Paying off your house

[dr.girlfriend]

Jan 6, 2023 22:47:38 GMT -5 Pom said:

It would be tough for me to do with a low interest rate. I do get all the emotions of the decision.

We ended up with the decision being somewhat removed due to a move/career change/found perfect retirement home in dream location and therefore ended up with a cash purchased house. We have no regrets because our retirement funds are solid, I have a lifelong pension-like income and therefore it worked out.

It sounds like you have decided on a good solution.

Eta: I meant to add we definitely consider ourselves coast FIREd. Having no mortgage makes this so much more comfortable.

I know what FIRE is but what is coast FIRE?  Googling just gets me random headlines of people on a coast getting fired.  :-)

[tacokick]

Jan 6, 2023 23:32:42 GMT -5 dr.girlfriend said:

Jan 6, 2023 22:47:38 GMT -5 Pom said:

It would be tough for me to do with a low interest rate. I do get all the emotions of the decision.

We ended up with the decision being somewhat removed due to a move/career change/found perfect retirement home in dream location and therefore ended up with a cash purchased house. We have no regrets because our retirement funds are solid, I have a lifelong pension-like income and therefore it worked out.

It sounds like you have decided on a good solution.

Eta: I meant to add we definitely consider ourselves coast FIREd. Having no mortgage makes this so much more comfortable.

I know what FIRE is but what is coast FIRE?  Googling just gets me random headlines of people on a coast getting fired.  :-)

I think Coast FIRE is when you take jobs and maximize income/saving early on when you are young and then take lower paying/more fun/more flexible jobs as you “coast” to retirement because you are already set for retirement from that early income/have passive income coming in.

ETA clarity

[Pom]

Jan 6, 2023 23:32:42 GMT -5 dr.girlfriend said:

Jan 6, 2023 22:47:38 GMT -5 Pom said:

It would be tough for me to do with a low interest rate. I do get all the emotions of the decision.

We ended up with the decision being somewhat removed due to a move/career change/found perfect retirement home in dream location and therefore ended up with a cash purchased house. We have no regrets because our retirement funds are solid, I have a lifelong pension-like income and therefore it worked out.

It sounds like you have decided on a good solution.

Eta: I meant to add we definitely consider ourselves coast FIREd. Having no mortgage makes this so much more comfortable.

I know what FIRE is but what is coast FIRE?  Googling just gets me random headlines of people on a coast getting fired.  :-)

It’s basically front loading your retirement. For instance, either investing early or a high paying job allows for maxing out retirement funds to the point that you reach a level that even with a downshift in earnings (in our case, H is at about a third of his old career earnings but a decent insurance plan) but enough sitting in retirement funds that will, with ROI, allow for retirement at a desired early but maybe not super early age like regular FIRE. We wanted to downshift and move somewhere we wanted to live heading in to retirement. I am already retired and H considers himself downshifted for sure. You no longer need to save aggressively to retire. Fav simple calculator: walletburst.com/tools/coast-fire-calc/

[cricketwife]

We paid our mortgage off on our first house and it was AMAZING. We are not high earners and we stayed in a very small home for a lot of years because we loved not having a mortgage. H lost his job once during that time and it was so, so, comforting to know we didn’t have a mortgage and we weren’t going to lose our house. (We also had savings but it still felt good.) Then the pandemic came and we both had jobs that were very uncertain to withstand the pandemic economy. We were fortunate in that we never lost our jobs, but in such a crazy and uncertain time, the peace of mind of not having a mortgage was priceless. We moved a year ago to a larger, more expensive home. We have a mortgage, but the plan is to have it paid off in the next two years or so. Our mortgage is 2.75%, I think.

I totally acknowledge that it’s not considered the best financial decision, but I believe that money should serve us. If paying off your mortgage brings you (or your H) the most peace of mind, then that’s money well spent. If keeping your mortgage and knowing that you can earn 1% more in a CD gives you that peace of mind, then do that. I can think of at least one other financial decision that we’ve made where peace of mind trumps the “smart” financial decision.

It sounds like you understand it’s that this is an emotional decision, not a financial one. If you have enough money to make it work, and it brings peace of mind to a spouse who has suffered brain injuries, it’s a solid decision, IMO. I mean, we spend money on all sorts of things that simply bring us pleasure, joy, make us feel good, why not this? And truly, being mortgage free is so, so freeing! It is just somehow different than having the equivalent amount of cash to your remaining mortgage balance sitting in another account.

[Deleted]

We paid off our house the same week covid shut everything down. We refinanced a rental property and took the equity from it to do it. Was it the best financial decision from an interest and whatever perspective? Maybe not. But it affords us a ton of flexibility. Between that and my DH retiring out of the military 9 months after that we have a ton of flexibility in our lives as far as jobs and how long we have to work and such. It’s been amazing and the psychological impact is huge. The knowing that if the economy drops out from under us that we will totally be fine, the knowing we don’t necessarily *have* to work (but that’s because of military healthcare and retirement benefits also). I don’t know I think it’s worth it. But, it sounds like you would have to sacrifice in several ways to do it the way your DH wants you to. Since we did it with a lump sum in the refinance of our rental it didn’t require any sacrifice on our parts and we only reaped major benefits from it. Maybe it doesn’t make sense for you.

[larzhope]

we have 3 homes (1 primary, 1 rental and 1 vacation) and no mortgage. we aren't mortgage averse, but we are debt averse and the emotional component is huge for us. my husband more so than me really wanted to pay off the mortgages as quickly as possible. assuming we don't move and upsize again (which, no guarantees), we will have 20 solid years of working before retirement w/ no mortgage payment which means lots of time to invest in the stock market. My husband makes quite a bit more than me and his concern was if something happened to his job he didn't want us to feel stretched on my income alone. Honestly we have enough discretionary income that it didn't take a ton of sacrifice for us to do this (I cringed writing that - I recognize how privileged we are). if we had to cut back in some areas he may have been singing a different tune. I do agree with others that the peace of mind that comes from having that asset w/ no debt is huge.

[traveltheworld]

We live in a HCOL, both work in finance and had a very low interest rate on our mortgage; so from a financial perspective, we both well understood that paying off our mortgage wasn't the most logical decision. But we did it and the emotional benefit of that has been HUGE. I also grew up very poor, so the insecurity definitely played into it. My DH fully supported my decision. We've also been very disciplined and have not changed our lifestyle; so we've been just putting all that extra $ into the market. Given where the market is right now, slow and steady deployment of capital is what we otherwise would do anyway.

[themoneytree]

My ex husband and I didn’t have a mortgage on our last two homes and I didn’t have a mortgage on my post divorce home (which I still own and now rent out).
I love not having a mortgage and find it very freeing.

My new husband and I bought a home together and have a mortgage on it at 2.9%.
I want to pay it off because I felt so much more secure owning homes free and clear.

We discussed this last week and have decided that we are going to aggressively save in a joint savings account that is only for the house. The interest rate is higher than the mortgage so the plan is to dump any extra money into this account as often as possible. We have a large mortgage so this will take time, but I really like knowing that we are working towards it and will have money there to pay the mortgage down if we choose too.
For us this was a good compromise in keeping our great interest rate and also satisfying my desire to be totally debt free.

[jobae1234]

Semi update: We met with our financial planner and laid it all out. They’re putting together a plan for us. We meet soon. One idea that was kicked around was aggressively saving in a 4% interest savings account (with Morgan Stanley) so it can earn interest, and if we ever need to pay the house off the money is there.

We also discussed accelerated retirement savings and other hybrid options. I can’t wait to see what they say!