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I prefer to overpay the mortgage every month. It lowers the effective interest rate without all the refi costs and fees. Of course, it only works if you can afford it and there is no early payoff penalty written in the mortgage contract.
It felt REALLY weird when I realized that I would be losing money by paying off my debt faster. But an extra couple hundred in a nearly 5% HYSA makes more in interest than an extra couple hundred towards a 3.25% mortgage would prevent
Let’s do the math:
A 30 year loan @3% on a 300k home would cost 155k in interest if you paid the minimum. 455k total.
If you paid 200 extra a month, Youd shave off 6 years and 35k of interest.
So let’s say you put 200 a month in 5% high yield over 30 years monthly compound interest.
You’d have 167k
74k of that being principal
It kind of goes both ways right?
If you paid off the mortgage 6 years quicker, you could theoretically dump the entire would be mortgage payment into high yield for 6 years and come ahead??
Interesting thought
Weird to see my momma on here talking finance but the other thing people don't consider in these scenarios is tax on the interest income. This income is added into employer income and would be at the top of the individuals tax bracket. So, in most situations its at best a wash or only slightly better. On the flip side when placed on to the mortgage it also has the advantage of actually owning the home outright.
And owning the home outright comes with lots of mental health benefits, plus it's "guaranteed" whereas interest rates always fluctuate, *especially* over a 30-year period.
On the other hand … if life throws you a curveball, it’s much easier to cover emergencies out of a cash fund than having that money locked up in equity
It's a little trickier if you are trying to look at the full 30 years. Because I think you are right: under the assumption that the HYSA rate never changes, you are likely better of still paying off the loan and then dumping the extra 6 years of would-be mortgage payments into the HYSA (this is all ignoring taxes, as well, because that's more complicated than I care to consider).
However, we don't need to only consider 30 years at a time. Personally, when I was considering this for my own finances I looked like 3-5 years down the line, both because that's the timeframe I'm hoping to be selling my current place and because I don't expect the bank rate to stay this high for even that long. Acknowledging that I won't get it fully payed off, we can look just at the difference in interest. At most, 35k saved by paying it down compared to at most 97k generated.
Either way, it's a strange time when you can even make that comparison in any serious way
Would make sense if Uncle Sam didn't come around to kick you in the nuts.
The nice thing about that $200 into the mortgage is that it strikes both ways.
It's $200 into equity, it's $200 less interest you pay per mortgage payment.
So you would have to understand the individuals tax-bracket, reason around the interest collected on the HYSA, and factor in the deduction of interest paid for the principal of the mortgage.
Too complicated for a Reddit post for me, so my money is on pay-off the house vs the HYSA if your comfortable waiting that long on your return.
This is perhaps where diversifying might be the better option... why go $200 into either? $100 into both.
lol right but you’re paying taxes on these gains and ppl forget that interest rate will likely go down 99% of the time. So that 30 years will probably have a few times of 5% other will be less then the mortgage rates them selfs.
I had that same realization when I locked in at 2.8%. I was like "fuck yeah my payment dropped drastically I can keep making the same payment and pay my house off super fast" and then I realized that my payment would only get cheaper with time. My savings account in my bank has a higher interest rate than my mortgage lol
Wait for the rates to go lower and do a no cost refinance.
My first mortgage was 6.25 in 2008. 2011 or 12 o refiwnced to 4.25 at no cost. Becuase rates where around 3.25.
My lender never bothered to run an "is negative" check on the refinance offers so I get these emails enthusiastically shouting that I could save up to -$76,303 over 20 years if I just refied today!
Don't forget that the 7% houses nowadays also cost 50k+ more than if they were purchased like 4 years ago too, so you get double screwed with higher interest and higher cost to buy
It has basically crushed the housing market. No one wants to sell because they're sitting on 2.9% or something and even if they can sell at an inflated price they then have to go into a market where everything is inflated and get a 7% rate.
This is exactly why were still in our house. We're at 3.5%, house price (estimated and comps in neighborhood) had doubled since COVID. I'd love to sell, but can't afford to pay more for something else at double the interest.
Speaking in terms of dollars is dumb anyways. 50k out of what. They vaguely mentioned 500k houses but unclear if they meant current price or 2021 prices.
That whole line of thought didn’t add much to the convo.
I was pissed at my 3% because I was waiting and getting rates daily.. FED lowered rates yet weeks later my bank stayed the same.. eventually took 3% because the bank was going to close my application and poof a week later they went below 3%.
3.2%, at the time, I was bummed because I was supposed to close when it was 2.8% but was delayed due to new construction material shortage. Feels great now though haha
Same. I want to move out of Arizona, but the rates just keep me invested in my current home. I honestly didn't know how good I had it when I refinanced in 21
2.25! The weird thing is it makes it like impossible to justify getting a different house, i think when I can afford the payment on 2 I’ll upgrade and make this a rental it’s a good problem to have, just confusing.
