Anyone regret paying off mortgage early?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
HootingSloth
Posts: 1050
Joined: Mon Jan 28, 2019 2:38 pm

Re: Anyone regret paying off mortgage early?

Post by HootingSloth »

Walkure wrote: Tue May 17, 2022 10:46 am
Admiral wrote: Mon May 16, 2022 11:10 am
Apathizer wrote: Mon May 16, 2022 9:02 am
Tom_T wrote: Mon May 16, 2022 8:52 am
59Gibson wrote: Mon May 16, 2022 7:45 am

Haha..BH Executive Summaries should be a thing w/ threads over a few pages
Here's the summary: Some people don't regret paying off the mortgage early; one person said he does; others who haven't paid it off said they don't plan to do so early. There you are!
Since only one says they regret it, I think it's fair to say most don't. Whether paying it off early makes sense depends on a number of complex, highly variable, and oft unpredictable factors.
That's what's known as selection bias. Regret is an emotion or a psychological condition that most people attempt to avoid, and therefore are not going to report it (even if true).

What's relevant for this thread is what is financially optimal, not what causes the least amount of regret.
No, what's relevant for the thread is whether anyone regrets doing something which, in hindsight, was demonstrably suboptimal. Whether the apparent absence of such regret (possibly due, as you noted, to selection bias) is relevant for anyone facing a similar decision going forward is anyone's guess.
If you specifically frame the question this way, it makes me wonder whether anyone regrets, in hindsight, having a portfolio that underperformed the 200% Monster portfolio
Global Market Portfolio + modest tilt towards volatility (80/20->60/40 as approach FI) + modest tilt away from exchange rate risk (80% global+20% U.S. stocks; currency-hedge bonds) + tax optimization
Admiral
Posts: 5039
Joined: Mon Oct 27, 2014 12:35 pm

Re: Anyone regret paying off mortgage early?

Post by Admiral »

Walkure wrote: Tue May 17, 2022 10:46 am
Admiral wrote: Mon May 16, 2022 11:10 am
Apathizer wrote: Mon May 16, 2022 9:02 am
Tom_T wrote: Mon May 16, 2022 8:52 am
59Gibson wrote: Mon May 16, 2022 7:45 am

Haha..BH Executive Summaries should be a thing w/ threads over a few pages
Here's the summary: Some people don't regret paying off the mortgage early; one person said he does; others who haven't paid it off said they don't plan to do so early. There you are!
Since only one says they regret it, I think it's fair to say most don't. Whether paying it off early makes sense depends on a number of complex, highly variable, and oft unpredictable factors.
That's what's known as selection bias. Regret is an emotion or a psychological condition that most people attempt to avoid, and therefore are not going to report it (even if true).

What's relevant for this thread is what is financially optimal, not what causes the least amount of regret.
No, what's relevant for the thread is whether anyone regrets doing something which, in hindsight, was demonstrably suboptimal. Whether the apparent absence of such regret (possibly due, as you noted, to selection bias) is relevant for anyone facing a similar decision going forward is anyone's guess.
Really? I regret buying $100k of TSM instead of $100k of Amazon in 2004, Apple in 2011, Tesla in... pick a year. Clearly those were demonstrably suboptimal decisions from a financial perspective.

Some people want nothing more than to be debt free and will make any choice--even a suboptimal choice, at least financially--to get there. Others, well, we don't sweat debt. Clearly there are those who are over-leveraged, and that can be disastrous, but for the most part, here in the Bh multiverse, we're speaking of people who have a good handle on their finances, are not over-leveraged, and have a good mathematical and financial grasp of interest rates, arbitrage, risk, and so on.

There's a vocal minority on this thread who states, repeatedly and contrary to years of posts pointing out the opposite, that mortgage debt is somehow, in some way, intrinsically bad, and that anyone who takes on debt to get a home should rent. That's just... not so. In fact, I'd say that in order to save and build retirement wealth--and if we stipulate that time in the market is perhaps the most important step in achieving that goal--the vast majority should get a mortgage that's affordable and that allows them to save in pre-tax. Saving for 10-15-20 years in order to pay cash for a home and not carry a mortgage just because, well, debt is somehow "bad," is financially suboptimal to the nth degree.

If you want to rent, go ahead and rent. But don't attempt to convince me that it's right for everyone because mortgages are evil.
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: Anyone regret paying off mortgage early?

