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About the author
MoneyClassroom
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I paid off my house because I don't like stress of knowing I didn't accomplish what I had every intention to do. Now, I'm debt free to stack money and if I lose a job, so what… my house is not going into foreclosure. The market is a mess.
I sleep good at night and my health in better shape too.
Those who own their home out right, understand how the grass feels on your feet.
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Thank you young man. As a Dave ramsay guy , I think paying off your mortgage is instant gains on your investment. Not only on house you live in but investment properties too. Don't let them bully you on this one. Things, health, jobs, politics are all fluid and can change anytime.
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I think this type of discussion always forgets one important factor, risk. Investing the extra money from not paying of the mortgage is only good when the market is normal or on the rise. But when recession comes and you lose your main source of income, and all the investments are down, this is where the actual benefit of paying off your mortgage come. You don't want to lose your house during recession since it's at the lowest price point, and this is where cash is king. The rich can buyout all this cheap real estates from these people, while the people that needs to be in debt to invest will lose almost everything. If you have money to payoff your first home, I suggest to do so. Then after that, you can consider investing with the extras.
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Personally I think it’s good to have pay off your mortgage early. Where to get the money; that should be a part of your overall strategy if that’s your goal. A mortgage will be the largest debt for most people. If you have a house fully paid off and you rent it those earnings are yours, you could then get another property rent the first and use the rent from the first to pay the mortgage then rinse and repeat.
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I am strongly in the option 1 camp. The mental stress that develops from financial troubles is a major contributer to relationship problems, health problems etc. So the mental freedom you get from not having a mortgage on your home is invaluable. Another thought is that whatever interest is on the mortgage is saved if you pay off the mortgage early. Example if you pay off your mortgage 10 years early you have saved 10 years worth of interest payments. After you mortgage is paid off your can quickly recover your savings by diverting money that used to be for your mortgage payments to savings and investments.
If it is an investment property however the aim is positive cash flow, so mortgage can remain on the property while the rental income pays the mortgage and you.
Great dicussion -
If you have extra money, pay down your mortgage by paying directly to principal to quickly increase your equity position while cancelling some of your interest payments. The money you save on interest will be equal to or greater than what you would have gained from average investments.