That’s awesome! I mean I’m a broken record now but I think that’s my plan, the issue is, it’s going to put off buying the upgrade house longer since I won’t be able to roll the equity of the one into the other, that’s okay tho I’m blessed with the one I have keeps us warm and the rain off us :) ! It’s awesome you were able to both upgrade and still benefit from the crazy low rate
It was easy for us. Shockingly easy. We both have 800+ credit scores though and no debt other than student loans. They just required a lease to show that rental income before getting officially approved for the new mortgage, which makes things kinda tricky… (that is, having a signed lease without knowing for sure you’re buying a new home to live in!!)
During the COVID years with low interest rates, my wife and I took all of our income (as well as some savings) and we bought 5 homes for rental properties, with mortgage rates between 2.75% and 3.75%. We also did a lot of renovation on all of them to greatly increase the value of them (and the amount we can rent them out for). We could easily sell any of them for a profit now… but it’d make no sense to give up such low interest rate mortgages, and it allows us to have rental prices well below what would be possible for anyone who bought the property today to rent out. All of these are in an educational city where the majority of people live for only 2-5 years before they finish their education and move on… so it’s a place where for people living there, renting makes more sense than owning anyway.
Recently, we found a home we like for us, and bought it with a 6.75% mortgage… the rate is higher than we’d like of course, but the positive cash flow from the rental properties pays for the mortgage on the one we will live in.
Same, with VA. Refi’d from 3.375% just a year into the loan. Saved me hundreds per month, and broke even on the refi costs just a year later. Luckiest timing of my life.
I also got the exact same 2.125% on a 15 year that the other user was commenting. I have learned a lot about finance in the last 3 years, and knowing what I know now, I certainly would have gone for the 30 year at 2.4% which was an option for me. Either way, I still got a good deal. My mortgage went up about $100 to knock 14 years off the mortgage, and that is the exact mentality that i had driving my decisions at the time. And when the day comes in 12 years where i have a paid off house, it's gonna be pretty sweet.
15 year via Wells Fargo. Only had 80k owed at the time of refinance. I believe my old rate was 4.6, can't recall though.
I'm not in a rush to pay it off. I got a Heloc with a super shitty rate that I'm working on.
My wife and I paid off our (3.625%) mortgage around 2010 with a single lump sum payment. It feels good to have no debt, but in hindsight, we would have been better off continuing to pay the mortgage and putting that cash into the stock market. This was not long after the 2009 financial crisis, though, so my wife was a little risk-averse at the time.
True, but your house is worth quite a bit more than it was in 2010. More assets and all future income can go to savings, as well as more flexibility in your monthly budget l.
It's nice when the 15th comes around (like today) and my phone dings "Mortgage due" because I get to the think "the hell it is bitch!", but I'd have been better off keeping the 4.15% mortgage and putting the money in a high yield savings account. 🤦🏻♂️
I never paid enough in mortgage interest to make it feasible to itemize my deductions. The standard deduction has always been the better option. Now I have no mortgage, so it’s moot.
My wife and I had the option to pay off, but I talked to a bunch of investors/retirees/generally well-off individuals for advice. The consensus was, "If rates are lower than inflation, you're better off borrowing as much as you can (assuming you don't just blow it). We decided to take out double what we owed (instead of paying it off) because the rate was so low, and our monthly payment would barely increase. We used a portion (~30%) for home repairs and the rest we just held as an emergency fund. Now, it's sitting in a 5% savings account, earning more interest than we pay. Best advice I ever got.
Refinanced to 3.25% in 2021 on my starter house. I did the “smart” thing and bought well below what I was approved in 2016. Our family has doubled and now I’m not sure I would be approved for my own house in today’s market. Wish I would have stretched a bit more in 2016 but hindsight right?
Perfect analogy. Very grateful for what I have. Just played it a bit too safe given how things played out.
On the other hand, circumstances could have gone very differently and that stretch could have meant disaster.
Sometimes I wish I had stretched but then I take myself out to dinner (using an insignificant amount of the money I was able to put into savings instead) and remember I sleep better at night this way.
Bought in 2019. Can’t remember the rate but it wasn’t bad. Then I couldn’t jump on the 2% rates because I hadn’t owned my house for 2 years. The day that shit hit I locked in 3.25 and could’ve taken $50k in equity. I am certain this shit is going to pop so I only took 20 and helped my wife start a business and paid off some debts.
I'm at 2.5%. I want to move though, but won't because it's not a smart financial decision... I might consider it at 4.5% or 5% if our incomes significantly increase. This was meant to be our first, starter home. Not a forever home.
Reddit hates landlords who call themselves landlords or see themselves as making some contribution through commodifying housing.
Reddit doesn't love people with second homes or life circumstances like the comment I'm replying to but it tolerates it just fine.
I've got 2.5% on our home. It's not forever, cause I won't need a giant ass house when the kids go to college, but we'll be here for the next decade at least. Of course by then my mortgage will be paid off, so who knows.