Post by KlangFool »

Admiral wrote: Tue May 17, 2022 2:02 pm
-the vast majority should get a mortgage that's affordable and that allows them to save in pre-tax.
Admiral,

Isn't this the problem? The vast majority get a mortgage that is not affordable. Hence, they saves nothing and live paycheck to paycheck. This happened to many of my income peers. Their annual household income is in the 150K range. But, they bought too much houses and it destroyed them financially.

The irony of the situation is they would not rent too much house. They bought a lot more houses than when they rented. They would have been in a better financial situation by renting.

If someone lives paycheck to paycheck and saves close to nothing after buying the house, do you claim that they are buying an affordable house?

In a country with an average gross saving rate of less than 5%, the majority are buying houses that they cannot afford.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
seekingbenchmark
Posts: 18
Joined: Tue Mar 22, 2022 3:46 pm

Re: Anyone regret paying off mortgage early?

Post by seekingbenchmark »

Instead of prepaying on my mortgage my plan was to continuously add to my after-tax investments until I had enough to pay off my mortgage at once and then make the decision to keep the money as is, adjust AA, or pay off the mortgage with it. If the market went down/stayed down along the way I would simply continue the process. I ended up hitting the number late last year and weighed the decision. I had 25+ years left to pay on it but figured I would either pay it off at that time or in 10 years (target retirement). I don't recall the exact figure but I looked at historical 10 year rolling averages of the market and determined historically there was an ~86% chance that the market would outperform my interest rate over that time but decided the 14% chance of coming out behind was too high for me and paid it off knowing it was mathematically the wrong decision. Regardless of what happens I won't regret the decision I made as I made it with all the information I had available to me at the time. I realized that I don't invest with the goal of getting the highest return, I make investment decisions based on what will give me the best peace of mind. That certainly doesn't mean plainly avoiding risk (I'm 100/0) but rather making the decisions that I'm most comfortable with.
User avatar
darkhorse346
Posts: 235
Joined: Sat Jan 10, 2015 4:53 am

Re: Anyone regret paying off mortgage early?

Post by darkhorse346 »

No regrets. Try it out.

If you don't like being debt free, you can always go borrow more money. :D
aklanche
Posts: 73
Joined: Wed Jul 17, 2019 9:01 pm

Re: Anyone regret paying off mortgage early?

Post by aklanche »

Apathizer wrote: Tue May 17, 2022 10:19 am
aklanche wrote: Tue May 17, 2022 12:40 am
Apathizer wrote: Mon May 16, 2022 8:50 am
aklanche wrote: Sun May 15, 2022 11:43 pm
Apathizer wrote: Sun May 15, 2022 11:30 pm
But you only know that afterwards and it was predetermined. As I mentioned previously, I got lucky selling most of my taxable investments earlier this year to pay off most of my mortgage a few weeks prior to a massive drop. While I knew this could happen I didn't expect it, but just got lucky.

To me investing strategy is about maximizing the likelihood of a positive outcome and minimizing the likelihood of a negative one. Investing with leverage is the antithesis of this. It might work really well if the market skyrockets, but it can be disastrous if it plummets.
From what I read most are not advocating investing the money that they could use to pay off their mortgage completely and putting it into the market. Rather they are parking in low/no risk things like HYSA, TIPS, iBonds and benefiting from the interest difference on what those accounts are making in interest vs. what one is paying in interest on the mortgage. These are KNOWN returns just like the known return of paying off the mortgage. This isn't like investing in the market for unknown returns.

For myself I am earning $12K a annually in interest from using such accounts while only paying $6K annual in interest on my mortgage. Why would I want to pull the money out and lock it up in my house right now? If things change and the rates fall to where I can't make the same as what I pay in the mortgage each month sure then its time to reconsider but why be in a rush to pay it off other than "it just feels good", which I get for some it does and thats important. For me I like knowing I have half a decade of total life expenses (including the mortgage) in no/low risk accounts earning more than what my mortgage is costing me. And should I lose my employment I don't have to go tapping my taxable account in a down market for a long time either. A mortgage makes up a small portion of our monthly budget so using all the funds to just pay off one line item doesn't make sense. Even if I was making the same amount of interest from the money as what I was paying on my mortgage (after taxes of course) I wouldn't put that money into the house to never be used again unless I HELOC at an even higher rate or sell.
So you don't know if you'll ever sell? That's the only practical financial reason to buy a house in the first place. If you never sell, you might as well save yourself the trouble of homeownership and just rent. If you do intend to sell, paying off the mortgage sooner means you reap more proceeds upon sale.

