Thanks to reader feedback, I realized one financial move that was not included in my top financial moves to relieve stress list, was paying off your home.
Even though I thought long and hard about what to put on the list, paying off your home didn't get a dedicated bullet point, just an add-on. Paying off your home may not provide the joy you expect. And if it does provide you joy, it will only be temporary.
For those who are intent on paying off your home ASAP, let me share some perspective from someone who has paid off two mortgages and still own the properties today.
Experiences Of Paying Off Your Home
We all have different opinions, experiences, and biases. These differences are why I enjoy reading about various perspectives. Here is the feedback from two readers who paid off their homes.
I think paying off the primary residence mortgage would easily be my #1. If the mortgage is paid off and you die prematurely, the spouse and children won’t ever be forced to downsize to afford shelter. Further, the emotional trauma from your death won’t be compounded by having to move to a lesser home and neighborhood as well.
In this situation, the kids are likely getting uprooted to a new school system and then lose contact with all their friends as well. That's way too much trauma. It can be avoided if there is no mortgage payment.
– CMAC
Number 1 for me was paying off my house. Nothing financially has relieved more stress and provided more happiness.
Number 2 paying off my business credit line.
Number 3 paying off my business.
Number 4 doing a will and trust
Number 5 paying cash for my daughter’s college
– Bill
Why Paying Off A Home May Not Bring You Stress Relief
I've personally paid off a vacation property rental, a rental that used to be my primary residence, and purchased a primary residence with cash.
The feedback from the two readers made me question why I didn't give “paying off a home” a dedicated bullet point in my post. In fact, before I read these two comments, I had forgotten I had ever lived in a paid off home between 2019 – 2020!
Here are the reasons why paying off a home might feel disappointing after.
1) Ongoing property taxes
Even if you pay off your mortgage, you will still have to pay property taxes forever. If you don't, your house will eventually be repossessed.
For example, the fixer I bought in 2019 for cash has an annual property tax bill of ~$23,000. Half the amount comes due on December 10 and the other half comes due on April 10. Every property tax notification I receive reduces my joy of having a paid off home.
Then when I read about corruption at the San Francisco Department of Building Inspection and the city wanting to fine homeowners for putting up tiny library houses, I get annoyed. There are bigger issues the city should be focusing on.
When you invest in private real estate funds, you still pay ongoing property taxes. However, the costs are just a number embedded in a spreadsheet dealt with by other people. Therefore, there is no property tax or maintenance stress. All you care about are the net returns as you sit back and enjoy life.
Check out Fundrise, my favorite private real estate investment platform. Fundrise manages over $3 billion and has nearly 400,000 investors. The funds investments primarily in residential real estate in the Sunbelt, where valuations are lower and gross rental yields are higher.
2) Ongoing maintenance issues
Every time there is a maintenance issue, my stress level goes up, not down. A fixer that took two-and-a-half years to remodel has already experienced a cracked kitchen pipe, a blown down fence, and a mysterious fire alarm, which was hilariously resolved.
I will eventually also have to spend ~$18,000 to replace its roof and another $3,000 to replace the upstairs furnace. Upkeep is all part of owning physical property.
I've only been in my primary residence since 2020. However, I've already had to replace a door handle, several rotted wooden deck planks, and fix a leak during a torrential downpour. More maintenance issues will inevitably appear over time.
3) Negative real mortgage interest rates
Although I've never regretted paying off a mortgage early, paying down a negative real interest rate mortgage is not an optimal financial move. The higher the negative real interest rate, the worse it feels paying off a home.
For example, I've got a 2.125% interest rate on my primary mortgage. With risk-free investments paying 5%+, there is no way I'm actively paying down extra principal at this time. It gives me more stress relief to arbitrage the difference and live for free!
However, if my mortgage rate was at 6% and I could only earn a risk-free return of 2%, the paying down a mortgage early would absolutely provide stress relief. But you've got to completely pay off the mortgage to free up cash flow. Otherwise, you're still paying the same mortgage payment amount, it's just the percentage split between principal and interest changes.