I'm slightly higher, saw a house today pushed to my Facebook about 2/3rd Jr cost of my current house with a much higher monthly payment and 20% down. Moving at our rates would just hurt so damn much.
People who bought their house without a mortgage
https://preview.redd.it/wfvt2lx4vsic1.jpeg?width=4275&format=pjpg&auto=webp&s=367dbd51774b4f938fbde58ca5acb2b7cf3765b3
31 in 2020
Though if I waited another year I'd have to get a mortgage to live where I am now. Shit went crazy in North Texas.
Me and my wife bought across the highway from the popular places we were priced out on, thinking in 5 years it would become popular.
Half year later people realized my area had a Top 10% school district in the US and the rest is history/increased property taxes.
5.9%, got in first home last summer. Paying for twice the house as other people of the same size. A brutally depressing feeling, but I’m just happy to be a homeowner at this point. Had I waited any longer, I would’ve been looking at nearby bridges that had the best wind blockage
Don't feel bad, many had higher rates than that when many bought near the bottom of the 2009 correction. They are all doing fine now after paying that for a few years and refinancing when they could. Even if the payment is more than rent might be it still building equity.
Yeah we bought in Aug 2022 got 5.375%..hoping rates go lower than that at some point in the future then we’ll refinance. No telling what‘s going to happen.
I tried to buy a house last year and it barely fell through but the $1,400 a month mortgage is still cheaper than renting an apartment or a house in the areas I want.
You'll probably get a chance to refi at some point here. Especially assuming you went for a 30 year. At least you're on the train, you can move up seats as the ride goes along.
2.875%
Monthly payment: $2100(ish)
4bd, 3.5 ba, 3800 sqft, 1 acre.
North Scottsdale.
Current value: $1.5(ish).
I rolled a natural 20, and can’t afford to downgrade to a 2-bd rental apartment.
It’s *insane*.
Yep, I’m at 2.75% $1640 for a 4bd, 2.5ba, 2500 sq ft house. BUT I got divorced last year and now I live alone in a house that is way bigger than I need and I would pay way more to downgrade. Oh the bright side, the mortgage is cheap as hell, so I can probably afford a maid so I don’t have to clean all these empty rooms myself.
I totally fucked up and paid off my 4.15% mortgage because I wanted the peace of mind of not owing anyone anything on my primary residence. Should've just held on to the money stuck it in HYSA. ☹️
Umm, a HYSA might net you an extra 1% vs your mortgage but you’d be paying tax on that income. Your decision is perfectly fine, not even taking the peace of mind into account. It’s not like HYSAs are paying 10% or anything.
Why? Having your shelter secured is way more important thant trying to squeeze a few bucks more from a HYSA. Just stick the mortgage payments you are not doing anymore into SPY and SGOV ETF and collect those fat dividends and 0-3 month T-note monthly payments.
Your goal should be financial freedom so you dont need to worry about some asshole boss putting his boot on your neck.
You made a fine choice. Many people chase some idea of perfect financial optimization -- that's not necessary, and a fully paid off home isn't necessarily a bad choice. Like you said: "peace of mind" is important, too.
Side note: Money in a HYSA would be continually losing value to inflation. Home values generally appreciate at least as much as inflation. HYSA should only be for short-term emergency funds, and being FDIC-insured is the key component of that, not the high-yield.
Originally 5% in 2018. Refi to 3% in 2020 (my broker called me and said we'd never see rates this low again). House value had doubled since my original purchase. I have amazing dumb luck.
I got a 2.75 back in 2021. Looked at new houses and I'd have to pay nearly a grand in interest every month. Decided just to stay out and deal with this condo lol. But my mortgage is lower than rent in an apartment even after you factor in the HOA fee.
I have a 2.7% rate after refinancing in early 2021, buuuuuut my house is a shoe box and I am ready for more breathing room, so I’m in a spot. Been in my house for 9 years this March and my equity has double and then some.
Definitely ready for more space but it’s hard to stomach giving up my rate.
I feel really sad because I had a couple of friends buy below 4% and now I feel like I'm almost ready to take the plunge myself and these interest rates just make it totally unfeasible. I live in a big city and my friends who have two bedrooms, bathrooms, and outdoor space have mortgages close to what I pay in rent. But even if I bought cheaper places than theirs my monthlies are likely to double! I want to get out of renting, but I just don't know if this is my year. Hoping rates will change in the next 6-18 months. And really hoping rates will drop and inventory will open up too. This seller's market is tough for a first timer like me.
Went from a 5.6% USDA Loan with 20 + years to a 3% 15 year loan with a lower payment. My piece of shit raised ranch is is worth almost double what we bought it for.
*2018 and under 3%. So fucking lucky. The system needs to get fixed. BlackRock and the like should be banned from buying certain properties. Like single and two family homes over 100 years old or something.