You're also forgetting about potential home deprecation. I don't know if this will happen, but it can, and paying interesting on a depreciating asset is double jeopardy.
I will likely sell my home at some point sure, but I'm not sure how that factors into why or why not I should take the money I have to payoff the balance of my loan that is currently making me an average of 5.3% and use that to payoff my mortgage at 2.75%?
What exactly are you investing in that is and will continue to generate those returns? Global stocks and bonds are all down over that past few months, so I'm curious. Is that net interest you're paying on the loan? How do you know this will continue?
I put in bold above what I stated before where I have my money that I could use to pay off my mortgage but instead choose to leave in those locations. As I stated before I am fairly conservative with this money as I always like to have the option to pay off the mortgage should things change going forward and they will one way or another. However, with rate hikes coming from the fed continuing to find more and more HYSAs to use to earn more in interest than I'm paying on my mortgage will continue to only get easier....atleast for a while. Will that continue for the next 14.5 years I have my mortgage, I'll adjust accordingly going forward. That said as the balance of my mortgage drop I take that equal amount and invest it into equities just to keep the balance of what is invested in these low risk (potential lower reward but have been paying much better than the market as a whole this year as you have noted) equal to what my mortgage balance is.
Last edited by aklanche on Tue May 17, 2022 11:12 pm, edited 1 time in total.
aklanche
Posts: 73
Joined: Wed Jul 17, 2019 9:01 pm

Re: Anyone regret paying off mortgage early?

Post by aklanche »

darkhorse346 wrote: Tue May 17, 2022 8:24 pm No regrets. Try it out.

If you don't like being debt free, you can always go borrow more money. :D
Haha almost did that very thing. Was considering paying off the mortgage outright. Then rates fell out the bottom and I cash out refi'd (each time they paid me a couple thousand to do it as I took a slightly higher interest rate). 18 months and 3 refis later I went from considering paying off my mortgage to doubling my mortgage balance and lowering my interest rate overall by 2% from 4.75% to 2.75% and they paid me extra $8K in the process :)
VeryBlessedCali
Posts: 307
Joined: Fri Aug 07, 2020 1:35 pm

Re: Anyone regret paying off mortgage early?

Post by VeryBlessedCali »

aklanche wrote: Tue May 17, 2022 10:56 pm
darkhorse346 wrote: Tue May 17, 2022 8:24 pm No regrets. Try it out.

If you don't like being debt free, you can always go borrow more money. :D
Haha almost did that very thing. Was considering paying off the mortgage outright. Then rates fell out the bottom and I cash out refi'd (each time they paid me a couple thousand to do it as I took a slightly higher interest rate). 18 months and 3 refis later I went from considering paying off my mortgage to doubling my mortgage balance and lowering my interest rate overall by 2% from 4.75% to 2.75% and they paid me extra $8K in the process :)
That's awesome aklanche. Who is your Lender? I am impressed!

Have a Blessed day.
Apathizer
Posts: 2507
Joined: Sun Sep 26, 2021 2:56 pm

Re: Anyone regret paying off mortgage early?

Post by Apathizer »

darkhorse346 wrote: Tue May 17, 2022 8:24 pm No regrets. Try it out.

If you don't like being debt free, you can always go borrow more money. :D
:D :sharebeer :D

Yeah, that's one of the ways I've arrived that I don't want to be a homeowner. I hate borrowing money and accumulating stuff. Being homeowner means you have to do at least one of the two, and usually both. A house is a consumer product. In other words it's stuff, and it's the kind of stuff that seems to encourage accumulating more stuff.

So as someone who values simplicity and minimalism above all else, homeownership is antithetical to my personality. Having lots of stuff and borrowing money is a physical and psychological burden to me.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
Admiral
Posts: 5039
Joined: Mon Oct 27, 2014 12:35 pm

Re: Anyone regret paying off mortgage early?

Post by Admiral »

Apathizer wrote: Wed May 18, 2022 1:49 am
darkhorse346 wrote: Tue May 17, 2022 8:24 pm No regrets. Try it out.

