Invest or Pay Down a 7.75% Mortgage: What’s the Smartest Choice?
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Invest or Pay Down a 7.75% Mortgage: What’s the Smartest Choice?
Paying off a mortgage can be a daunting task for many homeowners. With interest rates and other financial obligations to consider, it can be challenging to decide whether to allocate extra funds towards paying down the mortgage or investing in other financial opportunities. This decision becomes even more complex when considering a 7.75% mortgage, a rate that is relatively high in today’s market.
There are compelling arguments for both paying down a 7.75% mortgage and investing the extra funds elsewhere. Let’s explore both options and weigh up the pros and cons.
Paying down a 7.75% mortgage:
Paying down a high-interest mortgage can bring significant long-term financial benefits. By reducing the principal amount of the loan, homeowners can save thousands of dollars in interest payments over the life of the loan. This can also shorten the term of the mortgage, allowing homeowners to own their homes outright sooner.
Furthermore, paying down a mortgage can provide homeowners with a sense of security and peace of mind. With the housing market constantly fluctuating, having a lower mortgage balance can provide a safety net in the event of unforeseen financial circumstances.
However, it’s important to note that by prioritizing mortgage payments, homeowners may miss out on potential investment opportunities that could yield higher returns. Additionally, given the current low-interest rate environment, the opportunity cost of paying down a 7.75% mortgage may be higher than in previous years.
Investing the extra funds:
On the other hand, investing the extra funds in other financial vehicles, such as stocks, bonds, or retirement accounts, can potentially yield higher returns than the 7.75% interest rate on the mortgage. With the power of compounding interest and the potential for market growth, investing in the right opportunities can result in significant long-term gains.
By diversifying their investment portfolio, homeowners can spread out their risk and take advantage of various asset classes. This can provide a hedge against market volatility and potentially boost their overall financial wellbeing.
However, it’s important to exercise caution when investing, as there are inherent risks associated with the market. The potential for losses and volatility should be carefully considered, and homeowners should seek professional financial advice to ensure they make informed investment decisions.
So, what’s the smartest choice?
Ultimately, the decision to pay down a 7.75% mortgage or invest the extra funds comes down to individual circumstances and financial goals. There is no one-size-fits-all answer, and homeowners should carefully evaluate their personal financial situation before making a decision.
Factors such as risk tolerance, long-term financial objectives, and overall debt levels should all be considered when weighing up the pros and cons of each option. Consulting with a financial advisor can provide valuable insights and help homeowners make informed decisions that align with their financial goals.
In conclusion, whether to pay down a 7.75% mortgage or invest the extra funds is a decision that requires careful consideration. Both options have their own merits, and homeowners should weigh up the potential benefits and risks before making a final decision. By taking a holistic approach to their financial wellbeing, homeowners can make choices that align with their long-term financial goals and secure their financial future.
The real question is invest or pay down a 3% mortgage?
Need timestamps
My first home was 8%. You will probably re-fi in the near future, and then go down to a 15 yr fixed. Continue your path on investing in the market for LT growth.
Sounds like ya all in a submarine.
Would you consider a 4.8% fixed 30 year mortgage good?
You guys are AWESOME!
For the folks that make 275k in Dallas talking about buying a house, you can already afford a house. Shut up.
Pay down the mortgage. You’re blowing up the actual price of the house. The lowest price you can get your house at all in is your best bet.
Unless you are investing hundreds of thousands of dollars, you’re getting shafted without the courtesy of a reach around.
Love you guys. The sound quality was rough in spots.
Your content is profoundly thought-provoking! – Believe in your abilities to navigate your unique journey..
I've come to realize that money is a tool. I’ve worked so hard over the years to realize that if you don’t make money work for you, you can’t experience true freedom. fully retired with over $3.5million, my dividends is supplementing my retirement at the moment. started saving and investing in 2010 in growth, No regrets and financially free
Turn on original sound next time please
You guys went hard for this one. Love the transparency
Please make a separate "Highlights" channel. Your feed is a mess of duplicate content!
My compromise was to get the investment activity started – I invested about 5% before taxes, got a total of 5% more from my employer – and then I hit the mortgage.
My problem was that the mortgage was a variable rate and the payment was on course to double.
My compromise is I’m putting a chunk of money into high interest savings accounts (~5%), earmarking it for the mortgage (currently 1.89%), and I will either apply it to the mortgage at rate renewal time or put it in the market if we see a substantial drop.
Brian is in his zone! This made for a very entertaining episode!
Need individual mics
I had so much fun watching Brian run around with his camera. That was entertaining!
Love the personal side of this. Maybe check the mic quality for the next show but the content is great as always
❤❤❤
I've gained a lot of respect for you, Brian, with that Bizarro vs Robin comment! :p
I think it’s a behavioral thing. If you really believe in yourself to pay off that house very very fast and to ONLY use your house proceeds in retirement AS retirement one day…then you should focus on that as part of your hyper accumulation phase but I agree- don’t skip the first 2/3’s of the FOO
Just assume SS won’t be there and if you save enough to not need it, you will be great.
I'm 51 and have had many cars. My feeling on gap ins is. If I need it I paid too much for the car. Therefore I have never needed it. My current car I paid 19k for it. And I paid cash for it. It was a 4 year old toyota avalon with 45k miles. 3.5 years later it has 72k on it
Love this
Audio of this episode really is just not good enough for me to listen to. I hope the next recording in this setup has some of the issues fixed.
Hi Money Guys. I just switched jobs recently, and want to ask if should I roll over my previous 401k to my new employer's 401k or to transfer the funds to my Roth IRA. I was making Roth 401k contributions in my last job. Thanks.
That’s is a monster window casing. Someone has a fancy casa lol.
Follow the FOO!
There must be a lot of people with 7.75% loans that really need a answer to this question lol.
Brian puts everyone on pins and needles with his shenanigans. I love it.
Rates on 30-year mortgages subtracted 8 basis points Friday, lowering the average to 8.33%. On Monday and Tuesday, the flagship average had bolted more than a third of a percentage point higher to set a new 23-year high of 8.45%. Do I just keep waiting for a housing crash with my $2 million in liquid assets or shift my attention to the equity market?