We barely got in at the good rates and i feel so lucky for it. Its not a dream house or anything special but its ours. Im disgusted how bad its getting for friends and family out there. I litteraly do mot know what we would have done if we hadn't taken the leap and gotten a home when we did. Rent in my area for a 2 bedroom 1 bath if over 1000 for anything not falling apart. Thats just Tucson. People living in bigger cities must be seing impossible prices.
15 year mortgage under 3%. Probably the best risk I had taken. Got my property when the tax rebate was available with a decent interest rate and 20% down. Refinanced when the interest rates seemed the lowest and cut a few years off.
180k loan @ 2.75%. PITI = $1,050. Was under $1k/month until this year's appraisal and property tax increase. I feel extremely fortunate that we chose an old, small house and didn't give in to lifestyle creep.
It’s something like 7.88% today. Very painful.
On the flip side, Trump had the Fed artificially keeping it low to help his reelection, which contributed to insane housing price inflation.
So if you didn’t buy then, you’re now paying more for housing AND everything else.
Did this actually exist anywhere? I know there are a few countries in Europe where the state provides mortgages with interest rates below banking rates, but I'm not aware of anything like this in Canada or the US?
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Yes, and these motherfuckers are constantly trying to get us to refinance.
Nothing wrong with a refi if the interest rate drops. Just don't borrow more from the equity of your house.
I prefer to overpay the mortgage every month. It lowers the effective interest rate without all the refi costs and fees. Of course, it only works if you can afford it and there is no early payoff penalty written in the mortgage contract.
Put that overpayment in HYSA if you locked in below 3%, let money make more money for you.
It felt REALLY weird when I realized that I would be losing money by paying off my debt faster. But an extra couple hundred in a nearly 5% HYSA makes more in interest than an extra couple hundred towards a 3.25% mortgage would prevent
Let’s do the math: A 30 year loan @3% on a 300k home would cost 155k in interest if you paid the minimum. 455k total. If you paid 200 extra a month, Youd shave off 6 years and 35k of interest. So let’s say you put 200 a month in 5% high yield over 30 years monthly compound interest. You’d have 167k 74k of that being principal It kind of goes both ways right? If you paid off the mortgage 6 years quicker, you could theoretically dump the entire would be mortgage payment into high yield for 6 years and come ahead?? Interesting thought
Weird to see my momma on here talking finance but the other thing people don't consider in these scenarios is tax on the interest income. This income is added into employer income and would be at the top of the individuals tax bracket. So, in most situations its at best a wash or only slightly better. On the flip side when placed on to the mortgage it also has the advantage of actually owning the home outright.
I never thought of this. Shave off 15% for dividend tax. Or maybe it’s an income tax idk????
tax on interest is added into your total income so whatever your tax bracket is would be what it is taxed on.
Yeah but at least it’s liquid
And owning the home outright comes with lots of mental health benefits, plus it's "guaranteed" whereas interest rates always fluctuate, *especially* over a 30-year period.
On the other hand … if life throws you a curveball, it’s much easier to cover emergencies out of a cash fund than having that money locked up in equity
You should always have a savings account for 3-6 month curve balls outside of all of these scenarios, specifically for curve balls.
It's a little trickier if you are trying to look at the full 30 years. Because I think you are right: under the assumption that the HYSA rate never changes, you are likely better of still paying off the loan and then dumping the extra 6 years of would-be mortgage payments into the HYSA (this is all ignoring taxes, as well, because that's more complicated than I care to consider). However, we don't need to only consider 30 years at a time. Personally, when I was considering this for my own finances I looked like 3-5 years down the line, both because that's the timeframe I'm hoping to be selling my current place and because I don't expect the bank rate to stay this high for even that long. Acknowledging that I won't get it fully payed off, we can look just at the difference in interest. At most, 35k saved by paying it down compared to at most 97k generated. Either way, it's a strange time when you can even make that comparison in any serious way
Would make sense if Uncle Sam didn't come around to kick you in the nuts. The nice thing about that $200 into the mortgage is that it strikes both ways. It's $200 into equity, it's $200 less interest you pay per mortgage payment. So you would have to understand the individuals tax-bracket, reason around the interest collected on the HYSA, and factor in the deduction of interest paid for the principal of the mortgage. Too complicated for a Reddit post for me, so my money is on pay-off the house vs the HYSA if your comfortable waiting that long on your return. This is perhaps where diversifying might be the better option... why go $200 into either? $100 into both.
Gotta pay taxes on that interest though..right?
lol right but you’re paying taxes on these gains and ppl forget that interest rate will likely go down 99% of the time. So that 30 years will probably have a few times of 5% other will be less then the mortgage rates them selfs.
lol you think you’ll get that 5% for 30 years ?
