$1,214 ÷ 4 = $303.50 If you want to pay off your mortgage early, choose either accelerated bi-weekly or accelerated weekly. I agree that personal financial decisions are not always entirely math driven. Other small sacrifices can go a long way to help pay off your mortgage early. Whether it is a good option for you really depends. The individuals listed below offer physician mortgage loans for these lenders and are paid advertisers on the blog. For me the psychological benefits are worth it. My conclusions where different . I live in a high cost of living area and I think my home increased in value 6x since I bought in 2003. Great point! In essence, a $300,000 home costs more than $500,000 when viewed this way. There is very little risk in a mortgage, it is probably one of the least risky ‘debts’ one can have. FL, GA, MD, NC, SC, TN, VA, WI, WV I think it’s preferable. But maybe I just did— “MD/JD couples – Sleeping with the Enemy”. In your case it sounds like paying off your mortgage actually opened the door to new opportunities by allowing you to take risks! If future inflation and interest rates go up, a 2.875% loan will be very cheap money! Hence, there are more variables involved than just stock market returns and mortgage interest rate figures. Pingback: Sunday AAR (01APR2018) | MilitaryMillions, Pingback: Blog: FOMO, Cancer, and the Practice of Medicine – My Blog, Pingback: retired mortgage - Mortgagelendersinohio, Pingback: 300K Mortgage On - Fhaloanlimitsillinois, Pingback: How Much Will I Make Off My House | Buyingahomeforthefirsttimetips, Pingback: 80000 Mortgage 15 Years | Bed-bike, My 4 Current and 4 Future Passive Income Streams, The Doctor Loan: My Experiences Buying and Building with Physician Mortgage Loans. Notify me of followup comments via e-mail. I was putting away another $1000 a month into a investment that was paying me 6% instead of 3%. Looking back now, 2004 was close to the peak of the market. It made all the difference in the world for me . Thank you for supporting those who support this site and our charitable mission. It’s a mental burden to have a mortgage hovering and if our interest was anything above a 5% or god forbid the interest rates during the 70s and 80s, I would have chucked it so fast. Decisions, decisions. Now that I am FIRE aware and understand my numbers I want to keep the mortgage. We paid off our home in 11 years. 5.5 years total. Anyone would jump at the chance to only pay 1.20% for a mortgage. Our first mortgage rate was about 10%. I was no longer uptight or worried about losing my job or a demotion. Cutting about 12k of annual expenses (still considering taxes, maintenance and insurance) is huge! Living in a HCOL area I see people struggling to save and pay for their immediate expenses. Payoff Your Mortgage Early Contact: Bo Brown (NMLS #499414) at 816-309-5571 or Bo.Brown@BOKF.com, All States except AK & HI I had a few friends who dove right into homeownership after college only to be faced with a tough decision of whether to take a job offer elsewhere which involves selling and relocating or staying put. Great post! I’m right there with you rob, while I know mathematically it might not be the right move, paying off our mortgage is pare of our FIRE plan. The rest goes to savings and traveling. Contact: Lance Johnson  (NMLS #93035) at 704-770-3644 Office or 704-975-3033 Cell or lance.johnson@regions.com, FL, GA It provided a huge stepping stone to buying other properties. Haha. Over the last few years having enough cash in investment accounts has allowed me to take on more risk at work which has payed of handsomely and allowed even more taxable account contributions. We’re slaying our mortgage now, baby. I recall that we were getting around 10% from a money market account as well. Now he has a few rental houses and he’s doing quite well. But I’m struggling to see the benefit of not paying down if your (the generic “your”) eventual goal is FIRE. Once it’s paid off I’ll put more into my taxable accounts and/or start making backdoor Roth contributions (which will be easy for my wife but difficult for me due to other IRA accounts). I have about £150K in cash savings and zero debts now and this has allowed me to quit working under the unbearable pressures of the NHS whilst giving me the option of working as and when I choose as just getting more savings is not a prime motivator. Similarly we purchase cars in cash because we are willing to forgo the $2k-$3k arbitrage in carrying such a small loan for the simplicity of not having an extra monthly expense and allowing for lower car insurance. For us, between 4 to 6 years to paying off the mortgage AND saving enough for life after no 9-5 