If you don't like being debt free, you can always go borrow more money. :D
:D :sharebeer :D

Yeah, that's one of the ways I've arrived that I don't want to be a homeowner. I hate borrowing money and accumulating stuff. Being homeowner means you have to do at least one of the two, and usually both. A house is a consumer product. In other words it's stuff, and it's the kind of stuff that seems to encourage accumulating more stuff.

So as someone who values simplicity and minimalism above all else, homeownership is antithetical to my personality. Having lots of stuff and borrowing money is a physical and psychological burden to me.
So, a house/apt you buy is a consumer product, but somehow one that's rented is not? It sits empty except for your bed of nails?

I would make the opposite point: that a purchased property is an investment (that, yes, may be good or bad) that you are motivated/obligated to care for and maintain and hopefully improve, while an apartment is "someone else's problem" that you have no stake in (or even possibility for) improving to raise the quality of life of those around you. You use it for a while and then move on. THAT is the consumer product, not the other way around.

As I recall, you do not have children (right?), who are also fairly efficient at accumulating stuff. Most people who can afford not to don't like to shoehorn a family into a cold-water efficiency apartment.
Tom_T
Posts: 4836
Joined: Wed Aug 29, 2007 2:33 pm

Re: Anyone regret paying off mortgage early?

Post by Tom_T »

So this overlong thread has devolved from "paying mortgage early" to "here are the reasons why I don't want to buy a house." :confused
User avatar
AerialWombat
Posts: 3106
Joined: Tue May 29, 2018 1:07 pm
Location: Cashtown, Cashylvania

Re: Anyone regret paying off mortgage early?

Post by AerialWombat »

The check from selling a rental hasn’t cleared yet, but it probably will by tomorrow. At that point, I will have enough cash in my checking account to pay off my primary residence.

The marsupial of yesteryear likely would have paid off this 2.75% 15-year mortgage. But thanks to Bogleheads, this flying mammal has a new perspective, and knows that Mr. Market is likely to return greater than 2.75% per year, even at said mammal’s conservative 30/70 AA.

While I would love to be free of this monthly expense, I know that paying off the mortgage isn’t mathematically prudent. I appreciate that this lively thread has kept this top of mind for me, and I look forward to making my largest ever investment purchases within the next few days.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
Pitagoras
Posts: 145
Joined: Mon Apr 08, 2019 9:51 am

Re: Anyone regret paying off mortgage early?

Post by Pitagoras »

I think there are three reasons why I DO NOT pay off early my mortgage:

1) Got a 3.5% interest..unless the cash I could have on hand earned "less" than 3.5, it makes no sense in paying it off, purely financial math.
2) Psychological reason 1, in my case a huge driver: the mortgage for me is compulsory saving. I would pay same or more rent for my home than the mortgage + taxes. I am a good handyman and seldom need to pay for maintenance. So the monthly mortgage payment creates equity, rent does not.
3) Psychological reason 2: it feels just better to "own" my own home, it motivates me to keep it in top shape, I do not have to spend time negotiating things with a landlord, I can do what I want, etc etc etc. Peace of mind.

For me it is a no brainer. But that's me...

edit ps: guess I mixed up renting vs owning vs paying off. Anyway, I do not have the money to pay it off, and if I would, I would not do it based on 1)
Apathizer
Posts: 2507
Joined: Sun Sep 26, 2021 2:56 pm

Re: Anyone regret paying off mortgage early?

Post by Apathizer »

Admiral wrote: Wed May 18, 2022 6:18 am
Apathizer wrote: Wed May 18, 2022 1:49 am
darkhorse346 wrote: Tue May 17, 2022 8:24 pm No regrets. Try it out.

If you don't like being debt free, you can always go borrow more money. :D
:D :sharebeer :D

Yeah, that's one of the ways I've arrived that I don't want to be a homeowner. I hate borrowing money and accumulating stuff. Being homeowner means you have to do at least one of the two, and usually both. A house is a consumer product. In other words it's stuff, and it's the kind of stuff that seems to encourage accumulating more stuff.

So as someone who values simplicity and minimalism above all else, homeownership is antithetical to my personality. Having lots of stuff and borrowing money is a physical and psychological burden to me.
So, a house/apt you buy is a consumer product, but somehow one that's rented is not? It sits empty except for your bed of nails?