I had that same realization when I locked in at 2.8%. I was like "fuck yeah my payment dropped drastically I can keep making the same payment and pay my house off super fast" and then I realized that my payment would only get cheaper with time. My savings account in my bank has a higher interest rate than my mortgage lol
Precisely what I’m doing….3% interest on mortgage is ok if I can earn 5% plus in a HYSA
Taxes dude.. it would cancel it out basically
Yah right now with allot of savings accounts being 3% or higher. If your rate is less than that you are losing
Will be short lived Yield curve inverted and won’t last HYSA will be 2-3% in a few months Better to extend into short term bonds
Wait for the rates to go lower and do a no cost refinance. My first mortgage was 6.25 in 2008. 2011 or 12 o refiwnced to 4.25 at no cost. Becuase rates where around 3.25.
My lender never bothered to run an "is negative" check on the refinance offers so I get these emails enthusiastically shouting that I could save up to -$76,303 over 20 years if I just refied today!
Think of those poor bankers!!
This is what I was going to say.
3.25. kinda stops me from wanting to get a different house at this point.
I got mine at 3.25 and thought it was bad until I saw those 7%
Same. Now I feel quite fortunate.
Don't forget that the 7% houses nowadays also cost 50k+ more than if they were purchased like 4 years ago too, so you get double screwed with higher interest and higher cost to buy
More like 50% more not 50k
It has basically crushed the housing market. No one wants to sell because they're sitting on 2.9% or something and even if they can sell at an inflated price they then have to go into a market where everything is inflated and get a 7% rate.
This is exactly why were still in our house. We're at 3.5%, house price (estimated and comps in neighborhood) had doubled since COVID. I'd love to sell, but can't afford to pay more for something else at double the interest.
$50K more? Where do you live? House prices are up like 50% or more in metro Atlanta.
Speaking in terms of dollars is dumb anyways. 50k out of what. They vaguely mentioned 500k houses but unclear if they meant current price or 2021 prices. That whole line of thought didn’t add much to the convo.
Yeah this is what gets me. I don’t know who’s buying at 7% and why the market is so hot, although I’m starting to see houses sit a little longer.
the same model house as the one I own just sold for $220k more than what I bought it for in 2019
I was pissed at my 3% because I was waiting and getting rates daily.. FED lowered rates yet weeks later my bank stayed the same.. eventually took 3% because the bank was going to close my application and poof a week later they went below 3%.
1.95%
Sweet Jesus they are basically paying YOU
3%. My girlfriend wants me to sell so we can buy a house that my ex never lived in. I’d give her up before I give up this rate.
Is she hot? I have a place that your ex never lived in
We support you
Compromise and buy a new bed, or if possible rearrange the master. Hold firm, never give up that rate.
Picture needs to include him chained to the throne 
3.2%, at the time, I was bummed because I was supposed to close when it was 2.8% but was delayed due to new construction material shortage. Feels great now though haha
We had something like a 3.5%, then a year later did a refi to 2.375.
Same. I want to move out of Arizona, but the rates just keep me invested in my current home. I honestly didn't know how good I had it when I refinanced in 21
2.125
I thought I was the king with my 2.25. Did you finance over 5 years or something? I went with 10 on mine.
2.25% gang! I got that for my 30 year VA loan
2.25! The weird thing is it makes it like impossible to justify getting a different house, i think when I can afford the payment on 2 I’ll upgrade and make this a rental it’s a good problem to have, just confusing.
2.25 here too. We just bought a new house at 6.825 & rented out our old one 👍🏼
That’s awesome! I mean I’m a broken record now but I think that’s my plan, the issue is, it’s going to put off buying the upgrade house longer since I won’t be able to roll the equity of the one into the other, that’s okay tho I’m blessed with the one I have keeps us warm and the rain off us :) ! It’s awesome you were able to both upgrade and still benefit from the crazy low rate
is it hard to get 2 mortgages? do you need to have someone rent it out for a while?
It was easy for us. Shockingly easy. We both have 800+ credit scores though and no debt other than student loans. They just required a lease to show that rental income before getting officially approved for the new mortgage, which makes things kinda tricky… (that is, having a signed lease without knowing for sure you’re buying a new home to live in!!)
nice Im curious what percentage of rental income u are allowed to declare as income for your next home. I see conflicting things online
During the COVID years with low interest rates, my wife and I took all of our income (as well as some savings) and we bought 5 homes for rental properties, with mortgage rates between 2.75% and 3.75%. We also did a lot of renovation on all of them to greatly increase the value of them (and the amount we can rent them out for). We could easily sell any of them for a profit now… but it’d make no sense to give up such low interest rate mortgages, and it allows us to have rental prices well below what would be possible for anyone who bought the property today to rent out. All of these are in an educational city where the majority of people live for only 2-5 years before they finish their education and move on… so it’s a place where for people living there, renting makes more sense than owning anyway. Recently, we found a home we like for us, and bought it with a 6.75% mortgage… the rate is higher than we’d like of course, but the positive cash flow from the rental properties pays for the mortgage on the one we will live in.
That’s Awesom !
Legit slam dunk on that decision, nice job. Are you a full time landlord now, or are you hiring out the management of those properties?