job. The arbitrage paid for a new retirement car one for me, and one for my wife which I stagger purchased about 3 years apart, so it was definitely worth doing. The rents received were used to aggressively pay down the high int rate mortgages. I think this is a great post but it’s not what I did. Our question is what … However, we did not sacrifice what we considered to be better investments, such as fully funding my 401k. I’ll let Rob explain, after a brief introduction, which he kindly supplied. If its that risky just sell, never buy in the first place. I know the feeling. That recognition is not the only thing we have in common. Start receiving paid survey opportunities in your area of expertise to your email inbox by joining the Curizon community of Physicians and Healthcare Professionals. Contact my business manager Cindy (cindy@physicianonfire.com) for contact information by sending her an email with Fifth Third in the subject line. Contact: Barbara Reamer (NMLS #783173) at 517-853-2692 Office or 517-256-5364 Cell or breamer@mercbank.com, IL, NY, OH, PA Fun post! Do you think that you would have invested the difference had you chosen the 30 yr mortgage? Before I was in the same place because I felt safe. The main reason to pay off your mortgage early is that, often, it will leave you better off in the long run. I saw first-hand all of the ways that debt hindered them, all because of a decision that they made at 18. Retirement, for instance, is a common motivator for paying off a home loan. No PMI despite a down payment of only 0-10%. Paying off a mortgage balance early, either through additional payments throughout the years or as a lump sum after some of the balance is paid off, results in an interest saving for most homeowners. Unfortunately the way I’m wired…I can’t stand debt so I lose out on some of the leverage . Anyways, you’re not doing anything about risk anyways, you’re simply changing risks from one that is very tolerable to one that is much less palatable and much much more likely, ie, longevity risk that you run out of money. Maybe 529 money might be an option. No matter what, there is a risk with the stock market. Not quite. Paying a $400,000 mortgage off in 10 years instead of 30 will save you $400,877 in interest. Thanks for sharing Shawn!!! Timeless mortgage Q&A: “How to pay off the mortgage early?” If you’re looking to pay off your mortgage quickly, now might be an easy time to do so because mortgage interest rates are very attractive.. But I’m glad that I do so that I have a frame of reference to share with others . One question I have that maybe PoF can answer: In one of the last couple of guest posts PoF has had, the author wrote about investing with a 100% stock portfolio while paying off his student loans because he treated his loans as bonds. My credit was bad when young, so the only place I could afford was very low cost and a crappy house in crappy area. I’ll definitely have to check it out. Contact: Darick Hensel (NMLS #1177936) at 810.245.9609 or darick.hensel@tcfbank.com, CT, DC, DE, FL, MA, MD, ME, NH, NJ, NY, NC, PA, RI, SC, VA, VT If you’re considering paying off your mortgage early, first contact your mortgage lender or servicer. Now I am free to go part time which I will next year. Hi Rob, You know by now, I am very debt averse just like you. We are six years into a 15 year mortgage at 2.875%. I paid off the loan and kept the interest arbitrage. With good but highly unstable income and health reasons to consider, it was never a question of lost opportunity costs. Paying off the mortgage early is an important financial goal. Thanks for the read!!! I could be wrong in my thinking as I am a novice, I like the thinking Seabass!!! The tax situation is tricky as you could go multiple ways. I paid cash. I was much more secure than I otherwise would have been. I’m glad you enjoyed the post!!! Another consideration in the mortgage payoff debate is the type of mortgage loan a homeowner has. The benefit is only apparent when the mortgage payment disappears. Over the life of a $300,000 loan, a homeowner would pay slightly more than $215,000 in interest payments, plus the original borrowed amount. Get hot tips, exclusive deals and the latest news sent directly to you. I think you don’t have to over extend yourself personal finance is a balancing act with your priorities. Historically, the stock market has yielded greater returns over time compared to the historic lows of mortgage rates. Great post Rob. I’m currently in that situation as I face the same dilemma. Living next the Joneses doesn’t help either at times . Share your thoughts below. That is already higher than any of my debt. Tom, Hahaha…I know of our mutual disdain for debt . 