In normal times, most mortgage rates would be higher than the 10-year bond yield. But we are not in normal times, so please take advantage! The inverted yield curve won't last forever.
When you are able to live for free, you feel like you have won the lottery. You're already borrowing money for cheap to live in a nicer home than you can afford with cash.
4) Investing FOMO
Paying down a negative real interest rate or a low mortgage means living less for free, which may raise your anxiety a little bit. However, more powerfully, paying down a mortgage means you could be missing out on much greater investment gains.
Investing FOMO is difficult to overcome. It's why rich people still take unnecessary investment risk!
In a bull market or an economic rebound, you want as much risk-asset exposure as possible. Therefore, it will feel better if you pay down your mortgage right before a bear market occurs. Of course, timing the market is extremely hard to do.
For example, there is currently artificial intelligence mania here in the San Francisco Bay Area. If you don't find some way to gain exposure, you might feel more anxiety because you're missing out.
Instead of paying off a home to save 2% – 6% on mortgage interest expense, you may be more inclined to allocate capital to an AI investment to potentially make way more.
Found A Way To Invest In AI
Luckily, I found an open-ended venture capital product, which has invested 35% of its capital into artificial intelligence. I plan to invest $500,000 into venture capital funds that have AI exposure so that my kids don't ask me in 20 years why I was asleep at the wheel!
I don't want to miss the boat, which is one of the reasons why I wrote, How I'd Invest $1 Million Today For A Better Tomorrow. Writing these posts forces me to think more deeply about allocating capital.
Public stocks and real estate doing well
Since 2020, the S&P 500 has also done well. Despite a bear market in 2022, the S&P 500 came roaring back in 2023 and in 2024 so far. In addition, bidding wars are back here in San Francisco thanks to a recovery in tech, pent-up demand, and a strong economy overall.
Below is a home that was asking $4.7 million and sold for $5.7 million in one of the best neighborhoods in San Francisco.
5) Financial wins never elevate your happiness for long
Sadly, due to hedonic adaptation, we quickly revert back to our steady state of happiness after achieving any type of success.
If you pay off your house, you will feel an elevated level of happiness for maybe up to six months, but probably closer to one-to-three months. After that, you will simply take for granted you no longer have to pay a mortgage. The extra security you feel is marginal because of ongoing property taxes and sporadic maintenance issues.
The biggest security boost you get when owning a home is when it was first purchased. If you continue paying your bills, you will feel good knowing nobody can raise your rent or kick you out.
Since you worked hard to pay down your mortgage, you will feel more deserving of a paid off home. The more deserving you feel, ironically, the less financial joy you will experience. I've written about this in a post entitled, Overcoming The Trough Of Sorrow.
Paying off a home is a great achievement. But most people won't appreciate it for very long once it's done.
Perpetual Versus Temporary Financial Moves
No doubt paying off a home will bring you more peace and less financial stress. However, because there are perpetual taxes and maintenance costs to pay, the financial relief may not be as great as expected.
To help you feel better about paying off your home, think about the payoff as a perpetual way of no longer paying rent. If you tell yourself this, then you may feel better.
Out of the ten financial moves I recommend people make, the greater the permanence of the financial move, the more it will relieve stress and anxiety.
For example, once you create a revocable living trust and a death file, you and your heirs are covered for life. You don't have to worry as much about your dependents not gaining access to your funds when necessary. There are also no ongoing costs to pay. Ah, that feels great.
If you have investments that generate perpetual passive income to cover your basic living expenses, then you feel like you can take on the world without much fear. Wonderful!
But someone needs to stay on top of the investments because it can sometimes feel like a full-time job. As a result, you need to insure you have a backup person to manage your money accordingly.
Term Life Vs. Whole Life
Getting an affordable 20-year term life insurance policy felt the best to me partially because it buys me 20 years of security. I'm confident that in 20 years, I will not have any more mortgage debt left. Further, my children should be mature enough to survive independently at ages 23 and 26.