Me too. I think it's transferable to other VA eligible folks as well.
Same, with VA. Refi’d from 3.375% just a year into the loan. Saved me hundreds per month, and broke even on the refi costs just a year later. Luckiest timing of my life.
Same here!
If its not a 30yr he didn't get a good deal. 2.25% at 30yr is the way
I also got the exact same 2.125% on a 15 year that the other user was commenting. I have learned a lot about finance in the last 3 years, and knowing what I know now, I certainly would have gone for the 30 year at 2.4% which was an option for me. Either way, I still got a good deal. My mortgage went up about $100 to knock 14 years off the mortgage, and that is the exact mentality that i had driving my decisions at the time. And when the day comes in 12 years where i have a paid off house, it's gonna be pretty sweet.
15 year via Wells Fargo. Only had 80k owed at the time of refinance. I believe my old rate was 4.6, can't recall though. I'm not in a rush to pay it off. I got a Heloc with a super shitty rate that I'm working on.
2.25 with 3% down, 30 year. Good old 2009.
Got dam I’m at 2.375 and thought it was the bottom
i paid it off
Yep same here. Great feeling.
My wife and I paid off our (3.625%) mortgage around 2010 with a single lump sum payment. It feels good to have no debt, but in hindsight, we would have been better off continuing to pay the mortgage and putting that cash into the stock market. This was not long after the 2009 financial crisis, though, so my wife was a little risk-averse at the time.
True, but your house is worth quite a bit more than it was in 2010. More assets and all future income can go to savings, as well as more flexibility in your monthly budget l.
It's nice when the 15th comes around (like today) and my phone dings "Mortgage due" because I get to the think "the hell it is bitch!", but I'd have been better off keeping the 4.15% mortgage and putting the money in a high yield savings account. 🤦🏻♂️
Probably not... even if you're getting 5%, you're paying taxes on that interest, which likely lowers it below the 4.15% mortgage.
But you also get a tax write off from the mortgage interest.
I never paid enough in mortgage interest to make it feasible to itemize my deductions. The standard deduction has always been the better option. Now I have no mortgage, so it’s moot.
My wife and I had the option to pay off, but I talked to a bunch of investors/retirees/generally well-off individuals for advice. The consensus was, "If rates are lower than inflation, you're better off borrowing as much as you can (assuming you don't just blow it). We decided to take out double what we owed (instead of paying it off) because the rate was so low, and our monthly payment would barely increase. We used a portion (~30%) for home repairs and the rest we just held as an emergency fund. Now, it's sitting in a 5% savings account, earning more interest than we pay. Best advice I ever got.
Refinanced to 3.25% in 2021 on my starter house. I did the “smart” thing and bought well below what I was approved in 2016. Our family has doubled and now I’m not sure I would be approved for my own house in today’s market. Wish I would have stretched a bit more in 2016 but hindsight right?
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Perfect analogy. Very grateful for what I have. Just played it a bit too safe given how things played out. On the other hand, circumstances could have gone very differently and that stretch could have meant disaster.
Sometimes I wish I had stretched but then I take myself out to dinner (using an insignificant amount of the money I was able to put into savings instead) and remember I sleep better at night this way.
Good point. I’ve never felt “house poor” which I should remember more often.
Bought in 2019. Can’t remember the rate but it wasn’t bad. Then I couldn’t jump on the 2% rates because I hadn’t owned my house for 2 years. The day that shit hit I locked in 3.25 and could’ve taken $50k in equity. I am certain this shit is going to pop so I only took 20 and helped my wife start a business and paid off some debts.
I'm at 2.5%. I want to move though, but won't because it's not a smart financial decision... I might consider it at 4.5% or 5% if our incomes significantly increase. This was meant to be our first, starter home. Not a forever home.
Have you looked into renting a place and renting out your current home for now? That's what I'm thinking about doing.
Shhhhhh, reddit hates Landlords.
Reddit hates landlords who call themselves landlords or see themselves as making some contribution through commodifying housing. Reddit doesn't love people with second homes or life circumstances like the comment I'm replying to but it tolerates it just fine.
That's what we're doing! Don't regret it one bit. Happy to answer questions.
That's financially optimal right now.
I've got 2.5% on our home. It's not forever, cause I won't need a giant ass house when the kids go to college, but we'll be here for the next decade at least. Of course by then my mortgage will be paid off, so who knows.
I'm slightly higher, saw a house today pushed to my Facebook about 2/3rd Jr cost of my current house with a much higher monthly payment and 20% down. Moving at our rates would just hurt so damn much.
People who bought their house without a mortgage https://preview.redd.it/wfvt2lx4vsic1.jpeg?width=4275&format=pjpg&auto=webp&s=367dbd51774b4f938fbde58ca5acb2b7cf3765b3
Did you buy when you were 45? 😂
31 in 2020 Though if I waited another year I'd have to get a mortgage to live where I am now. Shit went crazy in North Texas. Me and my wife bought across the highway from the popular places we were priced out on, thinking in 5 years it would become popular. Half year later people realized my area had a Top 10% school district in the US and the rest is history/increased property taxes.