I would make the opposite point: that a purchased property is an investment (that, yes, may be good or bad) that you are motivated/obligated to care for and maintain and hopefully improve, while an apartment is "someone else's problem" that you have no stake in (or even possibility for) improving to raise the quality of life of those around you. You use it for a while and then move on. THAT is the consumer product, not the other way around.

As I recall, you do not have children (right?), who are also fairly efficient at accumulating stuff. Most people who can afford not to don't like to shoehorn a family into a cold-water efficiency apartment.
There's a difference between a consumer product you buy and one you rent. I actually like that I don't have an investment stake in a rental, so don't take it nearly so seriously as many homeowners seem to. I like not having maintenance and not worrying about property values unlike so many douche-bag homeowners who oft resist socially beneficial projects like homeless shelters, treatment centers, and public transit for fear they might adversely affect their property values.
https://www.vox.com/the-goods/22597947/ ... sing-local
Last edited by Apathizer on Wed May 18, 2022 12:11 pm, edited 2 times in total.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
nigel_ht
Posts: 4742
Joined: Tue Jan 01, 2019 9:14 am

Re: Anyone regret paying off mortgage early?

Post by nigel_ht »

Apathizer wrote: Mon May 16, 2022 7:42 pm
nigel_ht wrote: Mon May 16, 2022 1:40 pm
Apathizer wrote: Sat May 14, 2022 12:51 pm
queso wrote: Sat May 14, 2022 12:43 pmI'm prob an outlier, but am holding a 15 year mortgage at 2% and a 3 year auto loan at 2.1%. We're usually cash people, but for me it came down to the rate. I just wasn't willing to part with cash when they were offering 2% rates.
The mortgage I understand, but not the car. A house is much more likely to appreciate while in the long-term a car invariably depreciates. Holding a loan on a depreciating asset doesn't make sense.
At a low enough interest rate you can make money on a car loan. At 0% it's a no brainer. 2.1% it is still a no brainer if I can buy an iBond with the difference...9.62%...
Do you really make any money on a car loan considering the massive depreciation of the car itself? That seems really dubious to me and what is the duration of the I bond with a 9.62% return? If it's 10+ years or something that's an awfully long time to tie up money, and I doubt it will entirely compensate for the car depreciation.
The fact that its depreciating is immaterial if I've already decided to buy the car.

The difference is if the cash is coming out of my bank account all at once or if I'm getting a nice interest rate on a loan because they want to sell me a car that allows me some amount of arbitrage on the cash.
freckles01
Posts: 314
Joined: Sun Aug 10, 2008 4:43 pm

Re: Anyone regret paying off mortgage early?

Post by freckles01 »

I still have a balance on my mortgage- 15 year term to end in 6 years.

I have a separate taxable account for my home and at this point in time, I do kind of regret not taking some off the top and paying it all or part of the balance off... but hindsight, right?

I was waiting for it to hit a certain number before taking some gains, the balance got very close to reaching it but then 2022 happened and it started to slide down.

Luckily, the mortgage payment is still affordable and no matter, I will pay off any remaining balance when I choose to RE.
slalom
Posts: 343
Joined: Mon Dec 25, 2017 3:59 am

Re: Anyone regret paying off mortgage early?

Post by slalom »

I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
Hyperchicken
Posts: 2006
Joined: Mon Mar 02, 2020 4:33 pm

Re: Anyone regret paying off mortgage early?

Post by Hyperchicken »

slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
So, give away money now, so that you don't have to give away this money later?
Apathizer
Posts: 2507
Joined: Sun Sep 26, 2021 2:56 pm

Re: Anyone regret paying off mortgage early?

Post by Apathizer »

Hyperchicken wrote: Wed May 18, 2022 1:56 pm
slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
So, give away money now, so that you don't have to give away this money later?
No, it's risk and expense reduction. A paid off mortgage reduces monthly expenses and the likelihood of repossession. If slalom loses their job, thus reducing their income, they'll more likely be able to pay essential expenses without a mortgage.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
Admiral
Posts: 5039
Joined: Mon Oct 27, 2014 12:35 pm

Re: Anyone regret paying off mortgage early?

