Should you Pay Off Your Mortgage Early, or Invest? Answered.

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WHO AM I?
Hello 👋 I’m Humphrey, I used to be a financial advisor, worked in gaming/tech, and started my own eCommerce business. I make practical, rational content on investing, personal finance, the news, and much more with a data-backed approach. My goal is to help you with financial literacy and creating wealth.

PS: I am no longer a current Financial Advisor, any investment commentary are my opinions only. Some of the links in this description are affiliate links that I do receive a commission for & they help support the channel!

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[erictcarrollcarroll]

One hundred percent of foreclosures occur on a home with a mortgage.

[evandh]

What I’d give for interest rates to be back down at 3%

[RelearnMath]

I see a low mortgage rate as a “lower rent” to borrow the money, so the bank is giving me an opportunity to pay it off faster without accumulating so much interest. When viewed in this manner, I always come to the conclusion that i should pay off my mortgage even though its 3% fixed for 30 years(26 now)

[lukev]

I used to think like this, but then I think that 3% is 3% of hundreds of thousands of dollars and that 8-10% is only what you are putting into the stock market. It’s easy to think oh 300k on a house or 300k into the stock market, but the house is likely not paid off because we don’t have 300k in the first place. Thats just my thoughts though. I am curious to hear any counterpoints.

[theshowhost]

Always pay more towards your mortgage every month if you can afford to do so. Remember interest is always paid first meaning the last few years of your mortgage account for paying off typically around 80% of the entire loan. Being able to access home equity for future opportunities as well as lower interest obligations early is a great way to hedge for your future.

[joelp]

What about a more complex comparison playing out the scenario of a payout (even if 3%)? Likely once the house is paid off, the person would be free to put more towards investing. Is there a greater long term investment return in this scenario as an investment only strategy still has the burden of ongoing payments? For example, would 20 years of investment only while paying a mortgage be the same as a 20 year span where the house is paid off in 10 and there’s heavier investment for the final 10 years. would the increased investment catch up or surpass in half the time?

[monicalifornia_]

Pay it off 100%.
The absolute freedom in not having a house payment is priceless.

[YanLuo]

If it's 7 vs 8, I would pay off mortgage first: there is no risk and more importantly there is tax on the 8% capital gain earning

[marknickname]

Your future income from a job is not guaranteed. Paying off your mortgage will lower your monthly expenses, and will give you flexibility in case your job or income changes.

[igowhereimtowed]

I believe it was J Paul Getty who said people who understand interest receive it. People who do not understand interest pay it.

[scott.gall]

What if you have a low interest rate on your home on a 5 year fixed mortgage with the ability to pay down your principal faster? With so many mortgage holders on low interest 5 year term mortgages, wouldn’t this be a good opportunity to get ahead and mitigate the massive rate increase they will for sure see when they renew their mortgage rate? If they are at a 2.9% interest rate and are staring down a 5-7% upon renewal rate, would it not be a good option to front load as many principal payments for the first five years of their mortgage?

[logicalmisery]

Need to consider if your investment gains are getting taxed, then your returns need to cover that as well. I'm 1 year into a 30 year at a little under 6% but my extra payments give me a new length of 18 years. I'm holding off on putting any more into taxable brokerage but still going to max Roths

[huanchaoli]

So guys, listen. If you have money, pay off your mortgage as soon as possible. When you have mortgage debt or no mortgage debt, the feeling is way different.

[NicvB]

What about a situation where somebody has a variable rate mortgage. It is currently low, but will likely get higher soon. Would it be worth making more payments while the rate is low so as to have less balance once it increases?

[riftwalk]

Pay off the mortgage first you get 3% guaranteed, until the market you might get something from -40 % to 30%

[muphynman]

Look up the term: risk adjusted rate of return

[josephandreuccetti]

Pay off the house then its BEHIND YOU!!

[Frederik_uk]

Interest rates at any moment in the next 30 years can just jump up to 10-15 or even 30%. You have essentially no control over this. If the stock market is doing bad you can withdraw at any time.

[Logano]

ALSO DEPENDS IF YOU WANT MORE CASH MONTH TO MONTH OR SAVE MORE IN THE LONG RUN

[Amybirdsallbraden]

*GREAT CONTENT! VERY INTERESTING. I APPRECIATE THE SENSITIVITY WITH WHICH YOU DISCUSS. BUT I REALLY DO HAVE A QUESTION. FOR SOMEONE WITH LESS THAN $3, 000 TO TRADE OR ABOVE. HOW WOULD YOU RECOMMEND WE ENTER INTO TRADING OR INVESTING AS A NEWBIE TO EARN DAILY OR WEEKLY? AM REALLY ON MUCH DEBT AND I WOULD GREATLY APPRECIATE ANY SUGGESTIONS*