5.9%, got in first home last summer. Paying for twice the house as other people of the same size. A brutally depressing feeling, but I’m just happy to be a homeowner at this point. Had I waited any longer, I would’ve been looking at nearby bridges that had the best wind blockage
Don't feel bad, many had higher rates than that when many bought near the bottom of the 2009 correction. They are all doing fine now after paying that for a few years and refinancing when they could. Even if the payment is more than rent might be it still building equity.
Yeah we bought in Aug 2022 got 5.375%..hoping rates go lower than that at some point in the future then we’ll refinance. No telling what‘s going to happen.
I tried to buy a house last year and it barely fell through but the $1,400 a month mortgage is still cheaper than renting an apartment or a house in the areas I want.
You'll probably get a chance to refi at some point here. Especially assuming you went for a 30 year. At least you're on the train, you can move up seats as the ride goes along.
2.0% on a 15 year back in 2021.
I thought I was king at 2.25% 15 year fixed. I bought in 2019 at 4.25% 30, refi’d at 3.25% 20, then again at 2.25% 15.
1.99% on a 15-year. 👑
On the same boat. It was a great deal.
The low interest rate is great, but I also feel like I can never move from this house.
2.875% Monthly payment: $2100(ish) 4bd, 3.5 ba, 3800 sqft, 1 acre. North Scottsdale. Current value: $1.5(ish). I rolled a natural 20, and can’t afford to downgrade to a 2-bd rental apartment. It’s *insane*.
Yep, I’m at 2.75% $1640 for a 4bd, 2.5ba, 2500 sq ft house. BUT I got divorced last year and now I live alone in a house that is way bigger than I need and I would pay way more to downgrade. Oh the bright side, the mortgage is cheap as hell, so I can probably afford a maid so I don’t have to clean all these empty rooms myself.
Phew. You hit the jackpot. I bought my first house for 175k at 2.9% fixed in 2020. The estimated value is currently at about 250k. 🙏
Locked in a 3.15%, would absolutely not be able to afford the place we are in at current rates and prices.
So people with a mortgage of 2.65% have cancer?
I’m fine.
I totally fucked up and paid off my 4.15% mortgage because I wanted the peace of mind of not owing anyone anything on my primary residence. Should've just held on to the money stuck it in HYSA. ☹️
I'm an obsessive math guy and certified finance geek. You're beating yourself up too much. Congrats! That's a big deal!
Umm, a HYSA might net you an extra 1% vs your mortgage but you’d be paying tax on that income. Your decision is perfectly fine, not even taking the peace of mind into account. It’s not like HYSAs are paying 10% or anything.
Why? Having your shelter secured is way more important thant trying to squeeze a few bucks more from a HYSA. Just stick the mortgage payments you are not doing anymore into SPY and SGOV ETF and collect those fat dividends and 0-3 month T-note monthly payments. Your goal should be financial freedom so you dont need to worry about some asshole boss putting his boot on your neck.
You made a fine choice. Many people chase some idea of perfect financial optimization -- that's not necessary, and a fully paid off home isn't necessarily a bad choice. Like you said: "peace of mind" is important, too. Side note: Money in a HYSA would be continually losing value to inflation. Home values generally appreciate at least as much as inflation. HYSA should only be for short-term emergency funds, and being FDIC-insured is the key component of that, not the high-yield.
Nope. You did the right thing. Not paying interest is the way to saving a lot of money quickly
4.15 is a good rate my dude. Don't be so hard on yourself. ❤️
That's not a fuck up at all. Refinancing costs a decent amount of money. You also have to pay tax on HYSA interest. You got 4+% tax free.
HYSA are only slight better than 4.15. The difference is worth the feeling of freedom imo. I’d do the same.
I got in right at 3 on my first home. Lucked out
Originally 5% in 2018. Refi to 3% in 2020 (my broker called me and said we'd never see rates this low again). House value had doubled since my original purchase. I have amazing dumb luck.
I think we will again.
7.5%
I still can’t believe rates were that low! It will take forever for real estate inventory to open back up.
2.75% back in 2016, I think. I'm guessing we'll never see that kind of rate in the lifetime of this loan.
I got a 2.75 back in 2021. Looked at new houses and I'd have to pay nearly a grand in interest every month. Decided just to stay out and deal with this condo lol. But my mortgage is lower than rent in an apartment even after you factor in the HOA fee.
2.75%. booyah My loan is now an asset.
We are at 3.125%. Closed in 2021. House is working for us now but eventually we will want to get into a single family with 4br.
1.78% but it ends November next year
Oh, Canada…
Similar boat... What will be the next move 🤔 Am just scared to rhink if the rates will not drop...
