Hey all! I’m 30 years old. About to close on a house with a 5.75% fixed 30 yr mortgage. If you were me and your goal was to maximize your net worth by retirement, would you put a few thousand dollars extra into paying down the house faster or invest that extra money in the market? The 5.75% doesn’t feel that low but also not crazy high so I’m torn. Thoughts? 🙏

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I'd pay it down at that interest rate. Trying to beat a 6% return on paying down the mortgage including the taxes you'd have to pay on any returns and mutual fund management fees is going to be tough.

likesmart

I agree with this. Additionally if you’re paying PMI because of under 20% downpayment, I’d definitely pay towards equity at least until that PMI is cleared

likesmart

Invest the extra in the market. Refi the mortgage when rates go back down again.

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Do you think rates are going back down low enough to justify a refinance anytime soon?

likesmart

All of you “invest in something else “ people, please your highness’s, advise me where to find 100% probability of a >5.75% return 🙏🙏🙏🙏🙏🙏🙏

likefunny

Why do you need a guaranteed return? You bought the house with 20% of your own money and 80% opm. You own 100% of the eventual return on the house but only have 20% of your own money at risk. Why would you put more equity into an illiquid investment when you can use that cash and buy a highly liquid investment?

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Invest the money in something other than paying off your mortgage.

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Purchase price matters here. How much?

700K

like

I'd wait to buy the house until the market settles (29 here).

Never try to time the market…

smart

Don’t pay extra - keep your funds liquid and invest in the market. Your payment is what it is and won’t change based on paying more. There will come a time to refi and at that point you could choose to increase, decrease or keep the loan balance the same with a lower interest rate.

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