To Pay off the Mortgage Early or Not

I was looking at a post on where they talk about paying off your mortgage early.  They have some great tools posted there to help you get an idea of what how much money you will save.  My wife and I have spent a lot of time discussing the benefits and costs of doing this.  It’s a tough call.

We pay about 5% extra a month on our 30 year mortgage of which we are a few years into.  We refinanced a 2 year old loan near the bottom of the rates market a few years ago and have a rate a bit below 3%.  I hate the idea of money hanging over my head. I also hate the idea of losing out on earnings that could be had from investing money that would go to principle.

Homes are not cheap in the NY metro area, so we are not talking about a small sum even if we did pay 20% down. We have paid a few lump sums to the principle when we earn some extra money or have a windfall like a bonus from our jobs.  It’s really a hard call.

Where do you draw the line?  Do we save less, and pay down that mortgage.  We could divert funds that are currently going to investments to pay the mortgage down more quickly.

What holds me back is knowing that our mortgage rate is near the average inflation rate for the US since 1920 is just over 3%. I found the raw data, monthly, here.  So, if the mortgage is below inflation, then I think we should not pay it off early, in spite of how much I would prefer to do it.

We don’t carry credit card debt.  We had to buy new windows this year as 4 of them in our home were rotting out with dry rot.  The price of that work in my county is insane; there is a mark up because it’s one of the wealthier counties in the US.  Keep in mind, the home next to mine is 3x the price of mine, and my house is not a dump.  We just have a cheap small house in an expensive town with good schools.

Anyway, we can always change our minds later, but for now, the plan is to stay the course, and pay a little extra each month. That little extra will shave a few years off the loan, and more than $10,000 in interest payments.

I’m curious what you think?


  1. A little late to the party here, my logic is that money owed is money owed, when the tide goes out will you be skinny dipping or will you have a wet suit on?


    1. That is a valid point. My study of the market is that any 10 year period always has been up if you can wait it out. My county has sinking home values, so its hard to take the double loss there.

      That being said, I am still considering it with my wife. It’s not an easy call, and your point is valid. Pay now while we have the means and the market is up.


      1. Put a price on not worrying about how you will pay your mortgage. Imagine when your child is asking for money for a school trip or a trip to Disney or to go on vacation. Paying it off isn’t about inflation or cost it’s the reassurance of knowing your family won’t be thrown on the street in a recession and you could survive driving uber or waiting tables.
        Look at your budget now and picture it without any debt, what would you do this weekend with your family with that mortgage payment.
        That’s my motivation!


      2. These are valid points. My case is a bit different than yours, I think. We have a large cash or cash equivalent emergency fund that would keep us going for a year. If both my wife and I don’t lose our job at the same time, then those funds will last much longer. That’s how my wife and I responded to the valid concerns you are bringing up. Another fact is that our taxes are more than 1/3 of our rent; normal for the NY area. Actually, we are in one of the lowest cost counties within commuting range to the City, and yet our taxes are still insane by national standards. I still go back on the double penalty of having those funds not growing while simultaneously losing more value on our home. Latest check has it 7% below the price we paid for it less than 10 years ago.

        To answer your question, though, I would bank most if not all of that 2/3.

        But, you are right. I could get laid off tomorrow, or in the next recession. Our investments could crash out, which is why we are trying to diversify more. You are making a compelling point, but I am still not sure that is the best option for the reasons I have mentioned. That being said, the time between when I paid off my credit card debt and my school loans, and when I bought my home was fantastic. Sadly for me, I spent way too much on drinking and the like while living in Manhattan. It was fun, but foolish.


  2. Sadly for me, I spent way too much on drinking and the like while living in Manhattan. It was fun, but foolish.
    If you want to be old and wise first you must be young and stupid!


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