Should You Pay Off Your Mortgage or Invest? | Morris Invest

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If you’re weighing this big decision of whether to pay off your mortgage or invest, I’m going to give you a few main points to think about, so you can make the right decision for yourself and your future.

First, you should know that while there are many benefits to paying down liabilities, you’re not making your money work for you in this scenario. You’re just dumping all of your extra funds into paying down a loan. You’re giving it all to the bank. You might see better results through buying performing assets that produce income, depending on your personal situation.

Consider the interest rate on your mortgage. Are you locked into one of those historically low rates? If your rate is in the 2-4% range, maybe there’s no rush to pay it down? It’s up to you to decide, but you’ll probably never snag a mortgage at that rate again.

Ask yourself how much the burden of your mortgage is weighing on you mentally. Some people have higher debt tolerances than others. If the thought of carrying this debt for 30-years is disrupting your sleep and hurting your health, prioritize paying it down.

What kind of returns can you expect on a real estate investment? At Morris Invest, our build to rent properties offer an IRR of at least 18%. Personally, I find that hard to turn down. But if you’re looking at a deal that is a questionable investment, maybe you could pass for now and work on paying down your mortgage first. Never fudge the numbers when you’re buying an investment. This isn’t the time to hope for the best. Analyze your deal and weigh it against the interest rate on your mortgage.

Ask yourself this: why can’t I pursue both goals at the same time? Calculate how much extra cash you’re working with every month and determine if there’s a way to split the funds up between two goals. Maybe you could just throw a couple hundred extra dollars toward the principal balance on your mortgage or make an extra payment every month… and then use the remaining funds to save up for performing assets like real estate investments.

Another idea is to focus on buying rental properties first. Then as you build up cash flow over time, you can use it to fire at the balance of your mortgage.

At the end of the day, there’s no right answer to financial questions like this. Choosing whether to pay off debt or invest is a very personal decision. You’ll have to weigh the pros and cons for yourself, run the numbers, and determine what will have the biggest positive impact on your life. So while I can’t give you the answer, I hope this video gave you some key points to think about.

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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.

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[LewisKindrick-rn]

I paid off my first house in 2 years and 11 months.
It's amazing how much you can save when you don't have to pay rent!
I bought another house about a year and a half later and the house payment with everything is about $1500.
I get that much from renting out the first one and although I had to sign a thirty year note, there's no stress with it and I hope to have it paid off in 4 or 5 more years.
The mistake that so many make is that they sell their first house and use that money for a down payment for another house much more expensive and they're stuck for another 30 years making house payments.

[rendarsmith]

I paid my mortgage off 6 years ago. It's amazing how fast the savings build back up.

[acastr]

3.8% rate here and I don't care that it's low. I'm still paying it off early. Have a IRA, Roth, and an Emergency fund. Paying off this last debt of mine is going to be awesome.

[antpoo]

Here in Australia my mortgage is 8.48%. Infjation is running hotter, but few investments can top 8.48% without great risk to your capital.

Pay off the mortgage and be free. Then consider investing. If you try to invest while you have a mortgage you ARENT investing but SPECULATING.

[JCS-iw]

I would say that depends on your mortgage rate.
If you’re one of the lucky ones who have an extremely low rate, investing might be a better option
If you’re over a certain threshold with your rate you are better paying it off

[NGF-Life]

I learned velocity banking from you, and then infinite banking. Both pro and con, just personal preference.

[jasoncarby]

Always pay off your mortgage. It will build equity and even if it's slow, you can rent it out, and with no mortgage, the rent can pay the home you live in or at least partially . Once you sell, invest remaining liquidity from the sale. Paying off your mortgage allows you to have cash flow, ain't no cash flow in a stock or gic etc.

[animarucaa]

I’m happy to say I only have my home to pay off. I’m aggressively paying extra every month and maxing out my Roth IRA. I’m so blessed to be able to do both. I do work a lot, but I love my job and I still take vacations and have good times with friends and family.

[cryptojuan]

House is not an asset so yes pay it off

[johncantrell]

After you pay off your mortgage you can invest your mortgage payment less taxes and insurance. win-win... Another way to get a head is to split extra payments between 20 to 30% credit cards and paying down extra mortgage principle payments.

[jeremybw]

Neither, SELL REAL ESTATE and BUY BITCOIN. Same for GOLD TOO!

[fernfernacelli]

Say, Clayton! REALLY appreciate this amazing financial wisdom. I’d just ordered your book, and I’m greatly looking forward to learning from it. Many thanks!
😊

[taniahummelgard]

You addressed my question I asked you a couple weeks ago, thank you!

[melodyn]

How if my income is too low to qualify for HELOC?

[donp]

Pay off your mortgage ! Once you do that start a small business in your house and incorporate and invest that money if you can afford to

[robertbrost]

My mortgage rate is 4.25%. I can get 5%+ with a savings/checking account. Clear choice.

[Mrkevi]

What if your mortgage is at 3.31%. and started in 2022 January. Should you pay the mortgage principal early?

[RG-miwj]

I am going to start paying off, payed &10, 000 first than will pay $2, 000 a month, will finish in 5 years, NO HELOC.

[joels]

paid off my condo... $150 HOA... i'm done...lol

[thelifeofdel]

Thank you for this I’ve been speaking with my wife and we cannot come to a decision