But given I just talked about the importance of permanence, it is logical to conclude that getting a whole life policy (lasts your whole life) will provide even more comfort. This is especially true for those with family members who may struggle with mental and/or physical health conditions.
Yes, a whole life policy is more expensive than a term life policy. For most people, it's better to get a term life policy as I have done. But if you have dependents you worry about and grow your estate to a top level, having a whole life policy may be a better choice.
In retrospect, I probably should have gotten a whole life policy back when I was 30-35. The cash value of my whole life policy would be worth in the six figures by now. As a compromise, I tell myself I did the best I could in saving and investing as much as possible since college.
Check Policygenius if you're looking for affordable life insurance quotes. You can get multiple real quotes all in one place. Both my wife and I got new 20-year term life insurance policies during the pandemic with Policygenius.
Paying Off Your Home Is Fine
If you want to pay off your home sooner, go for it. If you've paid off your home already, congratulations! Life is so much easier once your living expenses are low.
I'm just warning you about the potential let down you may feel if you're currently attempting to pay off your home earlier. The harder you work and the more you sacrifice, the less satisfied you may feel once your home is finally paid off.
Based on the comments in this post, I realized something else important about paying off your home. The greater the value of your home as a percentage of your total net worth, the more joy you will feel paying it off. This makes sense given there's more risk at stake.
In conclusion, I wouldn't concentrate all your efforts on paying off your home ASAP. Instead, be dynamic in your financial decision making based on the economic conditions at hand. Diversify your financial moves to help bring greater peace of mind.
Perpetual or temporary, everything becomes temporary if you give it enough time. Try to make the most of each day.
Reader Questions And Suggestions
If you've paid off your primary residence, how long did the joy last? Or did you feel a let down once your home was paid off? Does anybody regret having a tremendous amount of capital locked up in one's home? Being house rich but cash poor can be stressful.
To invest in real estate more strategically check out Fundrise. Fundrise real estate funds predominantly invest in residential real estate in the Sunbelt, where valuations are lower and yields are higher. I've personally invested $954,000 in private real estate funds to diversify and earn 100% passive income.
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Points 1 and 2 exist regardless of whether the house is paid off or not so they are moot.
There’s difference for mortgage in US and Canada.
In Canada, mortgage interest rate is reset every 5 years regardless if it’s fixed rate. By paying it off, we remove the exposure to interest rate risk every 5 years. Back in 2010, 5 year fixed was 2.25% in Canada. Now it’s 5%! People locked in the COVID low 1.5% 5 year fixed in 2020 and will face a much higher rate in 2025 renewal.
In US, rate stays the same for the whole amortization period. Still, for old mortgage, it makes sense to pay it off lumpsum at some point as mortgage balance gets smaller. The payment yield will increase. Near the last few years of term, the payment yield can reach as high as 10% to 15% even though the actual interest rate is 3%.
Removing the mortage payment by paying lumpsum is equivalent to getting a permanet fixed income equivalent ot mortgage payment without market risk, even bonds suffered huge loss in recent years.
Thanks for sharing Kyle. In the U.S., we also have adjustable rate mortgages, that reset every one, three, five, seven, and ten years. They account for less than 8% of all mortgages. We have more choices.
I took out a 7-year ARM in 2020 to buy one house with a 2.125% mortgage rate and I don’t regret it.
In August 2027, when my mortgage reset rests, the balance will be less than half of what it was and I think mortgage rates will come down slightly from here.
Excellent piece.
Some Veterans do not have to pay property tax. How would this change/add to your article?
I enjoy reading your article. I think your points are suitable for financially savvy and risk taking investors, but not for the average person like me.
I am planning to pay off within next 5 months. Already paid-off 98% of the loan/home value. Within the last 12 months, I paid off ~50% of the loan. I do not have any regrets… I feel happy.
As long as you have the house, the property tax and maintenance expenses are always going to be there.
If you have mortgage and if you are temporarily unemployed for some reason, you need (Loan payment + property tax + maintenance) every month. But if you paid-off your loan, then you only need (property tax* + maintenance). You do not need 3 to 6 months of mortgage amount sitting in your emergency fund (which is usually kept in savings or money market accounts that pay lot less).
