Stop Investing to Pay Off a 3% Mortgage? Here’s Why.

In this video, we will examine what happens if you invest vs pay more on your mortgage if you only have a 3% mortgage rate. In the original video, we look at if we should pay off mortgage or invest, but took the current mortgage rate of 7.18% at the time. In this video, we flip the idea on it's head, examining the 3% rate.

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#FinancialFreedom #OverpayMortgage

📚 About This Video:
Today, we dive deep into the controversial topic of whether it's more beneficial to Overpay Mortgage or Invest that extra money. You won't believe what the numbers reveal. And no, this isn't some clickbait video that leaves you hanging. I crunched the numbers and broke down the pros and cons of each side, so you can make an informed decision. So let's answer the burning question: "Invest or Pay Off Mortgage: What's REALLY the Best Choice?"

The Chapters
00:00 Stop Investing and Pay off the Mortgage!
00:27 The Great Comment Asking About 3%
01:06 The Original Numbers
01:58 Makes Sense to Invest?
02:20 No, Makes Sense to Overpay Mortgage?
03:06 What About a 3% Mortgage Rate Tho?
04:39 Financial Freedom Thoughts
05:09 You'll Find This Part Funny
05:30 Why I'd Pay off My Mortgage (First Reason)
06:57 Do Whatever the Eff You Wanna Do!
07:26 When you Should NOT Pay off Your Mortgage Early

👇 Links & Resources:

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💬 Let's keep the conversation going! What's your take on this debate? Do you lean more towards overpaying your mortgage, or do you think investing is the better route? Share your thoughts in the comments section below!

*Disclaimer: Bob is not a financial advisor. Please contact a professional financial advisor prior to making any decisions. Some of the links and other products that appear on this video are from companies in which Bob Sharpe earns an affiliate commission or referral bonus. Bob Sharpe is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.

[mycenae]

What you said in the 2nd half of the video is exactly why I paid off my 3.5% mortgage early. It might not "make sense mathematically" to some people, but you can't put a price on freedom. Taking a 20% pay cut and only working 32 hours per week is balanced by not having a mortgage payment. Having a 3 day weekend EVERY WEEKEND is nice. Spending more time with the family, and working around the house on Friday instead of working for someone else on Friday is priceless.

[tranceporter]

Paid off my 2.75% mortgage. My sleep quality has been GLORIOUS

[TheBobbyBrown]

6.5% rate on a 15 yr here- trying to pay off in 5 to 7 years. People don’t talk about the fact that the $ you earn investing is going to be taxed. Whereas the $ saved on mortgage interest is risk free and tax free.

[Andypandy]

I just sleep better in a house that's paid off. Just call it sleep tax. It's worth it to me, even if I'm missing out on some investment growth.

[chatanp]

I paid off my 2.875% mortgage early. Yes, mathematically speaking, I *could* have made more in total returns with investing; but a major part was creating more security and greatly reducing my risk profile.

Now having had no mortgage for a few years, my investing was able to be a singular focus, with the worry of market corrections. The psychological boost of no mortgage is something money cannot buy...

[CalmerThanYouAre]

Can’t tell you how happy and thankful I am we haven’t paid off any of our mortgages early. Thanks to low interest mortgages and the power of compounding investments at a rate much higher than 2.75%, we became multi-millionaires and financially independent in our early 40s. Much faster and much more securely than we would have if we’d been aggressively paying down those notes instead.

[YellowVette]

I did a little bit of both. Decided on biweekly payments and invested. After 10 years I had enough invested to pay off the mortgage. Maybe not the best financial decision, but I sleep great at night not having a mortgage and now supercharging investing. Good video 🤘

[ZAWARUD]

I'm not convinced. I continue paying my mortgage which is really small (1.3k/month, fixed 1.5%) because investing one's money in ETFs yield something like 10% in the long run. It would be stupid to give free money to the bank.

