Prices are too high. With rates not subsidised in ’24 and mortgage still high , currently seeking alternatives to maximise savings without an RV move or taking a loan. I’m seriously contemplating the latter.
The best course of action if you lack market knowledge is to ask a consultant or investing coach for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, even though I know it sounds obvious or generic. I believe that is the most effective way to enter the business at the moment.
Thank you for saving me backward and forward hours of researching the markets, I just copied and pasted Melissa Terri Swayne on my browser, and her site appeared top search, no nonsense at all. She looks impeccable.
I paid my 30 year $455K mortgage in 7 years in December 2023! Scrimped saved and made significant sacrifices for those years. No new cars little entertainment rarely went to restaurants. All bonuses, tax returns, gifts were turned over to the bank. Wife wanted to hang me. Got through it and we now own our 950k house. No mortgage, no auto loans and no card debt because we didn’t spend money. We are financially free to do whatever the heck we want now. Btw we kept up with our 401k investments the whole time. It can be done! My rich friends still have many payments and are envious. Same people who poked fun because I drove a 10 year old car. lol.
Hi My name is Mira and I am so grateful to see your message. I am doing everything the same version that you did to pay off our mortgage too. Making videos weekly on my channel is pursing my passion and hoping to inspiring other people paying off debts and mortgage. Still working at it. I was an immigrant from Burma and I paid off all my debts including student loans. I am enjoying my life with my family spending quality time, stretching dollars and helping others however I can. Yep, I don't party big but I save to cut the debt circle big time.
Nice work Mira. Keep it going. I promise you the time is coming when you’ll be done and you will breathe the biggest sigh of relief and feel so so so accomplished with your goal. Matter of fact you’ll be so used to saving you won’t know what to do with the extra money. So you’ll just keep it in the bank for a while. Reward yourself and Make sure you set up another goal after that. Happy for you!! Btw- I’m an off the boat immigrant from Greece. 😊 best of luck!!
The only thing i would say is that you don't need a 15yr mortgage to pay it off in 15 years. In fact, i would recommend people take a 30yr loan BUT pay it at a 15yr pace. This is a long period of time and you never know when hard times will come. Today, you can pay off mortgages penalty free so if you fo with 30yr loans it gives you flexibility. If you or your partner lose a job, you have the option to pay significantly lower payment. If not, you keep paying it off at a 15yr rate and get it done early.
What I did. I COULD have made the 15-year payments but wasn’t feeling safe at work. Doesn’t mean I couldn’t (& haven’t) paid extra to Principle from that first payment!
Agreed and for those who may be considering refinancing from a 30 year to a 15 year mortgage you also have to factor in the multi thousand dollar fees associated with a refinance closing. Best to pay off that mortgage early by making additional payments as you suggested. 💪
but how when i do the math it seems that if i pay 15 year loan its paid in 15 years a 30 year if i pay that same extra few hundred a month that the 15 year loan was the math says you pay it off not in 15 years? I guess I am mathing wrong idk but never seems to be the same.
Yup, why shouldn't you give yourself the freedom if you can. I have a 25 year mortage but planning to pay it off in 15-17 years. In the the last 3 years I've paid off 3.5 years extra on the loan. Feels great. Just wish I had discovered this sooner. Plan to be completely debt free before 40. :D
We paid off our mortgage in January. I had a 15 year at 2.25% and so many people told me not to do it since the money was so cheap. It was a tough decision, but now that it's done, I don't have to throw additional payments to the principal every month. Now, the money we make is ours and let me tell you, we have been splurging the last couple months for sure. No regrets here. Very thankful for sure!
Nice job! Folks told me the same thing. What they don’t understand is the piece of mind aspect of paying it early. It’s an insulator in case you get laid off, etc. Enjoy your success!
Couldn't agree more! Congrats to you too!! It's a big sacrifice to take the extra money you have every month and keep pounding the mortgage. I'm glad that's done for you too!! @@billtsompanidis4691
Nope, you're wrong regarding my situation. My house is worth $1.3M and is now paid off, my cars and motorcycles are paid off, my kids college funds are in the bank, I have millions in the stock market, I'd say I made the right choice for my family. @@mguti090
@@mguti090I’m not so sure about that. The stress factor has been alleviated and I don’t have to worry about my job downsizing and giving me ( a highly compensated employee) the boot. It’s life insurance for my family should something happen to me etc. my retirement at 55 is complete and just growing it at this point. I’m happier than ever and can get a job at Home Depot stocking shelves without feeling any pain. Yeah I could have made another 200k but I already figured and delivered on that piece before the payoff. Can’t put a price tag on freedom 😊
yes, as every extra dollar will reduce as the extra $55 over a couple months will equal one month of the principal payment and at the same time reduce the amount of interest being charged.
@@RonalMorillas why they don't understand or why to apply it to principal? If you don't apply it to the principal the mortgage company will assume you want to pay "future" house payments. Principal goes directly to the actual debt you owe the mortgage company and pays down the amount. By doing that, you then save on interest.
My Mom was a “victim” of this. She paid extra diligently for over a decade, but they would always apply the extra to Escrow and send her a “mystery” check at the end of each year. It sucks, because she had the discipline and temperament, she just never knew to apply it to the principal.
One trick is to print off the 30-year amortization schedule showing each month’s principle and interest. Then whenever possible, pay extra money into the loan. After doing this a few times, then re-print the amortization schedule to see how much interest you have saved. That will encourage you keep sending in even more extra money.
Why reprint the amortization schedule, just use a pen and track where your actually are in your loan and how far head your principal balance is than where it should be if you made minimum payments
Yea! Seeing the total amount change so drastically is so exciting! (You don’t have to print, though, you can just pull it up on the computer and save paper 😊
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!
If you're already in a low rate mortgage, don't refinance. Just look up a 15 year mortgage online and see what the monthly payment would be and pay that extra amount toward principal on your current mortgage. Just pretend you're in a 15 year by paying the amount a 15 year would be. The years will just fall off your 30 year fixed.
We had a 5 year plan to pay the rest of our mortgage off starting Jan 2021. We ended up paying it off in 2.5 years. Once you start seeing the balance come down fast, it's addicting. Once, I even put my $100 Christmas money from my parents on it when the balance was around 400K. We tried putting at least 7 payments per month on it, regardless of the size.
@@lovetoplaywithyou3530 We just made principal payments several times per month. And made the bigger chunks at year end with bonus money and I took on random side hustle work. We had $100K in a brokerage account, but we paid off $903K in 30 months.
My husband and I did the same thing. One of use would say “so you want to go to a movie? Or stay home and put that $20 on the principal?” Then we would put it into a mortgage calculator and see how much we would save over the lifetime of our mortgage and we pretty much always chose to stay home 😂.
I'm down to my last $21,400 on my home, if I follow my plan I'll be paid off in 2029 that will be around 13 years early, original pay off date was 2043
@@kimberlylepine5115 You can still pay it off in 15 years by paying additional prinicpal payment equal to what a 15 year payment is but you're not obligated to make a high payment every month if times get tough. It's a win win.
@@kimberlylepine5115 I think you’re misunderstanding the point. A 30 year mortgage gives you a freedom of a lower payment. It doesn’t stop you from paying off your mortgage fast. You just make additional principal payments.
@@CM0211 that’s because you refinanced from a higher interest rate to a lower interest rate. If you would’ve chose the new rate on a 30 year your payment would’ve been much lower.
I would not refinance a loan from 30 to 15 year if you are good about paying extra towards the loan. People always make it sound like it is free to refinance, but nothing is free and those costs are $$. Sure the bank will just 'wrap those closing costs into the loan' but that will cost even more.
