Aldeer.com Forums Alabama Deer Talk Aldeer General Forum Paying Mortgage Off

Do not hit your 401K to pay off a mortgage in the 3's. You're making more than 3.6% on your investments so you'd be crazy to pull it out of there just to go in hole/losing money, to save even less on interest. In addition, you'll have to pay an early withdrawl penalty of 10% plus the federal and state taxes on any money you pull out, just for the privilege of tapping the 401(K). You can take your cash and put it in a FDIC insured money market making more than the 3.6% you're paying in interest, and still have complete access to it, anytime you need it. Once you put that money in your house, it stays there until it is sold or you put a new mortgage on it, which will then be in the 6.5% range. 3% mortgages are long gone and are not coming back. If you're worried about the stock market, reposition into safety, within your 401(K).

Is paying a mortgage via an amortization schedule still a thing or have banking rules changed that? In that scenario, you pay the full payment for this month and pay only the principal for next month. A lot of time has passed since I had a mortgage so I don't know the answer to this.

Don't touch the 401k that would be a mistake. Don't spend all your savings either. You always need an emergency fund

I'd not touch the 401K. Get mad at it (the debt), tighten your belt and make double or triple payments (to the principal) every chance you get. No idea what your spending habits are, but would bet you could cut out some discretionary spending & put the extra on the house. Just takes discipline

Another tip. Make Bi-weekly mortgage payments instead of once a month. At the end of the year, you will have made the equivalent of 13 months worth of payments so one full payment goes straight to principle reduction. In addition, the bi weekly payments are being applied to principle every two weeks instead of just every 30 days, thus further reducing interest costs. Doing this will turn a 30 year mortgage into a 24 or 25 yr mortgage.

I absolutely would not pay the 10% early withdrawal penalty to save 3.6% in interest. Personally, I would not pay that rate off early at all. Those rates were a gift and unlikely to ever be seen again. Inflation is eating purchasing power away by the day, but you are locked in at 2018 pricing. That payment will steadily become a much smaller piece of your overall spending as time goes on due to 3-4% compounded inflation.

With your volatile income, I would much rather have the cash in an emergency fund. A paid off house doesn't put food on the table when you haven't worked in 3 months.

You don't strike me as the type that's going to blow the money on something else, so I would just park it in a money market earning essentially the same rate that you are paying on the loan, but with much more flexibility.

I would NOT pull from your 401k. Even if the stock market crashes, it WILL rebound and you'll be better off just holding on through it. I'd suck up the $69/month. Just my opinion.

One more thing. Real household inflation is moving at a far greater rate than your interest rate. The government may say the inflation rate is lower but your grocery bill says its much higher. Making double or triple payments will be less significant sooner than you realize.

I’m 44. Not note whatsoever.
I’d pay it. Can you use the 401k as a loan ?

Interest on a 401k loan is about 2% over prime , so floats about 8-10 % . Granted he'd pay himself , but it's still double his 3.6 rate. In my mind not a good move. If he needed a small amount for a short time , a 401k loan could be an option. He'd also be missing gains on that 401k $ at possibly more than his payback rate.

Our approach was every quarter we would throw an extra 5-6,000, keeps plenty of reserves built up and doing that for a year or two knocks a big hole in the debt

Prioritizing a 3.6% mortgage is nuts especially given the low balance.
Let it ride

You would be better off prioritizing building up a fat brokerage account

Think you're doing great! Get er down another 30 or so then wipe it out

X2....

Jake, you can appeal that flood insurance requirement. It's an uphill battle , you'll have to hire a surveyor or PA and submit some paperwork .

I'd consider taking that $70k and buying an old dozer. Charge $200-$300 per hour doing work for landowners on the weekends.

lol until something breaks... but it would be fun at least.

I have’s assumed you work for the Roger’s group just by reading your post on here. I have a question how in hell do all these women have those company vehicles running around everywhere? Can you get a different position or is it a big pay cut? I’m just thinking of something to ride through the wet weather that all of us construction workers deal with. My personal opinion for what it’s worth and we know how opinions are is hold on to the 401k.

You can pretty well get a loan for anything, one thing you can’t get is a loan for retirement.
Draining a 401K to pay off a low rate primary residence with only $100,000 left is nuts.