Post by Admiral »

Apathizer wrote: Wed May 18, 2022 2:46 pm
Hyperchicken wrote: Wed May 18, 2022 1:56 pm
slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
So, give away money now, so that you don't have to give away this money later?
No, it's risk and expense reduction. A paid off mortgage reduces monthly expenses and the likelihood of repossession. If slalom loses their job, thus reducing their income, they'll more likely be able to pay essential expenses without a mortgage.
So, again, in the anti-debt Bizarro world, the money only works one way: when it's applied to a mortgage pre-payment, but not later, to pay expenses (including the mortgage). A severe job loss is a possibility, but it's not a certainty. If this poster is that worried about a job loss, they should use the pre-payment money to build up a large emergency fund.
nolesrule
Posts: 2631
Joined: Thu Feb 26, 2015 9:59 am

Re: Anyone regret paying off mortgage early?

Post by nolesrule »

Apathizer wrote: Wed May 18, 2022 2:46 pm
Hyperchicken wrote: Wed May 18, 2022 1:56 pm
slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
So, give away money now, so that you don't have to give away this money later?
No, it's risk and expense reduction. A paid off mortgage reduces monthly expenses and the likelihood of repossession. If slalom loses their job, thus reducing their income, they'll more likely be able to pay essential expenses without a mortgage.
So, what happened to the money in the scenario where it wasn't used to pay off the mortgage? It didn't just disappear, did it?
User avatar
corn18
Posts: 2867
Joined: Fri May 22, 2015 6:24 am

Re: Anyone regret paying off mortgage early?

Post by corn18 »

nolesrule wrote: Wed May 18, 2022 3:03 pm
Apathizer wrote: Wed May 18, 2022 2:46 pm
Hyperchicken wrote: Wed May 18, 2022 1:56 pm
slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
So, give away money now, so that you don't have to give away this money later?
No, it's risk and expense reduction. A paid off mortgage reduces monthly expenses and the likelihood of repossession. If slalom loses their job, thus reducing their income, they'll more likely be able to pay essential expenses without a mortgage.
So, what happened to the money in the scenario where it wasn't used to pay off the mortgage? It didn't just disappear, did it?
They must have bought a Ferrari because the can't use it to pay the mortgage while looking for another job.
Consistently sets low goals and fails to achieve them.
bmelikia
Posts: 842
Joined: Mon Jun 15, 2009 9:23 pm

Re: Anyone regret paying off mortgage early?

Post by bmelikia »

Hyperchicken wrote: Wed May 18, 2022 1:56 pm
slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
So, give away money now, so that you don't have to give away this money later?
Well. . .and also don't pay the interest that you would have had to pay by paying later. . .
"I would rather die with money, than live without it...." - Bogleheads member Ron | | A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
NiceUnparticularMan
Posts: 6103
Joined: Sat Mar 11, 2017 6:51 am

Re: Anyone regret paying off mortgage early?

Post by NiceUnparticularMan »

Apathizer wrote: Wed May 18, 2022 2:46 pm A paid off mortgage reduces monthly expenses and the likelihood of repossession. If slalom loses their job, thus reducing their income, they'll more likely be able to pay essential expenses without a mortgage.
This, once again, makes no sense.

We've been through this math many times, but in simple form:

A person has a job providing $X in monthly income post-tax. They have $X in monthly expenses, of which $0.3X is mortgage payments on a 30-year 3% mortgage, and $0.7X is other expenses. They have $90X in savings, which is just enough to pay off their mortgage.

In scenario A, they don't pay off their mortgage and then lose their job.

In scenario B, they do pay off their mortgage and then lose their job.

In scenario A, they only have $0.7X in expenses. Yay, right? Well, except they now have no job income and no savings and so no way to pay those expenses. Oops.

In scenario B, they still have the full $X in expenses. Yikes, right? Well, except they have $90X in savings, which will cover them for about 7.5 years.

I sincerely do not understand why people keep asserting the exact opposite of the truth. Locking up that much savings in only paying for your mortgage for 30 years means you have less in savings you could use for other expenses in an income crisis.
dred pirate
Posts: 667
Joined: Tue Nov 27, 2018 10:46 am

Re: Anyone regret paying off mortgage early?

