell the house or take out home equity loan. Brokerage account is fast to sell and transfer and can use for anything you want. A good example is can use the money for down payment on new house and wait to sell old house instead of having to sync the sales.

This assumes that you are the kind of person that can save and not spend it. If you can't then paying down mortgage is way to save money without having access.

abl444 t1_jaaen23 wrote on February 28, 2023 at 12:31 AM

What is it? It’s all just a math problem so “low” isn’t too helpful? For now?

2giornot2gi OP t1_jaap0oa wrote on February 28, 2023 at 1:48 AM

2.64%, rising .25% every year until it hits market value.

landmanpgh t1_jaad29g wrote on February 28, 2023 at 12:20 AM

If you take the extra money you were going to put towards your mortgage and invest it instead, your returns will be greater than what you gain in equity. You can usually get roughly an 8% return in the stock market, and hell, even CDs are offering like 5% right now. So if you keep that up for 30 years, your investments will far outpace what you can gain in home equity.