Personal Investments • Is paying off a 2.99% mortgage always a bad idea?

Your mortgage rate is actually a negative number. Do you still want to pay it off? If so, do it, but just be honest with yourself about effectively turning down a negative rate loan in real terms. A negative rate loan is an income stream for all intents and purposes.

In the end, you have to choose between what your heart and brain want. Personally, I’d tell my heart to sit down and be quiet because the math computed by the brain is what rules for me. I did a cash-out refinance in 2021 and took out a 30-year mortgage at 2.375% for $500k on a $110k income. Of that amount, $150k was equity taken out from the house. I restarted the 30 year term after already living in the home for 11 years so that the mortgage will take over 40 years to pay off from the time I bought the house. My only regret is not borrowing more money in that loan and that the house won’t take 50 years to pay off instead. I wish I’d asked the lender, “what is the maximum amount you’re willing to lend me at this ridiculously low rate and the longest period of time I can take to pay you back?”

That being said, my heart would love for the mortgage to be paid off. My heart is obviously a fool, as hearts tend to be. I can’t blame it for its nature but I recognize it for its folly and go on my merry way.

So go ahead if you want, tell the bank to take its generous income stream away from you. Tell them you prefer peace of mind and the money they insist on paying you is making that hard. There is nothing wrong with this so long as you’re aware of what you’re doing. Some people spend lavishly on cars or vacations. If you want to spend on peace of mind, it’s your choice.

Statistics: Posted by Ron Ronnerson — Sat Jan 27, 2024 9:27 am — Replies 50 — Views 1803

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