If emotionally it makes you feel better, then sure. It really depends on your situation and calculations.
In the 2008 financial crisis, we were a single-income family and my dad was unemployed (6-8months) and taking short contract work where he could. My mom was the stay-at-home-parent but self-taught herself trading/investing. She pulled out all the money from her investment accounts to lump sum pay off the mortgage since the instability of steady income had mortgage interest payments eating away at savings.
Her reasoning was that property tax would be less instead of letting the mortgage slow bleed money away. Luckily my dad found a really great government job a few months later. I think they were close paying it off anyways, so she just accelerated it by a few years.
For my husband and I, we put down 20% and had locked in a low 3.01% fixed rate for next 4-5 years. So for us the question is where can the same money get better returns. For example, we keep part of our emergency fund in a high-yield (5%) GIC for 6 months.
Even if we could buy our place for full cash, I'd probably still only do 20% downpayment (maybe higher if it's an investment rental property and I'd calculate the most efficient time/money ratio to see returns) because the house equity is probably not going to outpace the money being invested in something else with higher returns.
Also, I would want to diversify and not have majority of net worth be tied to something as illiquid as housing.
rubykowa t1_j6hbw3y wrote
Reply to Pay down on house or keep in savings? by jws1300
If emotionally it makes you feel better, then sure. It really depends on your situation and calculations.
In the 2008 financial crisis, we were a single-income family and my dad was unemployed (6-8months) and taking short contract work where he could. My mom was the stay-at-home-parent but self-taught herself trading/investing. She pulled out all the money from her investment accounts to lump sum pay off the mortgage since the instability of steady income had mortgage interest payments eating away at savings.
Her reasoning was that property tax would be less instead of letting the mortgage slow bleed money away. Luckily my dad found a really great government job a few months later. I think they were close paying it off anyways, so she just accelerated it by a few years.
For my husband and I, we put down 20% and had locked in a low 3.01% fixed rate for next 4-5 years. So for us the question is where can the same money get better returns. For example, we keep part of our emergency fund in a high-yield (5%) GIC for 6 months.
Even if we could buy our place for full cash, I'd probably still only do 20% downpayment (maybe higher if it's an investment rental property and I'd calculate the most efficient time/money ratio to see returns) because the house equity is probably not going to outpace the money being invested in something else with higher returns.
Also, I would want to diversify and not have majority of net worth be tied to something as illiquid as housing.