Comments on: How To Pay Off Your Mortgage Early

By: John

John — Wed, 23 Mar 2011 22:09:08 +0000

Paying off the mortgage early is the best thing we ever done. Aside from having extra money to spend or save you don’t have to worry about having a place to live if, heaven forbid, you loose you job. We’ve did it twice already and are working on paying off our retirement home early, hopefully for the last time. If you have a car payment, pay it off early too. Being debt free is a good feeling.

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By: Mortgage | Mozilist

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By: Derek Clark

Derek Clark — Tue, 20 Apr 2010 23:26:28 +0000

That’s awesome Ellen. We are going to be debt free except the mortgage next month, then after the emergency fund we’ll be working hard on the mortgage. We hope to have it paid off before I’m thirty (a little less than 5 years).

By: Ellen

Ellen — Tue, 20 Apr 2010 21:27:15 +0000

We are currently on baby step six. We bought our first house in June 2009 and are working feverishly to pay it off by December 2012. We are currently 29 years old. Our dream is for me to be able to stay home with our (future) children. The only way that we could figure out for that to happen AND be able ot save an appropriate amount for retirement was to get rid of the mortgage. We will be paying about $7,000 in interest on our mortgage, as opposed to $70K in interest if we kept it for all 30 years.

Getting rid of our mortgage will net us $450 each month after it is paid off, and that will all go towards our Roth IRAs.

Great post, as usual!

By: Derek Clark

Derek Clark — Tue, 20 Apr 2010 17:38:22 +0000

@Diane
Thanks so much for the comment. I have looked at the other side and I definitely go back and forth sometimes. I do plan on putting some money away towards retirement, but I think the majority is going to go to the mortgage.

3 reasons.
1. Paying off the mortgage means significantly less expenses each month. This means that it would take less money to retire. I don’t plan on waiting until I’m 60, and the lower our expenses are the less money I’ll need to retire.

2. If I pay off the mortgage I have about 1k a month, or 12k a year extra that could fund retirement. If you start 5 years later, but put 12k instead of 1k, I’m pretty sure you come out ahead by waiting.

3. Peace of mind. I want to have as few obligations as possible. If you have the house paid off it isn’t going to get foreclosed if you lose a job or have some big medical expenses. Having a place to live with no payments means much less stress.

By: Diane

Diane — Tue, 20 Apr 2010 04:41:32 +0000

Hi Derek,
I followed the link from ERE. You handled Dee’s comment beautifully. I was momentarily tempted to follow her link to see what kind of site it really was…thanks for saving me the trouble.
I’d say that I had the same mind set as you when I was 25. I had more than a year’s salary in the bank. I didn’t start a 401k or Roth because I knew I was going to use the money for a down payment. Fast forward (more years than I care to say). I’m on my fourth house and have over 50% equity in my home and close to that on a rental. HOWEVER, now that I am older and saving like mad for retirement, I regret the lost years of compounding opportunity. I wish I had put more of that money into retirement savings when I was as young as you are.

Oops! This next part is going to be long, but hopefully worth it.

Two very important things I wish I’d known then: First, (I’m paraphrasing and run-on here, but please bear with me.) if a 20- something person saves 1K/year for each of 10 years in a tax protected account and leaves it to compound until age 65, he/she will have more money in the end than a person who waits for ten years (until they’re 30-something) and puts 1K a year away in the same type account EVERY SINGLE YEAR until they turn 65!!!! Compound interest is a wonderful thing. Just ask Einstein.
Next, before you prepay a penny, read and understand Ric Edelman’s fine discourse on why and how a big, long mortgage can not only be an excellent investment tool, it can save your hide if/when you hit one of life’s rough patches. You can find it on his web site or read the first chapter of “Ordinary People, Extraordinary Wealth”. You are free to handle your mortgage any way you wish (I love this country!), but do yourself a favor and study both sides of the coin before you call the toss. That way, you’ll have nothing to regret later.

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Mon, 19 Apr 2010 18:58:16 +0000

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