Old lady here (70). My hubby surprised me about 5 years ago by paying off the house with some investment money. I was shocked but he realized how important it was to me. Now even he says he feels better! And, that monthly payment is gone. The grass really does feel different.
I would like to mention that I am 68 and I have a paid-off mortgage. Yes, it reduces stress but it makes me feel so secure that if myself or my husband gets sick and can not work we can afford to survive with a roof over our heads.
Asking a real estate agent whether you should buy a home right now is like to asking an alcoholic whether they think you should have a drink lol. Homes in my neighborhood that cost around $450k in sales in 2019 are now going for $800 to $950k. Every seller in my neighborhood is currently making a $350k profit. Simply unreal. In all honesty, deflation is what we require. The only other option is for many people to go bankrupt, which would also be bad for the economy. That is the only way to return to normal.
Exactly why i enjoy market decisions being guided by a pro , seeing that their entire skillset is built around going long and short at the same time both employing risk management and market experience , been using a portfolio-coach for over 2years+ and I've netted over $3million in that time frame.
Thank you for all the great information, Rachel! Because of listening to all the great videos coming out on Ramsey, I have been encouraged/my husband and I have been encouraged to pay off our mortgage early. We have about a week and a half to finish.🎉🎉🎉🎉🎉🎉🎉🎉
My payment is so low (under 10% of take home pay) and at 3.3%. Right now CD’s pay better. Not including taxes, my payment is $850. It just doesn’t make sense right now to pay off early. It will naturally be gone in 7 years.
Owned my condo 5 years, re-fi’d in 2021 to a 30-year, made extra payments from Day 1. Saw in Oct. interest was 50% of my remaining balance if I stick to the 30-year schedule! Nope! Double my mtg. each month, straight to Principle. Should be done in 7-years.
Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market.
True, I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
I finally cleaned up my act and am maxing out retirement IRA by this June for both my wife and I. After that, 4x principle payments each month through the end of the year. Can't wait to see the balance drop.
I make 13 principle payments a year and pay one quarter of my mortgage weekly. I have solar panels, so I have had no electric bills for 23 months. Also, the federal tax credit for solar is 30%.
My grandma paid her house off four years early in 1987. Freeing up the house payment only released $120 a month. So getting this done very early is very worthwhile. 26 years of inflation doesn't give you much money when you're done with the house.
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I pay my principle payments WEEKLY just for the peace of mind that I did the payment create the discipline and to stay on track I treat my extra principle money like a another bill I see the light to the finish line
I love these tips. I have a question please: Instead of making an extra payment per quarter, can I just pay extra per month? In other words, if my payment is $1200/month, can I pay an extra $400 per month, instead of making an extra payment at the end of a quarter? Is there a difference?
Yes, that’s even better. The sooner you make extra principal payments, the lower your future interest payments will be. So paying that $400 extra every month will result in a faster payoff than an extra $1,200 once per quarter UNLESS the $1,200 extra was paid in the first month of every quarter. Then, the $1,200 extra per quarter would be better because the principal balance on which future interest is charged would be lower sooner.
Or if you already have a 2.75% 30yr fixed, just pay it like a 15yr mortgage at 2.75%. Use a loan calculator and put your principal in there over 180 months at your current low interest and thats how much you need to add to your principal payment. There is no need to refinance. Also, if you have an emergency 1 month, you can pay the 30yr payment versus the 15yr payment. You dont need to wait to refinance.
Timely video. Yes home ownership is expensive!! We buolt our house in 2022 and it was double what we predicted would cost us. A big factor was the cost of labor and material had sky rocketed. We anticipated on having a loan but not close to what our loan came out to be. We sold our old home put money into building the new one but still had 249k. Signed up for 30 yrs but paying it as if its a 15yr. Thankfully our rate was locked at a decent number 3.85% before it shot up everywhere to 6-7%. We are putting extra $650 monthly. Would like to add more once we built our emergency fund back up.
True The Rate of the Biggest Loan is Under 4% "around ~3.70%" €140K You would notice it going up 1% or like you noticed Double the Amount then you could Pay Double and that for many Months till it goes down or even higher.. Cap the Rates People!!
I will have my house paid off in less than 4 months. I have a goal for 4 months because my insurance renewal comes in September. Currently it's 7k and that is more than double what it was a year ago. FEMA rezoned my home to a flood zone, so the Mortgage company required it. So I have decided to pay it off completely and get my insurance on my own. They want me to pay off the total before they will refund my escrow.. totally ridiculous!!! I don't care if I have only a few dollars in the bank. I am paying it off!!!
I make bi-weekly mortgage payments and that give me one extra payment a year. I also round up my payment to the nearest 100 and that is giving me an extra 75 every two weeks.
It is humbling to think that at least part of your childhood was spent with the broke Dave Ramsey. Your family has come so far and helped so many others with the journey. Thank you!
When I bought my first home, I used a simple trick of setting up an automatic payment where I had rounded the payment amount up to the nearest $100, with the extra, of course, going to the principal. You'll never miss that little amount, but over time it does make a difference. Then I started making significant additional payments when I could, ultimately resulting in paying it off in about 6 years. The payment difference between a 30 year and a 15 year mortgage is often very little--plan to pay at least that difference each month. Get a raise? put that on the mortgage. It all adds up very quickly.
I'd you have a 2.25% mortgage I would caution you not to be in a hurry to pay it off. You can make far better returns in a low cost s&p 500 index fund.
🙋🏼♀️Hi Rachel. I have a question about the 25%. Is this percentage on net income, for the mortgage only, or adding in utilities and any other monthly charges that have to do with the home? Your video comes at a time when I’ve been crunching numbers. My focus has been on paying down(and off) other debt and we’re almost there. But now I’m looking at amortization calculators with the goal of paying off by or before retirement. And you are so right about having a savings for maintenance and unexpected home repair. In the past we’ve had to finance a furnace HVAC and water heater replacement. Now our roof, as it is 20yrs old.
It's net income(after taxes) but not after other deductions that might be taken out of your check. The 25% is the mortgage, home owners insurance, property taxes, and PMI if you didn't put 20% down on the house.
I bought in 2009 and my mortgage at that time was 45% of our take home pay. We were not making much income and borrowed for the 3.5% down payment. It was a terrible decision at that time that payed off in the long run. Eventually our income grew and now we have a mortgage that is lower than a studio apartment. It was right when the market crash and we got the deal of a life time. It was by far the riskiest thing I’ve ever done
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I just withdrew my Profits a week ago, To be honest it was an amazing feeling when the profits hits my wallet I wish I could reinvest but, too much bills
Seeing my broker talked on RUclips, This was exactly how I got the recommendation about her for the past years. Hit $200k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started with $20k in January 2024
Interest rate is currently at 4.75%(8th rate hike since March last year) Inflation at 7% and mortgage rates is at over 7.5% but yet minimum wage remains the same and my retirement portfolio has suffered tremendously these past years, so my question is how do senior citizens retire and live off such unstable economy. The long term game is obviously not for me at this point.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Exactly why i enjoy market decisions being guided by a pro , seeing that their entire skillset is built around going long and short at the same time both employing risk management and market experience , been using a portfolio-coach for over 2years+ and I've netted over $3million in that time frame.
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
You’re always better off with a 30 year and paying additional principal as if it’s a 15 year. If you run into any issues like an emergency or job loss you can always just pay the 30 yr payment until you find a new job. But what if you’re stuck at the 15 year payment and not paying the full amount puts you on a path to foreclosure? Get a 30 year and treat it like a 15. The math maths almost identically. The Ramsey methods are very flawed.
I have a 3% mortgage interest rate and suddenly became liquid from the sale of a business and i am confused if i should pay off my mortgage or invest in the stock market.