[I understand you do not pay property tax monthly, I am prorating that to monthly]
My current loan interest is ~3.0%. If I earn ~5%, it is not net 2% earning, I will pay tax on that earning which will reduce the net earning to ~1.7%. Additionally, the liquid money may tempt me to buy unwanted items.
This article makes no logical sense to me and lets keep it very simple!
You pay off a home= no principle payments, no interest expense payments, no PMI and that depends on your mortgage and less stress! All you have to worry about is the never ending real estate taxes, insurance, maintenance and repairs and CapEx.
Some individuals will borrow against their home to invest into “AI”, home flips, AIRBNB or whatever.
Lets compare paying a $1 million primary home in cash vs zero percent financing!
1) Pay $1 million in cash for a home! You can refinance and use that capital for xyz.
2) After a 30 year period, your total amount spent will be $2.81 millions plus.
The taxes people pay in San Fran are INSANE!!!!!
Sure. But I’m talking about the joy you might expect once you pay off your home.
Did you may off your mortgage or pay cash before?
I love that I paid off my mortgage, because now I have the P&I portion free for all of that maintenance you say houses need. (I completely agree with that, and now I have more free cash flow to cover those needs, either reactively or proactively.) And while I could have just invested in the market, I had a higher rate (5%; never wanted to pay a fee to lower it through a refinance, so instead I accelerated payments) so it provided a decent and certain return on money put in. I really enjoy getting the property tax bill each year rather than have it go to a mortgage company, too, and it’s nice to know that all I need to do is generate enough income to pay the couple thousand in taxes I owe each year. (It’s a perfect little goal for passive income!) The biggest let down? My credit score has dropped a bit from where it used to sit, apparently because now I don’t have that long-term account on there. (For some reason, 20+ years of credit cards still nets me a “not a long enough credit history” on my score report. This is a whole other topic, but I don’t really care about the credit score anyway since I’ve come to believe that credit scores and bureaus are one of the biggest financial frauds of our time. I’ve paid every credit card balance in full each month and I’ve never been delinquent on any payment, yet the score is very good but not perfect.) If a small hit to my FICO score (a made-up score that I don’t plan to use ever again) is the biggest negative I got from paying off our mortgage, then it was a win for me.
Yes that fico score is bull! Its fraud 100%. It makes no sense that after you pay something major off its now a negative when if you pay late its also a negative. So logically speaking they are saying pay on this forever and thats the sweet spot. Incidentally the only winner there is the loan company who is in bed with the fico system.
Sorry, but let’s agree to disagree. Nearly every day since I paid off my mortgage I have been celebrating in small ways. I can’t think of anything I’ve done financially that comes close to the joy of paying off my mortgage. Even my mid 7 figure relatively liquid “fortune” just doesn’t quite do it. When people talk about the “rat race” and all the problems and burdens of contemporary American society inevitably they point to their mortgage as the primary burden…the monkey on the back of financial independence. I agree with them. Even though my brain tells me that the mortgage is just another debt, there’s something about the house, the home, the domicile, that makes that particular debt different. If someone repos your car, you can ride a bike. If the bank repos your house you are homeless, no roof, no shelter. That’s a pretty big psychological mountain to climb.
In terms of celebrating with the money we saved, it’s been fun. First we decided our air travel would be 1st class from now on. What a difference it’s made in lowering the anxiety associated with flying. We also travel anywhere in the US without worrying about the cost. We also get to eat at some of the best restaurants if we want to – if you haven’t tried STK in Vegas, I highly recommend it.
Some other great things we get to do with our money: Give our grown kids financial help, give our grandkids cool gifts, buy a car for cash, fix up the house without waiting for the price to drop and on and on.
Paying off the mortgage has been the best financial move we’ve made so far and I suspect it’s even more so for those of us who are below the $300k income level.
That’s great to hear. Sounds like your home is a good percentage of your net worth? If so, can you share what it is?
