[USER]

I’m making myself crazy over this decision, so I wanted to get the input. The age old pay off the mortgage or invest. My husband and I just bought our forever home with a 6.5% interest rate, 30 year conventional fixed mortgage.

We owe $431,000. We could pay it off in 7-10 years while still maxing all of our retirement options. We just wouldn’t be contributing to our brokerage account.

My husband has Va disability and a military pension that will cover all of our bills and most of our “wants” after the mortgage is paid off.

We have term life insurance on both of us and will re-up our policies until we are older and much wealthier I would like to work part time for many years after the mortgage payoff as well.

Would you pay off the house? Or invest the additional money that would go toward the principal?

[David]

First of all, there’s no such thing as a “forever” home, other than a cemetery.

But to your question, there’s way more psychology involved in financial decisions than most will acknowledge so it’s intellectually dishonest to simply say I can invest at x vs borrow at y and make the spread.

But you could start by asking yourself this, would you be happy with a GUARANTEED 6.5% rate of return??

Every extra dollar towards the mortgage gives you just that.

[Kimi]

I had a $347k mortgage, 3.65% rate and paid it off in little over 5 years. I don’t regret it.

It definitely freed up one of the biggest monthly expenses.

[Jeremy]

I have a mortgage at a lower interest rate, but I’m putting extra towards the principal each month.

Ideally, I’d like to be paid off at the time of retirement to give me a little more flexibility by freeing up cash flow.

It is not mathematically ideal, but it will be psychologically comforting.

[Judith]

We are in a similar position with a recently-acquired mortgage and we are paying off the house.

It will lower your FI number by a lot to have it paid off.

[Frank]

You want a rule of thumb? Invest 4 dollars for every extra 1 you put towards the mortgage.

[Max]

How important mental to you is a paid off mortgage. In my personal opinion, pay the mortgage.

[Smita]

We paid up our house a decade ago and our interest was low at 3%. There’s nothing quite like having a home paid for.

We also wanted it paid off before we started college tuitions for 3 kids!

[Tara]

I’m not paying off about the same amount at 2.68% before retirement.

My investments can beat this rate.

[Author]

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