If I were you, I would gladly pay off my mortgage first. Without debt and mortgage payments, you can invest as much as you want. I wouldn't invest in single stocks though. You'll be much better off with investing in a 401K or IRA.
You have a 3% mortgage. In my opinion, if you believe you can invest it anywhere for an after-tax rate of return over 3%, you should do that instead (Treasuries, I-bonds, high interest savings/money market funds, certificates of deposit, stocks, mutual funds, or wherever), especially if you have a long horizon to retirement or other needs of the funds. That said, if you have other debt that’s at higher interest rates, again in my opinion, you should pay those debts down/off.
Can't you accomplish the same thing by paying extra on the principal every month without being locked into a higher payment in the event an emergency arises and also you don't have to pay the extra couple grand it will cost to refinance.
Papa Dave says if you invest in stocks you will get a 12% return year over year. Why pay off your mortgage? Fun fact: $330,000 in stocks would net you $11,530,000 @ Dave’s 12%. A $330,000 30/yr mortgage will cost you $327,490 in interest @ 5.27%. The reason why Dave advocates to pay off your house is because Dave really doesn’t believe that you will make 12% in the stock market every year. But he wants to sell you hope (and books, and investor pros who pays Dave handsomely to be on his silly “vested” list).
Years ago I considered working for him so I read his book and when I saw the part that used 15% annually for decades in order to demonstrate how you could become wealthy via compound interest I lost interest in working for him because only an idiot or a liar would lead people to believe that was realistic and I didn't want to work for either. The no credit cards, the buy houses with cash, the pay mortgages off early, the 12-15% annual returns... If I listened to that baloney my portfolio would be a lot smaller.
You didn’t mention paying twice a month instead of once a month. We pay half of the mortgage payment on the 5th and the other half in the 15th. This builds in the extra yearly payment.
If you’re paying half the mortgage payment 2x a month, you’re not building in an extra payment. What you’re referring to if you pay every 2 weeks. That means you’ll pay 26 half’s (13 wholes) in the year instead of 24.
@@c2s2942 Yes. That's what I just said. The original commenter said they pay half of the mortgage payment on the 5th and the other half on the 15th. That means that they still only make 12 whole mortgage payments per year because they're not paying bi-weekly. They're just paying half the payment 2x per month.
I find a whole lot of comfort in my mortgage. I sold my home several years ago and invested the money in mutual funds. A couple of years later I bought another home. Instead of buying it out right with the money from my first home, I took out a 30 yr mortgage at 3%. The $350K I would have put in the house continues to generate about 8%. I am now about $200K ahead due to the mortgage. Please stop telling people to act on comfort; i.e., emotion and instead use rational thinking in managing their money.
I dont plan to pay off my mortgage early. My interest rate is only 2.75 percent. My money makes more staying in savings these days. Im retired, so my money has to work hard.
I sold an apartment in Springfield and made about $250K. I was frustrated when I only earned $171 in interest from a regular savings account. After doing some research, I was advised to invest in stocks. Are these stocks a good point to start from?
Although the stock market is exciting and can yield a healthy return on investment, professional advice is necessary for efficient portfolio management to prevent market burnout due to its extreme volatility.
These are great ideas to help “poor” people at least feel like you’re getting out of debt but still not the optimal way to “pay off” your mortgage early
While agreeing in principle, strategy and rationale to pay off your mortgage early, the cover image for this video showing a total payment of $0 is misleading. The Escrow line item that would have been for funds to cover taxes and homeowner insurance is still your responsibility. It doesn't go away after paying off your mortgage. Only the principal and interest goes to $0.
We have a 15 yr mortgage at 2.2% interest rate with 10 yrs to go. With such a low interest rate does it make sense to pay it off early rather than invest that extra payment?
What if you paid off the mortgage and stopped losing 2.2% on that every year and then invested what you were paying toward your mortgage. You’ll grow wealth even faster. A good way to look at it is if you were in a race and everyone starts with a weight around their ankle. You can either run the race with the ankle weight and hope you have the stamina to keep going, or you can take a little bit of time at the beginning and remove the weight and then sprint through the race without the extra burden.
Something we are doing is putting our money in a high interest savings account while our mortgage rate is lower than this guaranteed return, and then we'll pay a lump sum down the line. Gives the flexibility to use the money if we truly need to.
@@mrschulltzyI ran some numbers based it off 300k at 10 yrs paying an extra $2k/month. Paying the mortgage you save $19k But Investing at: 8% return gives about $33.5k 10% return gives $43.5k At 4% return, it’s about a break even. So she could just put it into a HYSA incase of a emergency, and in 5yrs if nothing goes bad, just pay it off the mortgage? Nothing lost but peace of mind won. Personally, I would max out 401k and Roth. Make sure you have a solid 6 month emergency fund and then either your children’s 529, or towards the mortgage.
I’m in the similar situation - 2.75% I’m 6 years in a 15 and have made extras leaving about another 6 years left till payoff. I’m pausing extras right now and shifting my focus towards my retirement/investment so I can align my Coast FIRE years with my mortgage payoff years. The risk is zero bc I have enough to payoff now, but I’d rather take advantage of the compounding years now than wait 6 years.
Thank you for this video! This is helpful information ❤ I absolutely love your company, the values and the character of your family and the employees at Ramsey Solutions. Such a blessing to others.
Enjoy your videos Rachel ! My prepayment plan one extra payment per year. If you have a $1200 principal and interest payment put $100 extra in every month. I believe that pays a 30 year mortgage off in 18 years. If you do that on a 15 year mortgage it really pays down principal. My first house in 1978 9/34 rate second house 1985 a 12.50 rate.
Why would you refinance from a 30 year mortgage to a 15 year mortgage? Closing costs on that would be $20k or more. There is no benefit to that. Just pay extra towards the mortgage
Great work Cynext solution so glad you are out there fighting these lowlifes. We need to do all we can to spare the elderly and the general public from these despicable scammers! Kudos to YOU!! You deserve the Nobel prize for keeping us safe big up brother.
I’m budgeted at 24 paychecks a year currently and I’m moving to a job to 26 paychecks but the same amount every checks. Should I just throw those at the mortgage twice a year or save?
@4:20 why the heck would you refinance a loan if your just trying to pay it off earlier? You're going to have to pay a couple hundred at minimum just to get it refinanced, it also forces you into paying it off rather than just paying down extra principal each month.. I barely see any reason to refinance an existing mortgage if you just plan on paying it off earlier anyway. If the interest rate isn't significantly lower it's pointless, also if you plan on paying it off faster than 15 years it's also pointless. Additionally, if the mortgage is literally going to be paid off in 20 years because you've owned it for 10 already it makes even less sense. Who do they expect the people who have no debt, tons of investments, that have a freshly bought 30 year mortgage house? It wouldn't surprise me if the average person who is looking at paying off their mortgage is already 10-15 years into owning their home.
It is just that People are forced to pay for 15 Years rather than Pay it half their Life and the Small Reduced cost is making people happy. If you are Young and can Pay 30 Years that is great but you could make it faster and do it in 10 Years so you are done with it..
I put my extra money in a good monthly income fund. In 10 years or less, I should have a "paid for house" because my investments will pay more than the payment for the house. I feel more secure doing it this way than paying the house off early because if I lose my job, I can make years worth of payments before I run out of money. The bank isn't going to give back your early payments because you lost your job. They expect that payment every month. I only need 80% of the original mortgage invested to make the full payment, so I am coming out ahead by not paying it off.
Money actually grow on trees but only on trees that was planted by you!! These tress are referred to as investments, How you diversify your investment portfolio matters.
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Help me understand the maths argument for paying off early. I pay 2.25% APR on my mortgage. My brokerage account earns about that PER MONTH. If the historic 8% Dave Ramsey talks about on his show is true then why pay off your mortgage early instead of investing it?