Perhaps it’s because I never restricted my spending when I had a mortgage, that’s the reason why paying off the mortgage hasn’t done much for me. I still went to those steak dinners at STK, flew first class, and traveled to over 60 countries since I retired in 2012.
So maybe that’s the lesson for folks. Try not to restrict your lifestyle too much before you pay off your mortgage. Because life is what happens every day.
The house value is currently nearly 25% of the overall portfolio. As we continue to upgrade I expect it could get to 30ish %. During Covid the value doubled and then cooled back down but it was all gravy either way because the house is paid for. You’re correct that we lived frugally for about 10 years while our kids were growing up, but prior to having kids we lived like rock stars for a few years so we had a taste of the good life and paying off the mortgage allowed us to do it again but much better and more grateful for our good fortune. Using our frugality muscles in surgical ways have allowed us to compress and hyper speed our financial growth to the point where we could take our foot off the brakes sooner than most of our peers. Not all of our happiness is related to paying off the mortgage as that was just one of at least 10 financial goals that allowed us fin freedom. But I’m not gonna lie…being free of the mortgage ball and chain gives me endless satisfaction!
That is great to hear. I have four kids and for me, getting rid of the mortgage will simply free another $650 per month for giving and investing. It will be great to have more margin for breathing! I always put investing into retirement and the kids’ college before putting extra to the mortgage, but for some reason, the tangible goal of “kicking the bank to the curb” and owning the home free and clear is something the excites me. At that point (about a year from now) my wife and I will be completely debt free, which will be a great place to be!
I want to cry reading this. Let’s me know I am not just a fool wanting to pay this monster off. I have had housing insecurity in my life. I have had job insecurity all my professional life. I made the decision to create my own “job”. Hired myself and never regretted it because I am a great employee and boss! But the decision to remove the other latent feeling of insecurity was to pay off my house. I am on a 5 year plan to do that. Im excited and it has given me new life. When covid hit and I lost my job for the umpteenth time in my career the first thing I thought was how will I pay for this domicile which would represent a place for my entire family to live if needed during the pandemic. I “made” a job and decided never again to rely on a job or the government again. But also the nagging feeling of this huge mortgage bugs me constantly. As you said no roof over head. No way to help adult children should they need it etc. So I decided go against grain of sound advice from financial experts and soothe my feeling of potential housing insecurity and pay it off. All your reasons resonate with me. I am now 100% secure in this decision. Good to hear your reasons!! Thank you. You don’t know how helpful you penning your reasons has been to a complete stranger!
What’s your take on how much higher the risk free rate needs to be over your mortgage rate before it swings in favor of investing? With rates above 5% I would say my 4% mortgage is not worth paying down. But if those drop down below 4.5%, I think the mortgage becomes more appealing. This is without taking taxes into account; purely from a psychological standpoint.
No definitive answer. Ideally, the risk-free rate only about 25% higher than your mortgage rate, to account for capital gains tax,, before paying down your mortgage. But it’s really an individual choice.
I paid off my 275k home during Covid. It certainly felt good for a few months however watching the market take off made me kinda regret it and now that the risk free rate is 5% I wish I wasn’t in such a hurry to payoff my 3.3% Rate. Hindsight however is 20/20. —on the flip side It’s great not having a payment and I found my risk tolerance increasing quite a bit as I have been more aggressive with my portfolio.
We left CA in July 2022 and moved to a state with a better cost of living and much lower property taxes. We only pay about $3500 per year on a $750K home. We paid more than that on our home in CA that was assessed in 2006 for $425k. We sold it for over $1.8 and paid cash for our new home and had $$ left over. Leaving CA for a more affordable state has enabled us to semi-retire and look forward to a future that we could only previously dream about. Best decision we ever made.
When I lived mortgage free, I didn’t feel like working anymore. I was too young to quit working but it felt like I no longer had a fire under my butt. I also wasn’t willing to earn a lot and was happy w what I was earning and losing out on potential. Moved and got a mortgage and not inclined to pay it off at such a low interest rate. And to make sure I keep working!
