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pay off mortgage or invest?

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aliwnec10
mom of 3 boys

Member since 4/06

11385 total posts

Name:
Ali

pay off mortgage or invest?

If you were given a lump sum of money that could pay off your mortgage, would you do that or invest it?

We're exploring all options right now and might talk to a financial advisor, but i'm curious what other people think.

Do we pay off the mortgage and be done with it? Do we put half towards mortgage, refinance and invest the other half?
Investing all of it makes me nervous.

I know you could earn more back on investing it but also being done with our mortgage sounds amazing to me too!

Posted 2/12/21 11:58 AM
 
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LSP2005
Bunny kisses are so cute!

Member since 5/05

19152 total posts

Name:
L

Re: pay off mortgage or invest?

What is your current rate? I would invest it in a broad market sp500 index fund. Vtsax and chill.

Posted 2/12/21 12:10 PM
 

aliwnec10
mom of 3 boys

Member since 4/06

11385 total posts

Name:
Ali

Re: pay off mortgage or invest?

Posted by LSP2005

What is your current rate? I would invest it in a broad market sp500 index fund. Vtsax and chill.



4.25%

Posted 2/12/21 12:14 PM
 

CookiePuss
Cake from Outer Space!

Member since 5/05

13524 total posts

Name:

Re: pay off mortgage or invest?

It would depend on my mortgage rate. I might split it and accelerate my mortgage and keep some of the lump sum liquid.

Posted 2/12/21 12:25 PM
 

CookiePuss
Cake from Outer Space!

Member since 5/05

13524 total posts

Name:

Re: pay off mortgage or invest?

There are so many variables too. What is the time frame for this money? How comfortable are you will investing and watching it move up and down?

Posted 2/12/21 12:26 PM
 

LittleDiva
LIF Adult

Member since 9/11

1072 total posts

Name:

pay off mortgage or invest?

Personally, I’d pay off the mortgage. It would free up a large monthly payment that would allow us to save and do things like travel more. But I also have 20+ years left on my mortgage, if you have less than 10 I dunno if I would pay off the mortgage since you are almost done.

Posted 2/12/21 12:26 PM
 

aliwnec10
mom of 3 boys

Member since 4/06

11385 total posts

Name:
Ali

Re: pay off mortgage or invest?

Posted by LittleDiva

Personally, I’d pay off the mortgage. It would free up a large monthly payment that would allow us to save and do things like travel more. But I also have 20+ years left on my mortgage, if you have less than 10 I dunno if I would pay off the mortgage since you are almost done.



We have a jumbo loan and we have 20+ years left.

Posted 2/12/21 12:29 PM
 

SLPRunner
LIF Adult

Member since 12/13

1071 total posts

Name:

pay off mortgage or invest?

Invest. You’ll do better long term in the market. We recently went through a similar decision making process. But depends on your long term financial goals.

Posted 2/12/21 1:07 PM
 

LittleDiva
LIF Adult

Member since 9/11

1072 total posts

Name:

Re: pay off mortgage or invest?

Posted by aliwnec10

Posted by LittleDiva

Personally, I’d pay off the mortgage. It would free up a large monthly payment that would allow us to save and do things like travel more. But I also have 20+ years left on my mortgage, if you have less than 10 I dunno if I would pay off the mortgage since you are almost done.



We have a jumbo loan and we have 20+ years left.



Just looking at your photo, with three kids i would pay it off. 20 years of freeing up that money. Save some to invest later and enjoy your family and make memories.

The market (and the future) is so uncertain right now. I’d save to invest at a later time. But I’m also not a risk taker when it comes to money.

Posted 2/12/21 1:30 PM
 

Mrs213
Biden 2020

Member since 2/09

18492 total posts

Name:

pay off mortgage or invest?

Pay off mortgage. It will save you a ton on interest in the long run and free up your money to invest or do other things

Posted 2/12/21 2:56 PM
 

nycbuslady
LIF Adolescent

Member since 9/15

776 total posts

Name:

pay off mortgage or invest?

Personally, I would want to pay off the mortgage. There's just a good feeling to getting rid of your largest bill, IMO. Then, you can invest what you would have used to pay your monthly mortgage. But, it's a personal decision that depends on so many other factors. Good luck!

Posted 2/12/21 3:09 PM
 

LSP2005
Bunny kisses are so cute!

Member since 5/05

19152 total posts

Name:
L

Re: pay off mortgage or invest?

I would refinance the mortgage into a fifteen or twenty year mortgage with a lower interest rate. At your rate, you will be able to get a lower term and lower payment. Then I would invest the rest.

Posted 2/12/21 5:47 PM
 

MK2010x2
LIF Infant

Member since 8/17

106 total posts

Name:

Re: pay off mortgage or invest?

Posted by LSP2005

I would refinance the mortgage into a fifteen or twenty year mortgage with a lower interest rate. At your rate, you will be able to get a lower term and lower payment. Then I would invest the rest.



This. You can do much better on your rate now.

Do you take the standard deduction on your taxes? If you itemize, might make sense to hold onto the mortgage - especially if we luck out and they get rid of SALT.

