When everybody found out that we bought our first house a few months ago, I got a lot of people assuming that I was going to kill our mortgage as fast as possible. Paying off your mortgage early seems to be a pretty common goal among personal finance bloggers, so I wasn’t really surprised.
But I have absolutely no intentions of paying down our mortgage and that’s okay with me. This is our first house and neither of us plans to stay here forever. How many people retire in their first house? Now hold on, I’m not saying that I plan to keep upgrading over the years or anything like that.
It’s just not the house we see ourselves in long-term. If we end up staying the US, we both would prefer to have a few acres. Our current house is under an acre and smack dab in the middle of a neighborhood, not exactly secluded and private.
If on the other hand we ended up moving to another country, we might decide to live in the city. It all depends on the area and what it offers, but we still might opt for some privacy.
Either way, we don’t plan to stay in our first house for the long haul. So why should we kill our mortgage when we could use that money in other areas? With my luck, I would pay extra and end up needing to borrow money because something came up. Not my idea of a good time.
It wouldn’t be smart for us to do. I know that financially it might be smarter because more money would be applied to the principal, saving us interest and building equity faster. But it would put all of our other financial goals on the back burner (like paying cash for a second car later this year).
Our interest rate isn’t crazy awful either, it’s 3.75%. Compared to a few years ago, that’s pretty nice. So we’re not paying as much when you think of it that way. Even if we had the extra money to pay off our mortgage early and still meet our financial goals, I would much rather invest that money.
I don’t really (at least at this time anyway) see our mortgage as debt. We’re still a little ways from breaking even, but after that it’s smooth sailing. Well, unless our house drops in value and we end up underwater. In that case, it would probably just make more sense to wait it out and sell when the value goes back up.
Now, when we do find the house that we want to stay in forever…that’s a different story. Finances permitting, I would love to kill that mortgage as soon as possible. It would be nice to not have to worry about monthly mortgage payments.
What factors determined whether or not you paid off your mortgage early?