In this video, we go over the best way to go about where to put your excess cash when you have an existing mortgage. What is the …
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In this video, we go over the best way to go about where to put your excess cash when you have an existing mortgage. What is the …
source
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20 comments
What's your current mortgage rate and are you considering paying off your mortgage early or investing? PS: Be aware of the spam/scam comments in the below comment section. I just purged a bunch, but there will inevitably be more that pop up. If theres ever a comment with a lot of likes but they're referring you to some random person's name and promises of returns…its a scam.
You didn’t account for home appreciation. The key question is: where is your money working harder for you? If your investments, like in the stock market, are earning 10-15% while your mortgage rate is 7%, then it's more beneficial to keep investing rather than paying off the mortgage early. By paying off your home, you're essentially tying up $500k or $700k that’s not generating returns. That money only works for you again if you take out a loan against it.
i think the guy confuses mortgage interest and home appreciation. You don’t compare stock average annual interest to mortgage interest.
Wrong. Paying off your home will decrease your credit score because of the change to debt ratio to available credit.
My first house was at a 7.3% interest rate. Paid it off in 13 years. Current one is at 2%. Going to pay it off early due to a refinance into a 15 year but definitely not paying any extra on it.
I'm working to pay off my mortgage before I retire 3 years from now. If I put away enough to add $100,000 to my 401k, the 4% rule says I can take another $400 a month. If I pay off my mortgage, I gain another $1200 a month for the remaining 16 years on my mortgage. The only other way I could save that $1200 would be to sell my home an buy a cheeper home somewhere else. Because of the high housing cost in my state, that plan would require me to move out of state.
Your video is clear, well educated and helpful. Thank you very much.
Im not sure if this is a thing in the US but in Aus we have offset bank accounts so any money sitting it that account is assumed to have paid off the loan even though you still have direct access to the money. This means the frequency of payment doesnt matter as long as your salary is being paid straight in to that account.
My advice to new investors: Buy good companies stocks and hold them as long as they are good companies. Just do this and ignore the forecasts and market views which are at best entertaining but completely useless.
Amortization of a 30 vs 15 year is wild. 4 years in and over 2/3 of our payment goes to the balance
Time is the most critical factor in investment growth. The longer you wait, the significantly less you’ll have down the road. If you're aiming to retire by 60, it's not financially ideal to prioritize paying off your mortgage early before the age of 45.
Yes but what about account for inflation?
Knew the answer to this already. Literally just watched to make sure Humphrey isn’t a dogmatic charlatan. He isn’t. Sub’d to channel. Thanks for the great PF content.
I think it’s incorrect to say the interest is front loaded to pay the bank first. It’s a result of the fact that the highest principal is at the biggest and decreases monotonically and the term of the mortgage. So if you went for 10 yr or 5 yr you would see something else.
I lost over $80k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Brooke Miller.
I bought some VOO while watching this. Thanks for reminding me
Would it be a good decision to sell a house that has good equity and use the $ to investment and buy a new house. This is not my forever house .
Thank you
lol you’ve confirmed the answer in 38 secs. Thank you ❤
Rather than paying off the loan, just park the extra money in the offset account and it will work exactly same with the added benefit of using the money to other investments or emergency at a later point of time rather than going to bank to extract the equity.
Unless you are a millioner you ain't paying off that mortgage early. Unless you bought home in the 90s