Think twice before not paying off that low interest mortgage.
When people say they are paying off their low interest rate mortgage, so many people say "Invest the $$$, don't pay off your mortgage."
Let's see if those of us with an ultra low mortgage rate should pay off their mortgage.
Here's the baseline, based off my own mortgage:
$294,568 loan amount
2.625% rate over 30 years
01/2021 Loan Date
$2,000/mo. extra payments, starting today (1/17/2025)
Interest Saved: $73,432.64
Payoff Date goes from 12/2050 to 09/2032. 18 years, 3 mo. early.
So, it would be paid off 7 years 8 Mo. from now.
Now, if I were to invest it:
$2,000/mo. for 8 years (Which is longer than I contributed to my mortgage)
Rate of return, 10%
My total contributions would be $192,000 for that 8 year period.
Investment growth would be $82,461.31.
This is a mere $9,028.67 difference between the two BEFORE taking into account taxes on $82,461.31 growth.
This is also very reliant on a good rate of return, which cannot be guaranteed over the 7.5 years, whereas I'm guaranteed to get $73k from paying off the mortgage early.
So, for those of you being told that you are dumb for paying off your mortgage early, make sure you do some (pretty easy) math before trusting what people say on the internet.