How did you do that? I pay principle and interest on the 15th of current month for the 1st. I also add another $200 a month towards principle. Just did the math. I refinanced on 8/21 at $318k and now owe $280k. My payment is $1740 a month. If I times that by 13.5 years I’m payed off. How can I pay it sooner? In 7 yrs as you?🙏💪
If you pay as if you're in a 15-year mortgage, but you're really in a 30-year mortgage, is it the same as if you were truly in a 15 year? Hope this makes sense. Good luck
I'm Married 51 year old if I payoff my house early and it's my only Asset what can we do at Tax time not to payback so much if we don't have anything to claim
I'm trying to reduce from 5 to 3 years or 2.5...not sure if it will be possible, but that would mean my mortgage, for which I put 0% down (I didn't know Dave then) will be over in 22.5 years.
People keep trying compare apr with simple interest lol. 2.5 apr first year of your loan is still half payment going to interest open your freakin eyes. So paying 3k in interest on 6k annual payment of 500 bucks a month is 50 percent interest for the year.
People aren't "sold" homes they can't afford! People BUY homes they can't afford. It's 100% the buyer's decision, no one forces them to sign on the dotted line. Other than that, great video.
I'm single, bought a house because rent is more than my house payment, but, my payment is half my income. I'm going to have to get a second job....rent and house payments are ridiculous. I put down a huge amount but still....living paycheck to paycheck.
@rachelcruze isn't some of what you said outdated in this real estate market of The Last 5 Years? Reports of shown that Americans are spending 50% of their income on home ownership because of the inflated housing prices, low inventory, and inflated rates. So a 25% of income housing expense doesn't sound realistic.
Almost have my house paid off. Did a 15 year mortgage and then did bi-weekly payments. Pay an additional $200+ every month towards principal. Still maxing out my 401K. The bi-weekly payments only allow interest to accrue for 14 days, not 30. Huge difference. If you can swing it, it's the easiest and quickest way to pay down/off your mortgage. Good luck to all!
i bought my house in 2017 4.1255% i was only payin round up to the nearest hundred started out about 59.and some change my extra on principle eventually got to 33.and some change so in middle if 2023 i bumbed it anither 50 bucks and starting in jan2024 im bumpun 50 each time putss me at 240 extra almost but u dint really see it helping uts so far😝
All of this advice was great except the 15yr refinance. That's a horrible idea. One big emergency and your credit and savings account are done. Never give away your leverage and options.
Refinancing after having a mortgage for a while is a horrible idea. The reason is because you start ALL over again day one paying interest again. Just like in the beginning because it is the beginning. Don’t ever refinance. Figure out another way. Just don’t do it. Even if the rate is lower. Just pay more on your mortgage each month. I know because we refinanced a couple of times until I finally decided never again. Now we will have the house paid off about 7 years earlier because we are so king it to that mortgage every month.
Many people have a higher interest and pay off their house loan under 30 years, I guess you like losing money I don't know what to say about being happy to have a mortgage for 30 years.
Hi Rachel, I bought my first home 4 years ago. I have a 20 year fixed rate mortgage at 1.37% (I know it’s crazy low). I currently have 169.000€ left on the mortgage. My current mortgage payment is €640.40 (€192.84 in interest, €447.56 in principal). I know debt is debt and you would want it to be paid off quickly, however I would be getting more interest on my money in the bank than it would be to pay off the mortgage. Would you say it is wise for me to start paying off the mortgage or just do that after the 20 year fixed is over (currently still 16 years left)?
So once you pay off all your debt, and this includes your mortgage, you can put in as much as you want. The 15% is only recommended while you pay for your mortgage.
Why not take out a 30 year loan for a cheaper monthly payment and use the money you are saving from a higher 15 year payment and invest that extra extra money and then before the first 15 years are up you will probably have enough invested to pay off your 30 year mortgage in Less time than your 15 year mortgage and probably with money left over.
Let's face it, there's nothing easy about paying off early. You must have extra funds available and discipline to do it. It's a great strategy, but not easy.
Prices are too high. With rates not subsidised in ’24 and mortgage still high , currently seeking alternatives to maximise savings without an RV move or taking a loan. I’m seriously contemplating the latter.
Affording our mortgage is tough as well. I have suggested cashing in, renting or relocating, and investing the rest in the stock market.
The best course of action if you lack market knowledge is to ask a consultant or investing coach for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, even though I know it sounds obvious or generic. I believe that is the most effective way to enter the business at the moment.
Please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with this person
Melissa Terri Swayne maintains an online presence. just make a simple search for her name online.
Thank you for saving me backward and forward hours of researching the markets, I just copied and pasted Melissa Terri Swayne on my browser, and her site appeared top search, no nonsense at all. She looks impeccable.
I paid my 30 year $455K mortgage in 7 years in December 2023! Scrimped saved and made significant sacrifices for those years. No new cars little entertainment rarely went to restaurants. All bonuses, tax returns, gifts were turned over to the bank. Wife wanted to hang me. Got through it and we now own our 950k house. No mortgage, no auto loans and no card debt because we didn’t spend money. We are financially free to do whatever the heck we want now. Btw we kept up with our 401k investments the whole time. It can be done! My rich friends still have many payments and are envious. Same people who poked fun because I drove a 10 year old car. lol.
That's incredible - nice work!!
That’s awesome and so inspiring 😊
We’ve done the same and it feels good having no debt.
Hi My name is Mira and I am so grateful to see your message. I am doing everything the same version that you did to pay off our mortgage too. Making videos weekly on my channel is pursing my passion and hoping to inspiring other people paying off debts and mortgage. Still working at it. I was an immigrant from Burma and I paid off all my debts including student loans. I am enjoying my life with my family spending quality time, stretching dollars and helping others however I can. Yep, I don't party big but I save to cut the debt circle big time.
Nice work Mira. Keep it going. I promise you the time is coming when you’ll be done and you will breathe the biggest sigh of relief and feel so so so accomplished with your goal. Matter of fact you’ll be so used to saving you won’t know what to do with the extra money. So you’ll just keep it in the bank for a while. Reward yourself and Make sure you set up another goal after that. Happy for you!! Btw- I’m an off the boat immigrant from Greece. 😊 best of luck!!
The only thing i would say is that you don't need a 15yr mortgage to pay it off in 15 years. In fact, i would recommend people take a 30yr loan BUT pay it at a 15yr pace. This is a long period of time and you never know when hard times will come. Today, you can pay off mortgages penalty free so if you fo with 30yr loans it gives you flexibility. If you or your partner lose a job, you have the option to pay significantly lower payment. If not, you keep paying it off at a 15yr rate and get it done early.
This is the way.
What I did. I COULD have made the 15-year payments but wasn’t feeling safe at work. Doesn’t mean I couldn’t (& haven’t) paid extra to Principle from that first payment!
Agreed and for those who may be considering refinancing from a 30 year to a 15 year mortgage you also have to factor in the multi thousand dollar fees associated with a refinance closing. Best to pay off that mortgage early by making additional payments as you suggested. 💪
but how when i do the math it seems that if i pay 15 year loan its paid in 15 years a 30 year if i pay that same extra few hundred a month that the 15 year loan was the math says you pay it off not in 15 years? I guess I am mathing wrong idk but never seems to be the same.
Yup, why shouldn't you give yourself the freedom if you can. I have a 25 year mortage but planning to pay it off in 15-17 years. In the the last 3 years I've paid off 3.5 years extra on the loan. Feels great. Just wish I had discovered this sooner. Plan to be completely debt free before 40. :D
We paid off our mortgage in January. I had a 15 year at 2.25% and so many people told me not to do it since the money was so cheap. It was a tough decision, but now that it's done, I don't have to throw additional payments to the principal every month. Now, the money we make is ours and let me tell you, we have been splurging the last couple months for sure. No regrets here. Very thankful for sure!