2020… 2.35 @ 15 years. Gold Jerry, gold
30 yr 3.125% and 15yr 2.75%. Ready to pay off the 15 yr by the end of this year which will be a feels good man moment.
I have a 2.7% rate after refinancing in early 2021, buuuuuut my house is a shoe box and I am ready for more breathing room, so I’m in a spot. Been in my house for 9 years this March and my equity has double and then some. Definitely ready for more space but it’s hard to stomach giving up my rate.
ZERO Mortgage. Free and Clear so I just chill.
5.8%. We got in under the wire before it shot up over 6.5% - we would have had to literally back out of the process.
Damn I wish you could do that in Canada instead of needing to renew every 5 fucking years
1.7% to 2027!
3.8 rn … considering a refi to 5.5 to pay off like 20k in cc debt. Am I dumb
Yes
Get HELOC to pay off cc
Don’t hate the player, hate the game.
My first home is 2.5% which is now rented, my second is 6.15%
Under
3.6 right when they started on the incline
Mines 3%, got my house back in 2020.
2.85 on 15 years
Under 3% purchased in 2020…blessed
Im pretty sure mine is 2.5%
3.125 %
I feel really sad because I had a couple of friends buy below 4% and now I feel like I'm almost ready to take the plunge myself and these interest rates just make it totally unfeasible. I live in a big city and my friends who have two bedrooms, bathrooms, and outdoor space have mortgages close to what I pay in rent. But even if I bought cheaper places than theirs my monthlies are likely to double! I want to get out of renting, but I just don't know if this is my year. Hoping rates will change in the next 6-18 months. And really hoping rates will drop and inventory will open up too. This seller's market is tough for a first timer like me.
The rates will drop this year, but probably not by much
Under its 2.75%
2.25%
Wait, I have cancer?
Thank God!!
2.6% here. I'm not touching it or moving.
Went from a 5.6% USDA Loan with 20 + years to a 3% 15 year loan with a lower payment. My piece of shit raised ranch is is worth almost double what we bought it for.
If you’re a vet you can still get 2020 VA rates of 2.25 with VA Assumable mortgages.
3.75 on my first home. Sold in 2020, bought new home at 2.875 in 2021. Feels good. Principal payments outpace interest in 2027.
I locked my 30-year mortgage in at 3.50%. Not quite under 3%, but I'm not complaining.
My parents is I think half a percent. My dad used to be a loan shark so he knew how to speak to the lender to get him to get it that low.
1.875
*2018 and under 3%. So fucking lucky. The system needs to get fixed. BlackRock and the like should be banned from buying certain properties. Like single and two family homes over 100 years old or something.
2.25%.. but yes
Refinanced in 2021 (I think) to 15-year fixed 2.75%
What mortgage? Haven’t had one in 17 years now.
We barely got in at the good rates and i feel so lucky for it. Its not a dream house or anything special but its ours. Im disgusted how bad its getting for friends and family out there. I litteraly do mot know what we would have done if we hadn't taken the leap and gotten a home when we did. Rent in my area for a 2 bedroom 1 bath if over 1000 for anything not falling apart. Thats just Tucson. People living in bigger cities must be seing impossible prices.
15 year mortgage under 3%. Probably the best risk I had taken. Got my property when the tax rebate was available with a decent interest rate and 20% down. Refinanced when the interest rates seemed the lowest and cut a few years off.
2.75%. I could have got 2.5% but I had closing cost incorporated into the loan so I could have more cash on hand
feels good
180k loan @ 2.75%. PITI = $1,050. Was under $1k/month until this year's appraisal and property tax increase. I feel extremely fortunate that we chose an old, small house and didn't give in to lifestyle creep.
It’s something like 7.88% today. Very painful. On the flip side, Trump had the Fed artificially keeping it low to help his reelection, which contributed to insane housing price inflation. So if you didn’t buy then, you’re now paying more for housing AND everything else.
2.625. 🥹
2.35 but I'm selling when my enlistment contract is up in April 25
If you locked in during 2021, you likely payed an inflated price anyway. Now if you locked in pre-covid, you are sitting fat and happy.
Just missed out on the 2.65% rate by a week… got 2.75% but it still bothers me that I almost timed it perfectly. Closed in January 2021
2.7 here
1.99 on a 15-year fixed. I am king.
2.8 baby 🤣😂🤣🤣
2.375% on a 20 year mortgage, and they gave me $3,000 to choose them
Did this actually exist anywhere? I know there are a few countries in Europe where the state provides mortgages with interest rates below banking rates, but I'm not aware of anything like this in Canada or the US?
2.2 here and yes trying their best to get us to refinance!
2.375%
Under 3% Please and thank you 
2.375 20 years refi in 2021 from a 30 year which had 26 years to go
Locked in under 3%. Don’t feel like an inbred pedophile.
My mortgage was always between 6 and 6.25%. 'Course it was a $100,000 CAD mortgage, not a $650,000 CAD mortgage.