Post by dred pirate »

slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
I think the second line is more relevant. I would also add, not having debt make it a lot easier psychologically to leave a bad job for one that is lower paying. I had 130k in student loans at 1.7% interest. It made much more sense to not pay more than the minimum, but it felt like handcuffs, so I got aggressive and paid it all off 10 years early. I don't regret it at all. Gave me a sense of relief as I am more likely to tell my job to "shove it" if I want to take something else, even if it doesn't pay as much.
drk
Posts: 3943
Joined: Mon Jul 24, 2017 10:33 pm

Re: Anyone regret paying off mortgage early?

Post by drk »

dred pirate wrote: Wed May 18, 2022 4:24 pm I would also add, not having debt make it a lot easier psychologically to leave a bad job for one that is lower paying.
Anecdotally, I found it extremely easy to tell a job to shove it when I had a lot of liquid assets and an affordable mortgage payment, whereas I would have struggled to make the same decision with very little liquid assets and no mortgage payment. So, I would caution against projecting one's own psychological preferences onto others.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
nigel_ht
Posts: 4742
Joined: Tue Jan 01, 2019 9:14 am

Re: Anyone regret paying off mortgage early?

Post by nigel_ht »

NiceUnparticularMan wrote: Wed May 18, 2022 3:40 pm
Apathizer wrote: Wed May 18, 2022 2:46 pm A paid off mortgage reduces monthly expenses and the likelihood of repossession. If slalom loses their job, thus reducing their income, they'll more likely be able to pay essential expenses without a mortgage.
This, once again, makes no sense.

We've been through this math many times, but in simple form:

A person has a job providing $X in monthly income post-tax. They have $X in monthly expenses, of which $0.3X is mortgage payments on a 30-year 3% mortgage, and $0.7X is other expenses. They have $90X in savings, which is just enough to pay off their mortgage.

In scenario A, they don't pay off their mortgage and then lose their job.

In scenario B, they do pay off their mortgage and then lose their job.

In scenario A, they only have $0.7X in expenses. Yay, right? Well, except they now have no job income and no savings and so no way to pay those expenses. Oops.

In scenario B, they still have the full $X in expenses. Yikes, right? Well, except they have $90X in savings, which will cover them for about 7.5 years.

I sincerely do not understand why people keep asserting the exact opposite of the truth. Locking up that much savings in only paying for your mortgage for 30 years means you have less in savings you could use for other expenses in an income crisis.
Well, I assume that folks won’t touch their EF to pay off their mortgage and this also assumes you lose your job right after the mortgage is paid off.

The other question is what is that 90X sitting in and would you be ok with it sitting underwater for longer than you planned. 50% down and it might only be 45X…

I do agree there are many black swan scenarios where keeping liquidity is far better than clearing low interest rate debt…
Apathizer
Posts: 2507
Joined: Sun Sep 26, 2021 2:56 pm

Re: Anyone regret paying off mortgage early?

Post by Apathizer »

dred pirate wrote: Wed May 18, 2022 4:24 pm
slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
I think the second line is more relevant. I would also add, not having debt make it a lot easier psychologically to leave a bad job for one that is lower paying. I had 130k in student loans at 1.7% interest. It made much more sense to not pay more than the minimum, but it felt like handcuffs, so I got aggressive and paid it all off 10 years early. I don't regret it at all. Gave me a sense of relief as I am more likely to tell my job to "shove it" if I want to take something else, even if it doesn't pay as much.
I agree. Significant debt is a major psychological burden to me and many others. Like you I had student loan debt when I was younger, though only about $17K. I paid it off in about 5 yrs rather than 20 with no regrets.

Relatedly I have a friend who borrowed significantly to go back to school in her 40s. She has a professional degree, but still about $200,000 of student loan debt and she's 58.

It's an awful position to be in. Her loans are income based so she has an incentive to work less so she doesn't have to pay as much of the loan back. I think she said the loans are forgiven after 20 years. I hope so but that means she's going to be getting much less social security in retirement.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: Anyone regret paying off mortgage early?

Post by KlangFool »

Apathizer wrote: Wed May 18, 2022 8:46 pm
I agree. Significant debt is a major psychological burden to me and many others.
Apathizer,

Meanwhile, some other folks never have significant debt.

A) Graduated college with 8K of savings.

B) I do not buy a house that I could not pay off the mortgage at any time.

C) Only buy a house when it is significantly cheaper than renting.