Nice job! Folks told me the same thing. What they don’t understand is the piece of mind aspect of paying it early. It’s an insulator in case you get laid off, etc. Enjoy your success!
Couldn't agree more! Congrats to you too!! It's a big sacrifice to take the extra money you have every month and keep pounding the mortgage. I'm glad that's done for you too!! @@billtsompanidis4691
Those people were right. What you did makes zero sense.
Nope, you're wrong regarding my situation. My house is worth $1.3M and is now paid off, my cars and motorcycles are paid off, my kids college funds are in the bank, I have millions in the stock market, I'd say I made the right choice for my family. @@mguti090
@@mguti090I’m not so sure about that. The stress factor has been alleviated and I don’t have to worry about my job downsizing and giving me ( a highly compensated employee) the boot. It’s life insurance for my family should something happen to me etc. my retirement at 55 is complete and just growing it at this point. I’m happier than ever and can get a job at Home Depot stocking shelves without feeling any pain. Yeah I could have made another 200k but I already figured and delivered on that piece before the payoff. Can’t put a price tag on freedom 😊
We’re paying off our home this year after 15 yrs and at 40 yrs old. No other debt, it feels good.
Congratulations. I am working towards paying off our mortgage too and will continue save.
@@HealthyWealthyMogulLet’s do this!!!💪
Huge blessing!! Many congrats!!!
Congrats, I'm on this path myself. 25 year loan getting paid in 15 before 40. :D
Round your payment up to the next hundred can knock a few years off the loan. I did that for 14 years and it knocked 5 years off.
Great idea! I'm going to do this!
So if the mortgage is 1245 you are saying to pay 1300 a month instead?
yes, as every extra dollar will reduce as the extra $55 over a couple months will equal one month of the principal payment and at the same time reduce the amount of interest being charged.
@@Matthew-wz8ng thank you!
We pay $450 extra on top of our monthly repayment amount
Remember extra payment to principal.... Some people don't understand that. When you make your extra payment, apply it to the principal only!
Why is that?
@@RonalMorillas why they don't understand or why to apply it to principal?
If you don't apply it to the principal the mortgage company will assume you want to pay "future" house payments. Principal goes directly to the actual debt you owe the mortgage company and pays down the amount. By doing that, you then save on interest.
My Mom was a “victim” of this. She paid extra diligently for over a decade, but they would always apply the extra to Escrow and send her a “mystery” check at the end of each year. It sucks, because she had the discipline and temperament, she just never knew to apply it to the principal.
@@ScottJ_Moses sigh ...that really stinks!
@@Kyriecat12 Yeah…I wish I would’ve known sooner, but we only got on the subject a year or two ago.
One trick is to print off the 30-year amortization schedule showing each month’s principle and interest. Then whenever possible, pay extra money into the loan. After doing this a few times, then re-print the amortization schedule to see how much interest you have saved. That will encourage you keep sending in even more extra money.
Why reprint the amortization schedule, just use a pen and track where your actually are in your loan and how far head your principal balance is than where it should be if you made minimum payments
@@barnabusdoyle4930 Reprinting it gives you “hard copy proof” of the effect of making extra payments.
Yea! Seeing the total amount change so drastically is so exciting! (You don’t have to print, though, you can just pull it up on the computer and save paper 😊
The PMT function in Excel easily calculates mortgage amortization in a spreadsheet. Very powerful tool.
I use an amortization spreadsheet I found free online.
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further.
I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an email shortly.
Took us 18 years on one income, but we did it!! Just last Thanksgiving, we were officially debt free... Meaning the mortgage!
If you're already in a low rate mortgage, don't refinance. Just look up a 15 year mortgage online and see what the monthly payment would be and pay that extra amount toward principal on your current mortgage. Just pretend you're in a 15 year by paying the amount a 15 year would be. The years will just fall off your 30 year fixed.
We had a 5 year plan to pay the rest of our mortgage off starting Jan 2021. We ended up paying it off in 2.5 years. Once you start seeing the balance come down fast, it's addicting. Once, I even put my $100 Christmas money from my parents on it when the balance was around 400K. We tried putting at least 7 payments per month on it, regardless of the size.
100%
How do you do that?
@@lovetoplaywithyou3530 We just made principal payments several times per month. And made the bigger chunks at year end with bonus money and I took on random side hustle work. We had $100K in a brokerage account, but we paid off $903K in 30 months.
Awesome job. It feels good doesn’t it!!!
My husband and I did the same thing. One of use would say “so you want to go to a movie? Or stay home and put that $20 on the principal?” Then we would put it into a mortgage calculator and see how much we would save over the lifetime of our mortgage and we pretty much always chose to stay home 😂.
The key is to don't buy an expensive house. A 3 bedroom 2 bathrooms is good enough. Nothing over $300k otherwise you will pay for longer.
Hear, hear. I bought in 2022. I’ve lived here around 18 months, but I’m” 6.5yrs” on my amortization chart.
I'm down to my last $21,400 on my home, if I follow my plan I'll be paid off in 2029 that will be around 13 years early, original pay off date was 2043
Very nice, congrats. In the same boat. Original date 2044 but aiming for 2030. :D
You could knock out the 21,400 in 2 or 3 years!! Push yourself and you’ll have more $
Working on this...my balance is 203k and plan to add at least 100 to 200 each month, and add more when I can
It's risky to force yourself into a 15 year mortgage. Keep your 30 year and just make additional principal payments
Not necessarily. I'm in my early 40s and I would be afraid to get a 30 year mortgage, even if Rachel and Dave didn't say so.
@@kimberlylepine5115 You can still pay it off in 15 years by paying additional prinicpal payment equal to what a 15 year payment is but you're not obligated to make a high payment every month if times get tough. It's a win win.
I refinanced from a 30 to a 15 year mortgage and reduced the interest rate. I ended up only paying about $75 more a month
@@kimberlylepine5115 I think you’re misunderstanding the point. A 30 year mortgage gives you a freedom of a lower payment. It doesn’t stop you from paying off your mortgage fast. You just make additional principal payments.
@@CM0211 that’s because you refinanced from a higher interest rate to a lower interest rate. If you would’ve chose the new rate on a 30 year your payment would’ve been much lower.
I would not refinance a loan from 30 to 15 year if you are good about paying extra towards the loan. People always make it sound like it is free to refinance, but nothing is free and those costs are $$.
Sure the bank will just 'wrap those closing costs into the loan' but that will cost even more.
Thank you, finally someone gets it. Take that fee you’d be charged and just pay off the principal on your current loan , and keep going till it’s gone
What about if you have 7.75 interest?
Yep, you're out thousands of dollars in "fees" at closing.
Agree. I have a 30yr loan. Currently on track for mortgage free after 9yrs.
I think it also gets overlooked that refi resets the clock too. So if your 4 years in and get a 15 yr refi your still mortgaged for 19 years.
Old lady here (70). My hubby surprised me about 5 years ago by paying off the house with some investment money. I was shocked but he realized how important it was to me. Now even he says he feels better! And, that monthly payment is gone. The grass really does feel different.
I would like to mention that I am 68 and I have a paid-off mortgage. Yes, it reduces stress but it makes me feel so secure that if myself or my husband gets sick and can not work we can afford to survive with a roof over our heads.
Asking a real estate agent whether you should buy a home right now is like to asking an alcoholic whether they think you should have a drink lol. Homes in my neighborhood that cost around $450k in sales in 2019 are now going for $800 to $950k. Every seller in my neighborhood is currently making a $350k profit. Simply unreal. In all honesty, deflation is what we require. The only other option is for many people to go bankrupt, which would also be bad for the economy. That is the only way to return to normal.
