Paying off debt early is considered a “guaranteed return.” But what if you can get better returns elsewhere? Could you use the “extra” you’d put toward paying down your mortgage for other financial goals, like retirement, investing, saving for college, going on vacation, or reaching some other goal?
While paying off your mortgage early is a noble goal, it’s not the only way. In this episode, we tackle some of the realities—including the reality that not everyone lives in an area where home prices appreciate dramatically over time.
When deciding whether to pay off your mortgage early, remember to consider the emotional and financial aspects of this decision and be honest about whether it’s truly the right choice for you.
Here are sources for this episode on deciding whether to pay off your mortgage early:
1991-2022, the average annual home price increase has been 4.3%, according to the FHFA. Since 2000, the average rate has been 4.7%. And since 2012, the average rate has been 7.7%.
Credit Karma has an article about this data.
There are a few articles that provide context for an average historical appreciation in the past, with some taking into account inflation:
We don’t always accurately gauge home appreciation, according to Rocket Homes.
Our 9.7% S&P 500 return is an oft-quoted number, but the annualized return through the end of 2022 has been updated to 9.81%.
Trying to decide whether to buy or rent? We like using the NYT’s calculator. If you want to avoid the signup requirements and potential paywall, Calculator.net also has a rent vs. buy calculator.
Thanks to J.D. Roth and Andy Hill for sharing on the podcast. Check out their stuff!
And make sure you check out our websites as well:
Consider supporting us by upgrading to a paid subscription here (so we can continue to keep doing this work)
Or, for a one off donation, buy us a refreshing beverage on Ko-fi.
Payoff mortgage early = bad?