Hence, the mortgage is not significant and it is not a burden. To each its own.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
carminered2019
Posts: 1939
Joined: Fri Jun 21, 2019 7:06 pm

Re: Anyone regret paying off mortgage early?

Post by carminered2019 »

KlangFool wrote: Wed May 18, 2022 10:22 pm
Apathizer wrote: Wed May 18, 2022 8:46 pm
I agree. Significant debt is a major psychological burden to me and many others.
Apathizer,

Meanwhile, some other folks never have significant debt.

A) Graduated college with 8K of savings.

B) I do not buy a house that I could not pay off the mortgage at any time.

C) Only buy a house when it is significantly cheaper than renting.

Hence, the mortgage is not significant and it is not a burden. To each its own.

KlangFool
Totally wrong for B & C.
Honu
Posts: 31
Joined: Thu Jul 27, 2017 9:40 pm

Re: Anyone regret paying off mortgage early?

Post by Honu »

NAVigator wrote: Sat Jun 02, 2012 6:58 pm My only regret about paying off my mortgage early was that I didn't do it earlier. :)

Jerry
I wholeheartedly agree!! Instead of two landlords, the bank and the county, I only have one. Sleeping better.
“Today is the tomorrow you worried about yesterday.” Lan Peters
slalom
Posts: 343
Joined: Mon Dec 25, 2017 3:59 am

Re: Anyone regret paying off mortgage early?

Post by slalom »

Admiral wrote: Wed May 18, 2022 2:51 pm
Apathizer wrote: Wed May 18, 2022 2:46 pm
Hyperchicken wrote: Wed May 18, 2022 1:56 pm
slalom wrote: Wed May 18, 2022 1:45 pm I may have already mentioned this in the thread but..

The main reason I am paying off my mortgage early is so that I don't have a mortgage to pay if I am out of a job, or even if I am forced to take a lower paying job.
So, give away money now, so that you don't have to give away this money later?
No, it's risk and expense reduction. A paid off mortgage reduces monthly expenses and the likelihood of repossession. If slalom loses their job, thus reducing their income, they'll more likely be able to pay essential expenses without a mortgage.
So, again, in the anti-debt Bizarro world, the money only works one way: when it's applied to a mortgage pre-payment, but not later, to pay expenses (including the mortgage). A severe job loss is a possibility, but it's not a certainty. If this poster is that worried about a job loss, they should use the pre-payment money to build up a large emergency fund.
What is 'large'? Who can know how long they'll be in a lower paying job or out of a job altogether, especially if one loses their job in their mid-late 50s and is 'unhireable'? (exaggerated of course)

If I save 1 year of expenses, it runs out and I still have no job after a year (this was incredibly common during the >=2008 meltdown, states increasing their unemployment to 99 weeks and beyond), I'm screwed.

Not having the mortgage is forever.

Also, I haven't spent a HUGE chunk on the mortgage, in lieu of savings - I'm also saving, I'm just spending down the mortgage faster than 30 years (down to about 15 years, which is in 3 years)..
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: Anyone regret paying off mortgage early?

Post by KlangFool »

carminered2019 wrote: Wed May 18, 2022 10:28 pm
KlangFool wrote: Wed May 18, 2022 10:22 pm
Apathizer wrote: Wed May 18, 2022 8:46 pm
I agree. Significant debt is a major psychological burden to me and many others.
Apathizer,

Meanwhile, some other folks never have significant debt.

A) Graduated college with 8K of savings.

B) I do not buy a house that I could not pay off the mortgage at any time.

C) Only buy a house when it is significantly cheaper than renting.

Hence, the mortgage is not significant and it is not a burden. To each its own.

KlangFool
Totally wrong for B & C.
This is what I do. So, how could it be totally wrong? You do you. I do what I do. To each its own.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
User avatar
oldcomputerguy
Moderator
Posts: 17932
Joined: Sun Nov 22, 2015 5:50 am
Location: Tennessee

Re: Anyone regret paying off mortgage early?

Post by oldcomputerguy »

This topic has been locked (topic exhausted, turning contentious). See: Locked Topics
Occasionally, even if there are no overt violations of posting policy, a topic (or thread) will reach a point where the information content of the discussion has been essentially exhausted and further replies are much more likely to cause distress to the community than add anything of value.
There is only one success - to be able to spend your life in your own way. (Christopher Morley)
Locked