That is so amazing, I’m trying to get onto the investing ladder at 40. I wish at 55 I will be testifying to similar success..
Exactly why i enjoy market decisions being guided by a pro , seeing that their entire skillset is built around going long and short at the same time both employing risk management and market experience , been using a portfolio-coach for over 2years+ and I've netted over $3million in that time frame.
Impressive can you share more info?
Credits to 'Carol Vivian Constable' she has a web presence, so you can simply
She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.
Thank you for all the great information, Rachel! Because of listening to all the great videos coming out on Ramsey, I have been encouraged/my husband and I have been encouraged to pay off our mortgage early. We have about a week and a half to finish.🎉🎉🎉🎉🎉🎉🎉🎉
Congratulations!
That is Amazing!!
Any update, is the mortgage done? 🤩
About a year left on my mortgage to be paid off.
Started with 30yr. but will pay off in 15yrs. (Extra Payments)
My payment is so low (under 10% of take home pay) and at 3.3%. Right now CD’s pay better. Not including taxes, my payment is $850.
It just doesn’t make sense right now to pay off early. It will naturally be gone in 7 years.
Owned my condo 5 years, re-fi’d in 2021 to a 30-year, made extra payments from Day 1. Saw in Oct. interest was 50% of my remaining balance if I stick to the 30-year schedule! Nope! Double my mtg. each month, straight to Principle. Should be done in 7-years.
Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market.
True, I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
@parrish8386 Please pardon me, who guides you on the process of it all?
Please pardon me, who guides you on the process of it all?
Thanks, I just googled her and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
I finally cleaned up my act and am maxing out retirement IRA by this June for both my wife and I. After that, 4x principle payments each month through the end of the year. Can't wait to see the balance drop.
I make 13 principle payments a year and pay one quarter of my mortgage weekly. I have solar panels, so I have had no electric bills for 23 months. Also, the federal tax credit for solar is 30%.
My grandma paid her house off four years early in 1987. Freeing up the house payment only released $120 a month. So getting this done very early is very worthwhile. 26 years of inflation doesn't give you much money when you're done with the house.
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I pay my principle payments WEEKLY just for the peace of mind that I did the payment create the discipline and to stay on track I treat my extra principle money like a another bill I see the light to the finish line
Another 31 months left if we are healthy and keep up with the plan. Can’t wait to be debt free and enjoy more with kids and hubby.
I love these tips. I have a question please: Instead of making an extra payment per quarter, can I just pay extra per month? In other words, if my payment is $1200/month, can I pay an extra $400 per month, instead of making an extra payment at the end of a quarter? Is there a difference?
Yes that is even better! We have been doing extra every single month and we are paying off in 15 instead of 30 yrs
Yes, that’s even better. The sooner you make extra principal payments, the lower your future interest payments will be. So paying that $400 extra every month will result in a faster payoff than an extra $1,200 once per quarter UNLESS the $1,200 extra was paid in the first month of every quarter. Then, the $1,200 extra per quarter would be better because the principal balance on which future interest is charged would be lower sooner.
*Thank you😊 for this video, do you offer account management or have any recommendations?*
As a beginner investor, it's essential for you to have a guide. Myself I'm guided by Mrs Victoria K Walter, a widely known consultant
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Could you suggest a consultant for me?
My Mortgage is paid, my truck, and my cottage. Still some debt with snowmobiles, etc.
She’s mostly on TELEGRAMS, using the ?…
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this was my situation when i finish paying for my mortgage, but with passive income from my day trading i am debt free.
Or if you already have a 2.75% 30yr fixed, just pay it like a 15yr mortgage at 2.75%. Use a loan calculator and put your principal in there over 180 months at your current low interest and thats how much you need to add to your principal payment. There is no need to refinance. Also, if you have an emergency 1 month, you can pay the 30yr payment versus the 15yr payment. You dont need to wait to refinance.
Timely video. Yes home ownership is expensive!! We buolt our house in 2022 and it was double what we predicted would cost us. A big factor was the cost of labor and material had sky rocketed. We anticipated on having a loan but not close to what our loan came out to be. We sold our old home put money into building the new one but still had 249k. Signed up for 30 yrs but paying it as if its a 15yr. Thankfully our rate was locked at a decent number 3.85% before it shot up everywhere to 6-7%. We are putting extra $650 monthly. Would like to add more once we built our emergency fund back up.
Sorry l wasn't clear. We still ended up with 249k loan.
True The Rate of the Biggest Loan is Under 4% "around ~3.70%" €140K You would notice it going up 1% or like you noticed Double the Amount then you could Pay Double and that for many Months till it goes down or even higher.. Cap the Rates People!!
I will have my house paid off in less than 4 months. I have a goal for 4 months because my insurance renewal comes in September. Currently it's 7k and that is more than double what it was a year ago. FEMA rezoned my home to a flood zone, so the Mortgage company required it. So I have decided to pay it off completely and get my insurance on my own. They want me to pay off the total before they will refund my escrow.. totally ridiculous!!! I don't care if I have only a few dollars in the bank. I am paying it off!!!
I make bi-weekly mortgage payments and that give me one extra payment a year. I also round up my payment to the nearest 100 and that is giving me an extra 75 every two weeks.
It is humbling to think that at least part of your childhood was spent with the broke Dave Ramsey. Your family has come so far and helped so many others with the journey. Thank you!
When I bought my first home, I used a simple trick of setting up an automatic payment where I had rounded the payment amount up to the nearest $100, with the extra, of course, going to the principal. You'll never miss that little amount, but over time it does make a difference. Then I started making significant additional payments when I could, ultimately resulting in paying it off in about 6 years. The payment difference between a 30 year and a 15 year mortgage is often very little--plan to pay at least that difference each month. Get a raise? put that on the mortgage. It all adds up very quickly.
Couldn’t you make your 30-yr mortgage down to a 15-yr mortgage with extra payments, particularly if you have a 2.25% interest rate?
I'd you have a 2.25% mortgage I would caution you not to be in a hurry to pay it off. You can make far better returns in a low cost s&p 500 index fund.
🙋🏼♀️Hi Rachel. I have a question about the 25%. Is this percentage on net income, for the mortgage only, or adding in utilities and any other monthly charges that have to do with the home? Your video comes at a time when I’ve been crunching numbers. My focus has been on paying down(and off) other debt and we’re almost there. But now I’m looking at amortization calculators with the goal of paying off by or before retirement.
And you are so right about having a savings for maintenance and unexpected home repair. In the past we’ve had to finance a furnace HVAC and water heater replacement. Now our roof, as it is 20yrs old.
It's net income(after taxes) but not after other deductions that might be taken out of your check. The 25% is the mortgage, home owners insurance, property taxes, and PMI if you didn't put 20% down on the house.
I bought in 2009 and my mortgage at that time was 45% of our take home pay. We were not making much income and borrowed for the 3.5% down payment. It was a terrible decision at that time that payed off in the long run. Eventually our income grew and now we have a mortgage that is lower than a studio apartment. It was right when the market crash and we got the deal of a life time. It was by far the riskiest thing I’ve ever done
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Interest rate is currently at 4.75%(8th rate hike since March last year) Inflation at 7% and mortgage rates is at over 7.5% but yet minimum wage remains the same and my retirement portfolio has suffered tremendously these past years, so my question is how do senior citizens retire and live off such unstable economy. The long term game is obviously not for me at this point.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Exactly why i enjoy market decisions being guided by a pro , seeing that their entire skillset is built around going long and short at the same time both employing risk management and market experience , been using a portfolio-coach for over 2years+ and I've netted over $3million in that time frame.
Impressive can you share more info?
