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Decided to payoff my mortgage.
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Decided to payoff my mortgage.
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If your goal is to buy another then definitely save for a bigger down payment versus paying off existing loans early. The rate on your future loan is likely to be higher than the loans you’ve got. Plus paying just a bit extra doesn’t get you anywhere unless/until you can pay off a loan and free up a big chunk of cash flow.
Benefits are lower interest paid over course of loan (significantly tbh) and peace of mind of having less debt.
There's a more nuanced approach about the opportunity cost of that money in the market + Inflation lowering the real value of your mortgage but if it were me I'd throw some extra cash at the 4.25% and leave the 3% on minimum monthly payments.
If you’re disciplined enough to stack the same money in the market then I would suggest that but if the $200 that you would put toward the mortgage is going to go to something else then I would hit the mortgages
Market > mortgage > mall
Only a potentially slightly good idea if you think you’ll actually hold onto the properties until the mortgages fully mature. Otherwise if you pay a little more each month and sell after 5 or 10 years, not as much benefit there.
Better to invest that $200/month in a large cap index fund and get 8-10% avg returns over the next 30 years. Warren Buffet gives this advice as well. A mortgage is the cheapest way to borrow a lot of money in order to make more money elsewhere- take advantage of it.
Well said!
Coach
I wouldn't throw an extra penny at that 3% one unless/until the balance is trivial and you just want to finish it off.
4.25% as others have said is less than inflation so probably no rush to pay it down. That said, if you are contributing as much as you'd like to to retirement and other short/medium term goals and would just throw this into a HYSA or similar you would probably get less than 3% after tax so it could make sense to throw a bit extra on the mortgage. It wouldn't provide any immediate noticeable benefit but would start knocking months off the end.
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That's less than inflation so technically you shouldn't unless lowering the payment gives you peace of mind
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I would rather buy "growing income" than "fixed income", but that's just me
Is the 3% debt your primary mortgage, and the 4.25% a secondary that was used to avoid PMI on the primary?
If so, paying off the 4.25% debt at an accelerated rate so you only have one mortgage isn’t a bad idea… especially if you don’t have any other debt at a higher rate (car loan, student loan, personal loan, etc.)