Posted 2/12/21 5:52 PM
 

MyBabyG
LIF Adolescent

Member since 1/15

666 total posts

Name:

pay off mortgage or invest?

I would most definitely pay off my mortgage

Posted 2/12/21 5:58 PM
 

Dreamer27
LIF Zygote

Member since 6/18

32 total posts

Name:

Re: pay off mortgage or invest?

I’d throw at least half of it to a principle mortgage payment if it doesn’t make sense to refinance to a lower rate/shorter term. Paying off your mortgage altogether might cause you to boomerang and overspend month to month on other things. Assuming you don’t have student loans or credit card debt, my next priority would be max contributions to college savings accounts for the kids. Doing it now gives it much more time to grow before they need it.

Posted 2/12/21 6:02 PM
 

Lucky09
2017!

Member since 1/06

7458 total posts

Name:
DW

pay off mortgage or invest?

Invest. Two words: compounding interest ... On that large sum of $$ you would miss out on that by paying off your mortgage. I would see if refinancing makes sense as someone noted above.

I wanted to add that most interest in a typical mortgage is front loaded. So you pay more in interest at the beginning of the loan than the end. I’m not sure how long you have been paying but it might make sense to calculate how much you would pay in interest on your mortgage for the next x years vs how much you would expect the $$ to grow in a typical index or otherwise safe fund over the same period.

Good luck and I’m jealous of people with decisions like these to make! Chat Icon

Message edited 2/12/2021 7:32:08 PM.

Posted 2/12/21 7:24 PM
 

PhyllisNJoe
My Box Is Broken

Member since 6/11

8736 total posts

Name:
Phyllis

Re: pay off mortgage or invest?

I would start researching what’s the best option. For us, we refi our 30 yr w 21 yrs left to a 15 yr at a point less and it’s saving us $108,000 in the end. So if you look at what you would be Investing in , what your return “should” look like vs what you’d be saving from not paying that mortgage interest for the next 20 years

It may be a good idea to involve a financial advisor to help run some numbers.

Posted 2/12/21 7:39 PM
 

LSP2005
Bunny kisses are so cute!

Member since 5/05

19152 total posts

Name:
L

Re: pay off mortgage or invest?

Regardless of paying off the mortgage, I would refinance. Then maybe wait and sit on the cash for a few months and not make big purchases. I do think the market is frothy now, but ai would still over all invest. Do you have an emergency fund?

Posted 2/12/21 10:33 PM
 

queensgal
Smile

Member since 4/09

3287 total posts

Name:

Re: pay off mortgage or invest?

This really depends on your overall financial situation.

You should absolutely refinance. You could go down to a 15 or 10 yr at a lower rate.

A professional financial advisor would tell you to invest.

Make sure you are reserving taxes for whatever you will owe. You don’t want to get hit with a huge bill after paying off a mortgage and not having that liquidity.

Posted 2/13/21 12:19 PM
 

hmm
November Girl

Member since 1/14

7568 total posts

Name:

pay off mortgage or invest?

maybe refinance, then put some towards the principle on your mortgage. this will help with monthly payments, and invest some

Posted 2/14/21 12:04 AM
 

Rosie0613
LIF Adolescent

Member since 8/10

874 total posts

Name:
Rosie

Re: pay off mortgage or invest?

Not sure if it an option with your mortgage but we took a substantial lump and did a "recast". Essentially, the mortgage co took that lump sum payment and recalculated the monthly payment based on our balance over the remainder of our loan. So our monthly payment went from $3.400 to $1,500. We are taking a portion of that savings to invest and the remainder to help pay some other bills.

Posted 2/14/21 3:02 AM
 

LInMI
LIF Adult

Member since 7/10

1762 total posts

Name:

Re: pay off mortgage or invest?

I would def speak to an advisor. Real Estate on LI has been going up quicker than the market, so you may want to pay off your mortgage. But keep in mind you won't have much to write off during tax season, so you may want a small mortgage and invest the rest.

Posted 2/14/21 2:47 PM
 

Hofstra26
Love to Bake!

Member since 7/06

26247 total posts

Name:

Re: pay off mortgage or invest?

I'd absolutely pay off the mortgage, then take the money you'd be paying towards the mortgage and invest it. Win, win.

Posted 2/16/21 8:21 PM
 

BaysideForever
LIF Adult

Member since 1/11

9952 total posts

Name:

Re: pay off mortgage or invest?

I would pay off the mortgage! It is just such peace of mind, knowing I owned the house and if we lost income etc, at least we still had a house to live in with no one bothering us. Not having those monthly payments, I would start to invest that money slowly instead.

Posted 2/16/21 8:47 PM
 

BaysideForever
LIF Adult

Member since 1/11

9952 total posts

Name:

Re: pay off mortgage or invest?

Posted by Hofstra26

I'd absolutely pay off the mortgage, then take the money you'd be paying towards the mortgage and invest it. Win, win.



just saw this. ITA.

Posted 2/16/21 8:47 PM
 
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