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Forum -> Household Management -> Finances
Making an extra mortgage payment a year- poor choice
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Post Sun, May 19 2024, 2:25 pm
amother OP wrote:
By the same token at year 26 you have zero dollars and zero access to cash since every penny was given to the bank to pay down the mortgage under the extra mortgage payment plan. Taking out a new loan on your home isn’t a given if you are unemployed or can’t show steady income .

Under the investment plan you have over 350k of cash you are sitting on at year 26 should the need or opportunity arise.

True but you’re talking an ideal I’m talking many peoples reality. Within 30 years of starting a mortgage your average frum family is making several bar mitzvahs, weddings, sending kids to Israel etc. How many people will be leaving that money untouched to actually get that level of return.
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Post Sun, May 19 2024, 2:33 pm
amother Emerald wrote:
If your house was paid off and you could get a loan for 3.5% (Hypothetically - using the rate in the OP example) would you borrow 800k against your house to invest in the market which would return a much higher rate?

Yes. A mortgage, especially at rates from a couple years ago which lots of people have, is literally close to the cheapest money you’ll ever get. So if you could take that and even very conservatively invest it to earn double, it is well worth it.

Spoken as someone who works in MCA, where people buy VERY expensive money.
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Post Sun, May 19 2024, 2:44 pm
teachkids wrote:
Short answer: depends on what your mortgage rate is and what you would do with the money otherwise

True, but the OP is making an excellent point. And almost anyone that took out a mortgage or refinanced more than 2 or 3 years ago has a pretty low rate.

And either way, those advocating to make an extra 2 mortgage payments a year should point out that for those that have the discipline, there is a far better opportunity with a historically better return available.
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