Long Beach, CA · Member since 2016 · 22 posts · 4 votes
Should we use stock assets to pay off home mortgage?
Details:
550K mortgage at 3.5% with 29+ years left to pay (purchase price 1 mil)
Currently have 550K in stock that we could use to pay off mortgage
The stock is not part of our 401k plans. We have a sufficient rainy day fund and the stock is not factored in to our our overall investment goals; however, it would obviously help us reach those goals sooner.
Interest savings would be 350K + over the life of the loan
Should we keep the money in the stock market or pay off our mortgage considering Trump capped the interest deduction at 10k and our property tax more than reaches that threshold??
You're not accomplishing anything. You would be taking your profit, and saving interest on a loan where you are not the one paying. The source of funds to pay the mortgage, on a PCF property, is the tenant's rent. That's someone else's money. They are buying the property for you. Don't help them.
Thank you, you make some good points. I probably was not clear. The mortgage is on my primary residence. Does that change your opinion?
That's different...but you may be better off investing your stock returns elsewhere. The stock returns are free money that the stock works to get for you. Although you will be reducing the total interest, you won't see that savings until the end of the term...and the monthly payments don't change while you're adding money to your mortgage each month.
Anything further to help me understand why? We are both still contributing max to our 401k, as well as contributing to 529 accounts and also some additional after tax money to Betterment.
You're not accomplishing anything. You would be taking your profit, and saving interest on a loan where you are not the one paying. The source of funds to pay the mortgage, on a PCF property, is the tenant's rent. That's someone else's money. They are buying the property for you. Don't help them.
You're not accomplishing anything. You would be taking your profit, and saving interest on a loan where you are not the one paying. The source of funds to pay the mortgage, on a PCF property, is the tenant's rent. That's someone else's money. They are buying the property for you. Don't help them.
Thank you, you make some good points. I probably was not clear. The mortgage is on my primary residence. Does that change your opinion?
You're not accomplishing anything. You would be taking your profit, and saving interest on a loan where you are not the one paying. The source of funds to pay the mortgage, on a PCF property, is the tenant's rent. That's someone else's money. They are buying the property for you. Don't help them.
Thank you, you make some good points. I probably was not clear. The mortgage is on my primary residence. Does that change your opinion?
That's different...but you may be better off investing your stock returns elsewhere. The stock returns are free money that the stock works to get for you. Although you will be reducing the total interest, you won't see that savings until the end of the term...and the monthly payments don't change while you're adding money to your mortgage each month.
A lot of us have a very small % of our world in our primary residence, so hard to relate. I can't get my head around a double comma home. What for? Maybe that's just a regular house in your market?
My primary is less than 10% of my total stock and RE portfolio + there is an ADU covering the bulk of the mortgage. It's an afterthought on my balance sheet. Oh yeah, that. Almost forgot. If I were you, I'd have have a mil in assets like apt bldgs long before I just slept in it. Wait, I do. LOL But it's all relative. Maybe $1M isn't much in your world.
Paying off your primary is never a dumb thing to do, I'd just be hesitant capping my return at 3.5%. Opportunity costs. Return maximization. Doesn't add up when you pencil it out with a calculator.
Congrats on having a portfolio that allows this choice and good luck however you choose to play it!
A lot of us have a very small % of our world in our primary residence, so hard to relate. I can't get my head around a double comma home. What for? Maybe that's just a regular house in your market?
My primary is less than 10% of my total stock and RE portfolio + there is an ADU covering the bulk of the mortgage. It's an afterthought on my balance sheet. Oh yeah, that. Almost forgot. If I were you, I'd have have a mil in assets like apt bldgs long before I just slept in it. Wait, I do. LOL But it's all relative. Maybe $1M isn't much in your world.
Paying off your primary is never a dumb thing to do, I'd just be hesitant capping my return at 3.5%. Opportunity costs. Return maximization. Doesn't add up when you pencil it out with a calculator.
Congrats on having a portfolio that allows this choice and good luck however you choose to play it!