Why I Wont Pay Off My Mortgage Early - $1000000 Mistake

Does it Really Make Sense to Pay Extra on Your House? Hey everyone, my name is Caleb Williams, the founder of Better Wealth. I'm here with a good friend of mine, David Anderson. What I love about David is his ability to make complicated things very simple. Today, we're diving into the popular debate: Should you pay off your mortgage fast?

The Common Perspective

• Many believe in paying off mortgages quickly to save on interest.
• There's a perception that if you can invest at higher rates, you lose more by rushing off your mortgage.

The Importance of Cash Flow

David discusses how people often focus solely on paying off mortgages faster without considering cash flow implications:

1. 15-year mortgage: Higher monthly payments, theoretically less interest.
2. 30-year mortgage: Lower monthly payments, potential to invest extra cash flow at a higher rate.

These savings from investing could equal or even surpass interest saved by paying the mortgage off early.

Mathematically Exploring Mortgage Choices

David's example highlights two mortgage scenarios, both leading to equivalent financial outcomes when cash is appropriately invested:

• A 15-year mortgage, with higher monthly payments but quicker payoff.
• A 30-year mortgage with potential for investing savings, leading to similar financial end states.

Conclusion

Choosing between paying off a mortgage faster or investing savings is complex and highly individual. It requires thorough analysis of interest rates, personal financial habits, and risk tolerance.

We encourage you to consider the broader financial context and work with experts to tailor strategies that align with your personal financial goals and expectations.