I can't stand my mortgage

[snafu]

since you asked...

In practical terms, a 75% likelihood of selling and moving in 3 yrs significantly reduces benefits of clearing mortgage. There is no opportunity to re-direct principal payment to another investment stream. Unknown what thought or expectation has been given to next residence.

I'd focus on getting the house 'sale ready', removing all items not used, needed or loved. Sell stuff no longer used, take photos of your rooms to help you see tiny details that have potential to increase value. Repair and update every item that buyers want so that the house garners every possible dollar. Enjoy the fruits of your labor for a bit before selling.

[Attitudeofawinner]

Tom, being in the 39.5% tax bracket means your making over 415k annually. How long have you been a high earner? It sounds like you are near retirement age. I'm trying to gather information to understand the situation you are in.

[greenskeeper]

I can put all my leftover bonuses towards the mortgage starting in March 2017. This is after I fund all retirement accounts to the max each year ($70k), and fund all other expected expenses each year (with a cushion).

pay off the mortgage! You're in great shape with everything else.

[InvestorShark]

I'm with disneysteve in terms of the practicality of a balanced approach (actually, I'm more on the side of pay it off as slowly as possible and invest everything you possibly can), but if the psychological victory of getting rid of the mortgage outweighs the ~3-4% annual return (avg stock return - mortgage %) you'd be forfeiting by doing so, do it.

It's a very personal decision with no right answer. If your primary goal is capital appreciation over the long run, don't do it. If it's peace of mind, do it. Given the figures you're throwing around, money isn't going to be an issue later no matter which route you take, so just weigh your personal goals.

[feh]

So, what would you do?

Tom

I see it as a choice between a) being debt free (which is wonderful, by the way) and b) retiring earlier.

Which one is more important to you?

[Fishindude77]

I feel like I have the ability to retire earlier due to not having a mortgage.

[Jluke]

I see it as a choice between a) being debt free (which is wonderful, by the way) and b) retiring earlier.

Which one is more important to you?

I'll echo what fishindude said, but I am curious what is your line of thinking when you say you could retire earlier if you don't pay off your mortgage?

Is it in general or is it specific to Tom b/c he is a high wage earner? Even then, retiring with a 400k mortgage seems daunting (to me).

[corn18]

All the data show I can retire earlier with less risk of running out of money if I pay off the mortgage vs putting that same money into the market.

My gut says to get into a rental with the money. My head says I need to get a lot smarter before I do that.

[Fishindude77]

You can probably pay off the mortgage, keep adequately saving for retirement, and get a rental too if you put your mind to it.

[LivingAlmostLarge]

Personally I'm going to be the odd one out. I would not pay off the mortgage. Why? Because you don't know what 3 years out holds. You know you are going to move and downsize. But that has so many moving parts. You don't know if your house will sell quickly. You don't know how fast you'll move or if you will want to buy before selling. You've moved as a military guy and moving cost money. Where are you moving to? More expensive? Cheaper? Need more down? I think tying up liquid funds is not the wisest path when you know 3 years you'll need cash.

Now about the rental. Depends on the number and purpose. Whether you have mortgage or not is moot to retiring early. The only thing that matters is if you were staying in place and then yes a house paid off is easier.

But if part of your FIRE plan is to downsize and pay off the mortgage then it doesn't matter. The only thing is that you have to know what your financial plan is. My plan is to retire without a mortgage, but we'll probably carry one until we do. And our retirement plan is to not have one. So all budgets working off that assumption is not a bad one.

But you see mortgage/debt free is not always the point. The point is how to get to FIRE. And what happens when you get there.

[corn18]

Thanks for all the feedback. I think rational thought has prevailed and I will keep it for now. The marginal interest rate is 2.1% due to my high tax bracket. If inflation ever kicks in, it might be nice to have 2.1% money locked up for a while longer.

[feh]

I'll echo what fishindude said, but I am curious what is your line of thinking when you say you could retire earlier if you don't pay off your mortgage?

Is it in general or is it specific to Tom b/c he is a high wage earner? Even then, retiring with a 400k mortgage seems daunting (to me).

This comment is specific to Tom because he earns a lot, and should have a great deal saved when he does retire. If planned properly, he should be able to handle a mortgage payment even when he stops working.

Now, I would never retire with a mortgage, but I'm not in Tom's position. In his case, I think the scales tip toward investing/saving that money he was comtemplating throwing at the mortgage.

[corn18]

I decided to just go to biweekly payments vs. monthly for now. Basically $250 extra a month. I'll revisit this next March at bonus time. Tom

[corn18]

When I was filling out the autopay form, I opted not to do biweekly. Wells Fargo doesn't do real biweekly, so no advantage there and that made it a PITA to budget. So I just kept the current monthly payment and added $500 / month. Saves me $78k in interest and cuts 8 years off the mortgage. I think this is a good compromise.

[Jluke]

When I was filling out the autopay form, I opted not to do biweekly. Wells Fargo doesn't do real biweekly, so no advantage there and that made it a PITA to budget. So I just kept the current monthly payment and added $500 / month. Saves me $78k in interest and cuts 8 years off the mortgage. I think this is a good compromise.

thanks for the update. I was wondering if your mortgage company would make bi-weekly payments easy - obviously not, but I'm sure if you pay them a fee they can set up your account for bi-weekly going forward. which would never make sense.

You're better off with the extra $500/month.

throw in some lump sums on occasion and soon you'll be addicted to seeing the amount drop