3 ms·

This is bad advice. The $300k doesn’t look so bad when compared to the compounded gains those extra payments would get if they were invested instead.

LoSboccacc 6y ago
if they're invested. investing takes time, and if your job/career is on a natural rising curve, sinking time in the job to advance faster will gain greater returns, especially if you and the job market can stay in the "switch every two years for 15% pay increase" zone, very hard to beat that unless one is consistently very lucky all the time with investment, at which point it's better to fire yourself and start investing other people money as a job anyway.
gravitas 6y ago
It depends on how aggressive you want to be - I did a 30y loan and paid off at 5y by just sacrificing a lot to the math. The math was it would take +7 more years investing the "mortgage" to reach even (so 12y, 3y less than a 15y loan with far far less interest due) and I compounded that much more month over month during those +7 years, leaving me at the end of 12 years with a "free house" and a lot more month over month to keep investing with a nice reserve. I realize that's extremely aggressive and perhaps not possible by many people, I started with enough in reserves to be able to make it work.
- bradlys 6y ago
  IF you paid off a house in 5 years, you bought way less house than you could afford. Almost no one in America lives with that level of income to expense (as income usually scales with cost of living). Beyond that - unless you got some crazy predatory loan, you should be able to get a loan that will always be less than market returns (averaged over the years) even after taxes (you also get mortgage interest deduction when you have a loan). Rates today are now below 3% and with the economy booming - they were still frequently below 4%. Home ownership (especially for $500k+) is heavily subsidized in the USA.
  - gravitas 6y ago
    > IF you paid off a house in 5 years, you bought way less house than you could afford. Of course I did, that's the whole point to me. Moving to a location with a nice quality/standard of living with housing available far below my income so that it's not a financial burden. Everyone has a different goal - a small, modest house in a nice place to live is all many of us ask. And not being in debt. > Home ownership (especially for $500k+) is heavily subsidized in the USA A really nice house (nicer than mine for sure, even a brand new build) here is 250k. 500k buys a lot of house here (miniature mansions in some places), there are plenty of nice places to live in the USA for 150-250k. I just checked Zillow, where I grew up half way across the country (where parents still live) is the same prices as here. Not everyone lives in an overly expensive housing market or wants a massively large house/land.
tonyedgecombe 6y ago
Not this year.

LoSboccacc 6y ago

if they're invested. investing takes time, and if your job/career is on a natural rising curve, sinking time in the job to advance faster will gain greater returns, especially if you and the job market can stay in the "switch every two years for 15% pay increase" zone, very hard to beat that unless one is consistently very lucky all the time with investment, at which point it's better to fire yourself and start investing other people money as a job anyway.

gravitas 6y ago

It depends on how aggressive you want to be - I did a 30y loan and paid off at 5y by just sacrificing a lot to the math. The math was it would take +7 more years investing the "mortgage" to reach even (so 12y, 3y less than a 15y loan with far far less interest due) and I compounded that much more month over month during those +7 years, leaving me at the end of 12 years with a "free house" and a lot more month over month to keep investing with a nice reserve. I realize that's extremely aggressive and perhaps not possible by many people, I started with enough in reserves to be able to make it work.

bradlys 6y ago
IF you paid off a house in 5 years, you bought way less house than you could afford. Almost no one in America lives with that level of income to expense (as income usually scales with cost of living). Beyond that - unless you got some crazy predatory loan, you should be able to get a loan that will always be less than market returns (averaged over the years) even after taxes (you also get mortgage interest deduction when you have a loan). Rates today are now below 3% and with the economy booming - they were still frequently below 4%. Home ownership (especially for $500k+) is heavily subsidized in the USA.
- gravitas 6y ago
  > IF you paid off a house in 5 years, you bought way less house than you could afford. Of course I did, that's the whole point to me. Moving to a location with a nice quality/standard of living with housing available far below my income so that it's not a financial burden. Everyone has a different goal - a small, modest house in a nice place to live is all many of us ask. And not being in debt. > Home ownership (especially for $500k+) is heavily subsidized in the USA A really nice house (nicer than mine for sure, even a brand new build) here is 250k. 500k buys a lot of house here (miniature mansions in some places), there are plenty of nice places to live in the USA for 150-250k. I just checked Zillow, where I grew up half way across the country (where parents still live) is the same prices as here. Not everyone lives in an overly expensive housing market or wants a massively large house/land.

tonyedgecombe 6y ago

Not this year.