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.
You’re always better off with a 30 year and paying additional principal as if it’s a 15 year. If you run into any issues like an emergency or job loss you can always just pay the 30 yr payment until you find a new job. But what if you’re stuck at the 15 year payment and not paying the full amount puts you on a path to foreclosure? Get a 30 year and treat it like a 15. The math maths almost identically. The Ramsey methods are very flawed.
Exactly it shouldn't matter that someone gets a 30 year mortgage if the goal is to pay it off early regardless
I have a 3% mortgage interest rate and suddenly became liquid from the sale of a business and i am confused if i should pay off my mortgage or invest in the stock market.
If I were you, I would gladly pay off my mortgage first. Without debt and mortgage payments, you can invest as much as you want. I wouldn't invest in single stocks though. You'll be much better off with investing in a 401K or IRA.
If you had a paid off house, would you borrow money to invest somewhere else. NO! pay off your mortgage :)
You have a 3% mortgage. In my opinion, if you believe you can invest it anywhere for an after-tax rate of return over 3%, you should do that instead (Treasuries, I-bonds, high interest savings/money market funds, certificates of deposit, stocks, mutual funds, or wherever), especially if you have a long horizon to retirement or other needs of the funds. That said, if you have other debt that’s at higher interest rates, again in my opinion, you should pay those debts down/off.
Can't you accomplish the same thing by paying extra on the principal every month without being locked into a higher payment in the event an emergency arises and also you don't have to pay the extra couple grand it will cost to refinance.
Thank you so much for your motivational videos. May I ask- does it matter what day of the month you make an interest only payment?
You want to pay principle only, not interest only.
Papa Dave says if you invest in stocks you will get a 12% return year over year. Why pay off your mortgage? Fun fact: $330,000 in stocks would net you $11,530,000 @ Dave’s 12%. A $330,000 30/yr mortgage will cost you $327,490 in interest @ 5.27%. The reason why Dave advocates to pay off your house is because Dave really doesn’t believe that you will make 12% in the stock market every year. But he wants to sell you hope (and books, and investor pros who pays Dave handsomely to be on his silly “vested” list).
Exactly. We both know who's paying 5.27% essentially risk free :)
Years ago I considered working for him so I read his book and when I saw the part that used 15% annually for decades in order to demonstrate how you could become wealthy via compound interest I lost interest in working for him because only an idiot or a liar would lead people to believe that was realistic and I didn't want to work for either.
The no credit cards, the buy houses with cash, the pay mortgages off early, the 12-15% annual returns... If I listened to that baloney my portfolio would be a lot smaller.
You didn’t mention paying twice a month instead of once a month. We pay half of the mortgage payment on the 5th and the other half in the 15th. This builds in the extra yearly payment.
If you’re paying half the mortgage payment 2x a month, you’re not building in an extra payment. What you’re referring to if you pay every 2 weeks. That means you’ll pay 26 half’s (13 wholes) in the year instead of 24.
@@mrschulltzybut some months have an extra week, so bi-weekly payments actually creates a 13th monthly payment.
@@c2s2942 Yes. That's what I just said. The original commenter said they pay half of the mortgage payment on the 5th and the other half on the 15th. That means that they still only make 12 whole mortgage payments per year because they're not paying bi-weekly. They're just paying half the payment 2x per month.
You have to check with your loan provider. Some will hold your payment until it is made in full. If that's the case, this advice won't work
Yes sorry! Every two weeks is how we do it. Those dates are paycheck dates.
I find a whole lot of comfort in my mortgage. I sold my home several years ago and invested the money in mutual funds. A couple of years later I bought another home. Instead of buying it out right with the money from my first home, I took out a 30 yr mortgage at 3%. The $350K I would have put in the house continues to generate about 8%. I am now about $200K ahead due to the mortgage. Please stop telling people to act on comfort; i.e., emotion and instead use rational thinking in managing their money.
100%. The math is so clear and yet these people can't think rationally.
I dont plan to pay off my mortgage early. My interest rate is only 2.75 percent. My money makes more staying in savings these days. Im retired, so my money has to work hard.
apr and simple interest is not the same if u have 2.75 apr u are paying 500 a month 250 is interest lol first 15 years so ur math aint mathing
I sold an apartment in Springfield and made about $250K. I was frustrated when I only earned $171 in interest from a regular savings account. After doing some research, I was advised to invest in stocks. Are these stocks a good point to start from?
Although the stock market is exciting and can yield a healthy return on investment, professional advice is necessary for efficient portfolio management to prevent market burnout due to its extreme volatility.
These are great ideas to help “poor” people at least feel like you’re getting out of debt but still not the optimal way to “pay off” your mortgage early
While agreeing in principle, strategy and rationale to pay off your mortgage early, the cover image for this video showing a total payment of $0 is misleading. The Escrow line item that would have been for funds to cover taxes and homeowner insurance is still your responsibility. It doesn't go away after paying off your mortgage. Only the principal and interest goes to $0.
We have a 15 yr mortgage at 2.2% interest rate with 10 yrs to go. With such a low interest rate does it make sense to pay it off early rather than invest that extra payment?
What if you paid off the mortgage and stopped losing 2.2% on that every year and then invested what you were paying toward your mortgage. You’ll grow wealth even faster. A good way to look at it is if you were in a race and everyone starts with a weight around their ankle. You can either run the race with the ankle weight and hope you have the stamina to keep going, or you can take a little bit of time at the beginning and remove the weight and then sprint through the race without the extra burden.
People here are going to say no but your rate is so low that you should drag it out
Something we are doing is putting our money in a high interest savings account while our mortgage rate is lower than this guaranteed return, and then we'll pay a lump sum down the line. Gives the flexibility to use the money if we truly need to.
@@mrschulltzyI ran some numbers based it off 300k at 10 yrs paying an extra $2k/month.
Paying the mortgage you save $19k
But Investing at:
8% return gives about $33.5k
10% return gives $43.5k
At 4% return, it’s about a break even. So she could just put it into a HYSA incase of a emergency, and in 5yrs if nothing goes bad, just pay it off the mortgage? Nothing lost but peace of mind won.
Personally, I would max out 401k and Roth. Make sure you have a solid 6 month emergency fund and then either your children’s 529, or towards the mortgage.
I’m in the similar situation - 2.75% I’m 6 years in a 15 and have made extras leaving about another 6 years left till payoff. I’m pausing extras right now and shifting my focus towards my retirement/investment so I can align my Coast FIRE years with my mortgage payoff years. The risk is zero bc I have enough to payoff now, but I’d rather take advantage of the compounding years now than wait 6 years.
My insurance and taxes are twice the cost of my actual mortgage payment. However, I overpay my mortgage every month and pay it bi-weekly.
Thank you for this video! This is helpful information ❤ I absolutely love your company, the values and the character of your family and the employees at Ramsey Solutions. Such a blessing to others.
Enjoy your videos Rachel ! My prepayment plan one extra payment per year. If you have a $1200 principal and interest payment put $100 extra in every month. I believe that pays a 30 year mortgage off in 18 years. If you do that on a 15 year mortgage it really pays down principal. My first house in 1978 9/34 rate second house 1985 a 12.50 rate.
Why would you refinance from a 30 year mortgage to a 15 year mortgage? Closing costs on that would be $20k or more. There is no benefit to that. Just pay extra towards the mortgage
Great work Cynext solution so glad you are out there fighting these lowlifes. We need to do all we can to spare the elderly and the general public from these despicable scammers! Kudos to YOU!! You deserve the Nobel prize for keeping us safe big up brother.
I’m budgeted at 24 paychecks a year currently and I’m moving to a job to 26 paychecks but the same amount every checks. Should I just throw those at the mortgage twice a year or save?
