- The repayment of our mortgage was not as free as I would hope for.
- Our financial advisor recommended that we keep our mortgage and invest our money in the country.
- Having no mortgage has advantages, but I wish we could hear our advisor more.
I remember clearly where I was when I paid my house – sitting in a Costco parking lot. I put that call with a sense of joy.
With the extra money we would pocket every month, my husband and I could buy practically everything we wanted: decorated dinners, new clothes and a better car that was no more than a decade and a half old. And, of course, we would start saving more.
At 30, I felt sure that our lives would change drastically, but six years later, the reality is less free than I would hope.
We have worked hard to pay our mortgage
We bought a free foreclosed property in 2011 when house prices and interest rates were still low by the collapse of apartments three years ago. Our mortgage was $ 150,000.
It was our dream to get out of grinding, and we thought of paying our mortgage was how we could get there. We got sidewalks and refinancing from a 30-year-old mortgage to a 15-year-old who helped us knock more than 30% of the mortgage in three years.
Then, I received a repayment check for a bad accident in which I was involved in what could pay 80% of the remaining loan, but when the opportunity was within the possibility, we hesitate.
We visited a financial adviser to ask him what to do with the repayment money. He told us that it made more sense to put it in investment and keep our mortgage. Our mortgage had a 3.25%interest rate, and the councilor said investments would give a higher return.
I didn’t like our advisor’s advice but he turned out to be right
On the way home from the meeting, I felt the stomach turn. I didn’t like the advice of our financial advisor.
I wanted to pay our house so that it would not hang over our heads. I loved it “financial freedom” for personal finance expert Dave Ramsey to show in his show.
In the end, we compromised. We have used some of the money to maximize both of our Roth IRAS for the year and put three to six months expenses on a savings account, as recommended by our advisor. The rest, we decided towards the mortgage, and we have fully paid it within the next three years.
After paying it, I woke up that we had $ 1,100 more to work with every month. I made a budget on the EveliDollar app and opened Robinhood and Betterment accounts, set to pour as much as possible on these investment routes.
Premature retirement, exciting holidays and a new car were just around the corner – then the reality quickly entered.
Mortgage repayment did not feel as free financial as I hoped
Maintenance of the car and the accumulated house – a new water heater for the home, a catalytic car converter, insurance discounts for my family. None of those usual life costs magically disappeared.
While we no longer had a mortgage, this did not exclude us to pay our ever -increasing taxes and homeowners’ insurance. These bills add to the equivalent of several months of our previous mortgage each year.
I’m not complaining; I had not just understood the money we saved from our mortgage would often disappear towards unexpected bills and expenses.
Plus, our financial adviser was right. Since their inception, we have seen the money we decided in Roth Iras to increase at an 8%rate. So, if we were to keep the interest of 3.25% for the mortgage and put the repayment money in an investment portfolio, the return would have been greater.
However, a great benefit to pay a mortgage is peace of mind.
When my husband was fired from 2024, we survived with a small budget, cutting all unnecessary expenses and living outside our savings account. We managed to stay completely out of debt during that difficult time.