This can be a highly debated topic. I've done some reading on it, and there are a lot of mixed opinions out there. Unfortunately, most of them are from financial advisors and such, who are great at delivering an analytical view, but I'm more interested in hearing about other's real world experiences.
Background:
My wife and I are 30 and 31 years old. We don't make a ton of money (both public employees - her a high school teacher, myself an engineering tech/construction inspector), but we are both pretty conservative. No debt outside of the mortgage. Large expenses like education and cars were always saved for and paid for in cash; no credit card debt.
In 2014, we purchased a home for $223000. We opted for a 15 year fixed @ 3.25% on a $178,400 loan. No points, no PMI, just a straightforward 15. We set up direct deposit into a separate checking account dedicated to mortgage payments, where biweekly payments are automatically withdrawn (equating to one extra monthly payment per year).
Fast forward 2.5 years later. We now have a $150k loan balance remaining.
With no other debt, we've been able to save quite a bit as well. Quite a bit of cash has accumulated in our bank accounts. As many of you may know, it's not doing much for me sitting there earning 0.01% interest from the bank (that's all the love they can show us for making X% on the loans they fund with it?). I don't like it. I'm getting antsy.
Modern wisdom says that with such a low mortgage interest rate, I'd be better off investing the cash elsewhere. I've dabbled in stocks in the past with moderate success, but I have a hard time stomaching the ups and downs of the market. I can't keep my eyes off of it, I worry, I spend too much time on it. I just don't have the mindset for it.
I realize the investor's world is huge, but am pretty unfamiliar with most of it.
Given my long winded story, I'm thinking about pulling the trigger on taking some of the idle savings and using it to pay down the mortgage. $50k now, and then increasing the automatic payments nearly $300 dollars to pay off the house in 4-5 years before my kids start school. Essentially earning a tax-free 3.25% on the extra payments, this will save me $18000 in interest vs sticking with only the biweekly payments over 13.6 years, and save $23000 vs making the standard minimum monthly payments over 15 years.
Over the course of years, I think that's kind of insignificant and I can't help but think I could do better investing. However, imagining the financial freedom and cash flow of not having a house payment is intoxicating to me. It's almost difficult to grasp.
So... have any of you paid off your mortgage early? If so, was there ever any doubt as to if it was the right decision or not? How did you do it? Any benefits you didn't realize until it was done? Any other insight?
Background:
My wife and I are 30 and 31 years old. We don't make a ton of money (both public employees - her a high school teacher, myself an engineering tech/construction inspector), but we are both pretty conservative. No debt outside of the mortgage. Large expenses like education and cars were always saved for and paid for in cash; no credit card debt.
In 2014, we purchased a home for $223000. We opted for a 15 year fixed @ 3.25% on a $178,400 loan. No points, no PMI, just a straightforward 15. We set up direct deposit into a separate checking account dedicated to mortgage payments, where biweekly payments are automatically withdrawn (equating to one extra monthly payment per year).
Fast forward 2.5 years later. We now have a $150k loan balance remaining.
With no other debt, we've been able to save quite a bit as well. Quite a bit of cash has accumulated in our bank accounts. As many of you may know, it's not doing much for me sitting there earning 0.01% interest from the bank (that's all the love they can show us for making X% on the loans they fund with it?). I don't like it. I'm getting antsy.
Modern wisdom says that with such a low mortgage interest rate, I'd be better off investing the cash elsewhere. I've dabbled in stocks in the past with moderate success, but I have a hard time stomaching the ups and downs of the market. I can't keep my eyes off of it, I worry, I spend too much time on it. I just don't have the mindset for it.
I realize the investor's world is huge, but am pretty unfamiliar with most of it.
Given my long winded story, I'm thinking about pulling the trigger on taking some of the idle savings and using it to pay down the mortgage. $50k now, and then increasing the automatic payments nearly $300 dollars to pay off the house in 4-5 years before my kids start school. Essentially earning a tax-free 3.25% on the extra payments, this will save me $18000 in interest vs sticking with only the biweekly payments over 13.6 years, and save $23000 vs making the standard minimum monthly payments over 15 years.
Over the course of years, I think that's kind of insignificant and I can't help but think I could do better investing. However, imagining the financial freedom and cash flow of not having a house payment is intoxicating to me. It's almost difficult to grasp.
So... have any of you paid off your mortgage early? If so, was there ever any doubt as to if it was the right decision or not? How did you do it? Any benefits you didn't realize until it was done? Any other insight?