I felt the exact same way! I wrote about it in The Biggest Downside Of Paying Off Your Mortgage Early.
Fire to grind got extinguished. It wasn’t until I had my son in 2017 where the fire to earn grew again.
We are on a 10 yr FRM at 2.45. Plan on paying house off in 26 months. Seeing the mortgage melt is very satisfying.
Currently investing 12,000 monthly
Into equities. Once the house is paid that should bump to 16,000 + monthly. We are stock piling for a Cabin in the woods at the same time.
We expect some satisfaction and relief with a paid for house. But the real focus is to allocate more money monthly for investment. We complete ROTH conversions each year as well.
The house will be around 30% of our assets. It will be dropping percentages per year as we invest larger amounts.
When I paid off my primary residence early in 2016, my reaction was meh. When I sold and moved to my next place in 2017, I took out a mortgage and invested the rest. I’m much happier with my vanguard account now being twice the amount of my mortgage.
I dig your book I bought it when it come out and feel that I made more optimal choices in life than not. Here’s my approach to owning a paid off home. In my 20s. I bought a duplex its in a lower cost of living area. I live in one unit and rent the other one out. I had it paid off by the time I was in my 30s. I bought it for 150k put 50k down and then used the rent payments to pay it down while I was still paying off the mortgage each month. My fixed expenses, utilities, property taxes, insurance and all that I could have paid for by the rental income. The rent has gone up, a fair amount. It’s now at $1,000 a month. So I feel like if you owner occupy a rental property like this that is a whole other factor to consider. I still get the tax breaks, the income generation, the write offs all that stuff so I have something that’s going up in value and generating money at the same time. I don’t own any other properties and I’m not really interested in expanding, but this duplex has been totally worth it. Thanks again for your site and your book Sam.
Read this piece with interest as I have newly discovered your book (really it it – original and grounded – and I’ve read dozens of personal finance books). After always pushing back on paying down a mortgage, we paid off our 5.5% mortgage in 2007 all at once after cashing out all our investments in 2006 and watching the money just sit there. It took years after that for the lightening bolt of happiness to not hit us a couple times a day. We live in a low-tax state in the west so the other home expenses are very low. After we paid off the house we immediately directed 100% of the saved payments into our Vanguard fund. It was a good choice for us. But likely wouldn’t have done it if the market hadn’t been as wobbley in 2006-2009.
Hey Sam! Hope you’re doing well today.
I’ve been wondering for years if you should invest more or pay off your home early. So, I really like your FS DAIR model as it is a good system of doing both.
I have a question for you. We’re trying to retire early in about 10 years. That would put me at 55 years old. While it’s thankfully not happening now, I was either underpaid or severely underpaid for much of my career, so I wasn’t able to even think about retiring like a FIRE person.
We have two rental properties in San Diego, and we figure the way we could potentially retire at 55 is by paying those off early and living off the rental income while our retirement funds continue to grow. Would you still suggest FS DAIR or would you suggest doing our best to throw all of our extra into paying off those rentals as soon as possible?
Thanks for your time and for all the knowledge, I’m grateful!
I was in the don’t pay it off early camp until my situation changed. My house was hit by hurricane. When you have a mortgage, depending on the amount of the settlement, the check will be made out to you AND your mortgage holder. The mortgage holder will only disperse payments to you and your repair contractor(s) by the mortgage company’s arbitrary rules. The mortgage company would periodically require an inspection and would send a third part inspector for which they billed me half the fee. It was roughly $40 a visit, but it was the principle.
Long story short, I received a second settlement. Rather than paying endless games with the mortgage company, I sold some stock in a brokerage account and used it along with the settlement check to pay off the mortgage company and get out from under their thumb when it came to repairing my house post hurricane.
Hi Sam,
Thanks for sharing your perspective and appreciate another great post. I can definitely see how the hidden costs of homeownership beyond the mortgage can quickly diminish any initial dopamine spike that you get from paying off the mortgage.