[Couchlnvestor]

Paid off the mortgage with returns from holding quality assets. Everything now is a bonus!

[jeffmiller]

Another idea.... Pay a substantial amount down on your mortgage, and do a "Recast". This would lower your payment, as much as, substantially. The payment is low enough to be handled in the case of job loss or illness. The extra saved each month can be DCA'd into your favorite investments. Just another "what Thanks for your videos, Bob!

[Atraa]

Great video. The thing the "always invest" crew don't seem to appreciate is that 10% returns are not guaranteed. But repaying your mortgage is guaranteed. And there is a massive power to being repaid. YOU own it. Massively motivational.

[scottsendra]

I agree with you, yes you might make more money investing but the risk is much higher. If you pay off your 3% mortgage quicker you are guaranteed a rate of return and low risk, but if you invest in stock market the risk is much higher and like you mentioned you could be put in a bad position when then market is down. If the market drops and you loose your job you will not be able to make mortgage payments. If I have the house paid off, I live on a very low income and still live in my home.

[Vic-ikri]

Excellent point, you nailed it!!! That's what I've been telling people about! It's not only the returns on investments agains mortgage savings, it's what you can invest after you finish paying off your mortgage! And peace of mind (or financial freedom) is priceless! I have only 17.5k left to pay on my mortgage of 4.5% interest and can't wait to pay it off and be able to invest even more.

[taniahummelgard]

Best down to earth financial “personal” advice yet. Yes that idea of “financial freedom” is so enticing. One thing to note; however, is in order to maximize that choice is to consider your fiscal discipline. If you pay it all off, but then find yourself blowing your extra cash at the casinos, or just buying “stuff”, was it worth it? That’s something I needed to throw into my decision, because i can get a little carried away at times

[akldama]

Also (you hit on this) a lot of lay offs coincide with market downturns. That needs reiterating. Paying off early is such peace of mind. That magic day came for us. I was reading books about the Great Depression. Said a mortgage was an embarrassing thing back then. Made me ponder that and then hammer on ours and now it’s gone.

[DaveBee]

A few points to add with a paid off mortgage: 1) your emergency fund you need is much less, because you have no mortgage. 2) You become a much more stable investor because your aren't concerned about the market dropping because you don't need the money except for retirement. 3) You have less stress, which takes something off you mind, which helps you in many different ways including helping you focus better at your job....personally I got a promotion since my mortgage was paid off.

[azteca]

I was single at the time. I managed to save 3 months of emergency funds. 2 yrs after I moved into my house. I was diagnosed with cancer. The following year as I was going back to the hospital and doctors. To check for any remaining cancer cells. New management came in, I lost my job. Fortunately I had that money saved up. I was cleared from Doctors and was able to find another job 2 months later. I cannot stress enough about having an emergency funds. And I did get a 30 yr mortgage. Made extra payments as I could. Stopped making extra payments, when I was going through this. The mortgage was paid off in 19yrs. I was told I'm losing out in investing. But paying off the mortgage gives me a peace of mind, in case something else happens.

[jeffgamedev]

Hi Bob! This is my exact scenario. My wife and I have opted to pay our mortgage off aggressively. I agree with your reasons, and have another to do so that I see is overlooked:

We considered putting a lump sum into a CD for guaranteed 5% return. Further research revealed that this would be taxable income, similar to if we invested it in the stock market in a brokerage account. When compared to putting it down on the house, the return was tax-free. This ultimately led us to putting a lump sum on the house.

Thanks for the video. We plan on being mortgage free by early 2025 and look forward to financial freedom. Your analysis helps us fuel our fire!

[jamiec]

Love this video. Thanks for putting in the time to look into my specific situation: 3% mortgage and looking to be in this house for less than 4 years. In Bob we trust.  Keep up the great work.

[gdelacruzjr]

I'm paying the mortgage off, man. Idc about an extra 100k. The freedom of not having to worry about my family being homeless is priceless