Great advice! And…thank you SO MUCH for not having the Walmart family game commercial in this video.
Personally I dont mind a 30 year mortgage - yes its higher interest but I like the flexability short term having the extra cash now.
@4:20 why the heck would you refinance a loan if your just trying to pay it off earlier?
You're going to have to pay a couple hundred at minimum just to get it refinanced, it also forces you into paying it off rather than just paying down extra principal each month..
I barely see any reason to refinance an existing mortgage if you just plan on paying it off earlier anyway. If the interest rate isn't significantly lower it's pointless, also if you plan on paying it off faster than 15 years it's also pointless. Additionally, if the mortgage is literally going to be paid off in 20 years because you've owned it for 10 already it makes even less sense. Who do they expect the people who have no debt, tons of investments, that have a freshly bought 30 year mortgage house? It wouldn't surprise me if the average person who is looking at paying off their mortgage is already 10-15 years into owning their home.
It is just that People are forced to pay for 15 Years rather than Pay it half their Life and the Small Reduced cost is making people happy. If you are Young and can Pay 30 Years that is great but you could make it faster and do it in 10 Years so you are done with it..
I put my extra money in a good monthly income fund. In 10 years or less, I should have a "paid for house" because my investments will pay more than the payment for the house. I feel more secure doing it this way than paying the house off early because if I lose my job, I can make years worth of payments before I run out of money. The bank isn't going to give back your early payments because you lost your job. They expect that payment every month. I only need 80% of the original mortgage invested to make the full payment, so I am coming out ahead by not paying it off.
Money actually grow on trees but only on trees that was planted by you!! These tress are referred to as investments, How you diversify your investment portfolio matters.
I've experimented with a few over the past years, but I've stuck with ‘’Julianne Iwersen Niemann” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up..
Wow, her track record looks really good from what I found online. I'll take a chance and see how it goes. Thanks for the info
Help me understand the maths argument for paying off early. I pay 2.25% APR on my mortgage. My brokerage account earns about that PER MONTH. If the historic 8% Dave Ramsey talks about on his show is true then why pay off your mortgage early instead of investing it?
How did you do that? I pay principle and interest on the 15th of current month for the 1st. I also add another $200 a month towards principle. Just did the math. I refinanced on 8/21 at $318k and now owe $280k. My payment is $1740 a month. If I times that by 13.5 years I’m payed off. How can I pay it sooner? In 7 yrs as you?🙏💪
Advice starts at 3:27
If you pay as if you're in a 15-year mortgage, but you're really in a 30-year mortgage, is it the same as if you were truly in a 15 year? Hope this makes sense. Good luck
I'm Married 51 year old if I payoff my house early and it's my only Asset what can we do at Tax time not to payback so much if we don't have anything to claim
Find the organization where you could donate the amount of money you would pay on interest each year, make sure you get a receipt and it’s legit
Wow, what a revelation. Pay more per month in order to pay your mortgage loan faster. How come I did not think about it?
I'm trying to reduce from 5 to 3 years or 2.5...not sure if it will be possible, but that would mean my mortgage, for which I put 0% down (I didn't know Dave then) will be over in 22.5 years.
People keep trying compare apr with simple interest lol. 2.5 apr first year of your loan is still half payment going to interest open your freakin eyes. So paying 3k in interest on 6k annual payment of 500 bucks a month is 50 percent interest for the year.
People aren't "sold" homes they can't afford! People BUY homes they can't afford. It's 100% the buyer's decision, no one forces them to sign on the dotted line. Other than that, great video.
I'm single, bought a house because rent is more than my house payment, but, my payment is half my income. I'm going to have to get a second job....rent and house payments are ridiculous. I put down a huge amount but still....living paycheck to paycheck.
im goong on 5yrs in december of my home being paid off. good thing cause we had a baby 2yrs ago.
@rachelcruze isn't some of what you said outdated in this real estate market of The Last 5 Years? Reports of shown that Americans are spending 50% of their income on home ownership because of the inflated housing prices, low inventory, and inflated rates. So a 25% of income housing expense doesn't sound realistic.
Almost have my house paid off. Did a 15 year mortgage and then did bi-weekly payments. Pay an additional $200+ every month towards principal. Still maxing out my 401K. The bi-weekly payments only allow interest to accrue for 14 days, not 30. Huge difference. If you can swing it, it's the easiest and quickest way to pay down/off your mortgage. Good luck to all!
can the every dollar app handle more than one bank account? I have two checking accounts and two credit cards (those are paid off every month).
You can pay like you have a 15 year mortgage but have the leverage to not do that if you have an emergency.
The pic i clicked on said escrow was 0. Does that mean i shouldn't buy insurance and pay my taxes! I'm kidding, cept that was misleading to me!!!!
Yep, by the time you pay off your house the insurance and taxes will be more than the mortgage payment
i bought my house in 2017 4.1255% i was only payin round up to the nearest hundred started out about 59.and some change my extra on principle eventually got to 33.and some change so in middle if 2023 i bumbed it anither 50 bucks and starting in jan2024 im bumpun 50 each time putss me at 240 extra almost but u dint really see it helping uts so far😝
All of this advice was great except the 15yr refinance. That's a horrible idea. One big emergency and your credit and savings account are done. Never give away your leverage and options.
7k canadian left after 17yrs. Need that extra money
Refinancing after having a mortgage for a while is a horrible idea. The reason is because you start ALL over again day one paying interest again. Just like in the beginning because it is the beginning. Don’t ever refinance. Figure out another way. Just don’t do it. Even if the rate is lower. Just pay more on your mortgage each month. I know because we refinanced a couple of times until I finally decided never again. Now we will have the house paid off about 7 years earlier because we are so king it to that mortgage every month.
One simple reason not to. I have a 2.5% 30 year fixed mortgage 😂
Many people have a higher interest and pay off their house loan under 30 years, I guess you like losing money I don't know what to say about being happy to have a mortgage for 30 years.
Hi Rachel,
I bought my first home 4 years ago. I have a 20 year fixed rate mortgage at 1.37% (I know it’s crazy low). I currently have 169.000€ left on the mortgage. My current mortgage payment is €640.40 (€192.84 in interest, €447.56 in principal). I know debt is debt and you would want it to be paid off quickly, however I would be getting more interest on my money in the bank than it would be to pay off the mortgage. Would you say it is wise for me to start paying off the mortgage or just do that after the 20 year fixed is over (currently still 16 years left)?
I would Invest 20% and pay 10% extra on the Home
Do you still invest 15% in mutual funds during retirement?
So once you pay off all your debt, and this includes your mortgage, you can put in as much as you want. The 15% is only recommended while you pay for your mortgage.
@@ginganinja7958 I live off my pension and social security. I turn my RMD into a QCD. Stopped investing when I retired. Should I restart investing?
How do you make money if you are retired?
I live off my social security and my pension
“I’ll show you the math” . . . did you forget? I’m waiting, Rachel
First comment! Love your videos! Always providing great advice!
Live here in Canada and try whatever you said ,let me see if you can pay off even a credit card!
What is better, make extra pays every two weeks or do a big one once a year??
Misspelling "dollar" ruined this video for me. Just kidding, Rachel! Thanks for the encouragement!
Why not take out a 30 year loan for a cheaper monthly payment and use the money you are saving from a higher 15 year payment and invest that extra extra money and then before the first 15 years are up you will probably have enough invested to pay off your 30 year mortgage in Less time than your 15 year mortgage and probably with money left over.
Let's face it, there's nothing easy about paying off early. You must have extra funds available and discipline to do it. It's a great strategy, but not easy.
You never own your home outright. You still have to keep paying tax on it every year.
Parents should have bought it for around 30 Years there you go Free 1 House and some Plumbs