For my wife and I, we paid off our $1.2M mortgage in NY in 2018 where we had a monthly payment of $5,186 based on a 30-year fixed mortgage rate of 3.75%. At the time, we were elated because it would allow us to save more and allocate more funds to our brokerage account. With elevated inflation over the last two years, I appreciate it even more today! Higher homeownership costs and higher cost of living in general due to inflation is difficult in itself. As an FYI, our common charges increased by 10% y/y and our property taxes increased by 20%. In some areas in NYC, property taxes went up by 40%! If we still had a mortgage, it would have been even more stressful.
Cheers,
Harvey
It’s been 9 years since we’ve paid off the mortgage on our primary home. I remember being elated when we made the last mortgage payment and went out to dinner to celebrate. I don’t recall that happiness lasting beyond that day. However, since then, there have been numerous occasions that we remind each other how grateful we are to not have a mortgage when times get tough.
When we found our most recent investment property, we decided that we wanted to have the property paid off in 5 years so that we could retire early. We only have 2.5 years to go and it feels great to know that we are putting our money towards a guaranteed income source.
My wife and I inherited 3 properties after my mom-in-law passed away, the one we currently live in, my mom-in-laws house and a beach vacation rental she also owned. We feel very fortunate, but the dark side is that along with these properties comes a lot of maintenance and upkeep we cant afford….could never afford. Makes one consider selling the rental properties if the funds are not there for major repairs. The income is good, but again major upkeep is needed in the tens of thousands of dollars which is a BIG stretch.
We paid off our mortgage in 2020 and had no regrets. Increased cash flow has been deployed to building passive income via CD’s, Ibonds, and dividend funds plus virtually eliminating fears about losing our home. What a weight off our shoulders! Thanks, I have enjoyed FS for years!
Congrats! And I’m glad you have found the site valuable over the years.
Our house is long since paid off. I realize that the equity in it could have been invested at much better rates than what I am not paying on a home loan (at least on average, over time) but goshdarnit, I try to keep life simple and that, plus a large decrease in worry, just seems worth the loss in potential earnings. Heresy, I know.
Nothing wrong with living, a simple, peaceful life!
Sam, first off want to say love your posts and regularly look forward to them.
One thing I wanted to point out that may be specific to my locality that motivated me to pay off our house was the increasing cost of insurances. I live in SE FL and if you have a mortgage you’re required to carry “Wind Storm insurance for full replacement value of the property and dwelling. The 30-50% they keep raising it is what motivated me to pay off the bank and just have liability, fire and the other basics. Saved 12k a year and at the time the underwriter said “yours only will go up 30%” like I was supposed the be excited about it.
Great perspective, Jordan! I didn’t think about this scenario. Thank you for sharing. I’ll have to look into this if and when I buy a house in Hawaii near or on the beach.
Timely article. My wife and I (both mid-30s with 2 young children) just paid off our house last month (bought it for 354k, 20% down, 3.49% 30 year fixed back in 2016, now worth approximately 530k). After leaving the bank, I remarked that it was anti-climatic. She asked what was I expecting? I said, “I am not sure. Maybe it will hit when we get the payoff letter or next month when the mortgage payment does not come out on the first.” Both of those have since come and went. I have a love hate relationship with real estate. I absolutely hate the upkeep/maintenance, but do love a paid-for physical asset that provides shelter for our family in case something would ever happy to me (sole provider). We do not have investing FOMO as we still continued to invest 15-20% of our income during this process and would just chunk anything left over/extra on the house.
Yes, anti-climatic. Maybe if the lender threw borrowers a party or gave us a nice gift, that would help, hah.
Actually, to make paint of the house, more meaningful, it’s worth throwing a party or getting each other gifts to commemorate. Make it real!
All In The Family Season 5, 1974, Archie and Edith threw a mortgage burning party when the last payment was made!
We paid off our mortgage in February. We found that we deferred so much spending in our quest to be debt free, we still are spending all of our mortgage payment fixing deferred maintenance as well as replacing needs and wants that have been gathering over the last 18 months.
Hopefully, you’ll finish up with the deferred maintenance spending soon. And be good to go for years to come.