5 Sep 2017 #1 We are in a position to pay the outstanding balance of 30 K on our mortgage. I have been happy to use debt for my real estate investments however. Will an extra $10 a month be a hardship? There is very little benefit in a partially paid off mortgage. How Much Money Does a Doctor Need to Retire? You could also put the money you’re saving while staying at home to knock out extra principal. As long as you have a mortgage you still are required to make payments on it. It definitely wasn’t easy but I am incredibly thankful that it’s paid down now. I know for some people they can handle it very well while others like myself have a bit more difficulty dealing with it. That’s a great point to bring up and not something I thought about when paying off since we didn’t have any children at the time. Especially if income is increasing annually. Time to kill the mortgage. On a $250,000 30-year fixed-rate mortgage at 3.5%, you’ll pay off your mortgage four years early and save more than $20,000 in interest. Our mortgage is a modest 3.75% and it gives me less butterflies. Neither of us won the Plutus Award, but the nomination alone was an honor. But I keep coming back to the rate being so low and my very real dilemma of actually spending my savings (topic for another discussion). It’s the miniature “F off” fund. TX Otherwise, you run the risk of your place morphing into a frat house. Should you pay off your mortgage early? I realize that I could be further ahead but the peace of mind is worth it . For starters, you don't have to make any more monthly payments, and … No reason to suffer. I think paying off a mortgage is great, especially for early retirees as it is a form of deleveraging. Many people choose to pay off their mortgage early by making extra mortgage payments. That’s incredible Pat!!! Eliminating all debt payments will allow us the peace of mind for him to “retire” from corporate, once we hit our mortgage free goal. Contact: Stephanie Arcelay (NMLS# 897166) at 615-484-6690  or stephanie.arcelay@td.com, AZ, CO, IL, KS, MO, NE, OK, TX Now that my kids are older and my income is higher, I wish we’d completely maxed out our retirement accounts (back when we were both government employees we had required retirement plus 403b plus 457 options and for some of that time the ability to backdoor Roth) first because now that DH no longer has a 457 or required saving we have money leftover each month that we can’t hide from college financial aid by putting it in retirement or paying down the mortgage. Great blog! Congrats Rob! Top 5 Reasons Tracking Spending is Problematic | Passive Income M.D. If you're looking to pay off your mortgage early, you have a couple of options to consider. If you pay it off in 6 years (average of 5 – 7 years) that’s $1200 per month with a total interest payment of $87229. Within five years, we had the house completely paid off. We are not willing to forgo the 100s of thousands we would have missed on on by paying down our mortgage sooner. I have a $770,000 mortgage at 3.625%. Click on this link to Join Curizon and you'll also be entered into a drawing for an additional $250 to be awarded to one new registrant referred by Physician on FIRE this month. Great article! It sounds like buying a home right after graduation has worked for you on a number of levels. . If you’d rather keep that money for yourself instead of giving it to the banks, this course is for you! While daunting and strenuous to pay off the mortgage, by the end of 2012, I was able to breathe a sigh of relief. I paid off my mortgage somewhere between 2002-2006. After all, I had graduated with a finance degree in college. Messages 14. I love hearing views that opposite side of the coin I wish I had the risk tolerance for debt. Glad you enjoyed the story Keep up the hard work and you’ll be out of debt in no time at all!!! Most of the proponents for paying off a mortgage balance early consider the interest rate first. Great article. If you’re trying to pay off your mortgage early, the worst thing you can do is give the bank extra Photo by Avi Waxman on Unsplash If you own a home, you’ve probably been sold on the … We celebrated when our investments were equal to our debt and had saved up 20% for a home down payment. Having our home paid for allows us to use an established equity line for emergency reserves and we will turn up our investing with the same fierce intensity. Debt is a negative bond so paying it off is making the investment less negative, which is a positive. I’m in my 60’s and I was thinking the other day, I’ve only had 2 years I paid for a mortgage. 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