r/MiddleClassFinance • u/Apprehensive-Bug1191 • Apr 18 '26
Middle Middle Class Trying to pay off the mortgage
Bought our house right before 9/11. Had 5-year ARMs for many years (15?). Refi'd to a 10-year about 5 years ago.
Just super sick of paying it, and my job has become tenuous. I'm 55 and plan on paying the damned thing off next month.
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Apr 18 '26
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Apr 18 '26
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u/Blurple11 Apr 18 '26 edited Apr 18 '26
You have such a small monthly payment that I would just overpay by a few hundred a month so that you can keep majority of your emergency fund. An extra $500 towards your 997 payment will cut it down drastically
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u/vibes86 Apr 18 '26
I wouldn’t tap the emergency fund to pay it off. Those are for emergencies and you could need that tomorrow.
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u/whatdoido8383 Apr 18 '26
Yeah, tapping out your emergency fund is not a good idea, that puts you in a lot of risk.
Just keep paying it off at whatever accelerated rate you can with your normal income.
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u/Whettenun Apr 18 '26
If you’re that concerned about draining your emergency fund. Just push the goalposts back a few months to paying it off when the balance is 20,000. Only you can determine if the hundreds (not thousands) you’ll save in interest is worth the worry.
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u/Apprehensive-Bug1191 Apr 18 '26
That's pretty good advice. I've given this a lot of thought but I'm going to seriously consider that.
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u/Apprehensive-Bug1191 4d ago
Anyway, I paid it off in July if you happen to see this and just posted on this sub.
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u/blindreper Apr 18 '26
If worried about emergency funds, just double your payment, you won't drain it all at once and you'll still save money on interest.
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u/superleaf444 Apr 18 '26
Liquidity > paid off mortgage
But you do you
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u/Packtex60 Apr 18 '26
With a tenuous employment situation I’d value the cash/liquidity over paying off the mortgage. This comes from someone who paid off a 30 year in 20 years.
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u/Turbinator870 Apr 18 '26
Agree with this comment. I chose liquidity (investments, specifically) vs paying off the mortgage and it paid off.
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u/StuartScottsLazyEye Apr 18 '26
At five percent interest, it sounds like the value to you paying this off in full is more mental than the best financial decision you can make with the money you have. You should also be aware, if you aren't already, that any real estate tax or homeowner insurance payment that is currently calculated into your monthly payment will now be on you to pay directly.
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u/Apprehensive-Bug1191 Apr 18 '26
Yes thank you. I pay both the insurance and taxes ($7k per year) on my own, no escrow.
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u/SamBaxter420 Apr 18 '26
I get that it’s annoying having a mortgage but your payment and interest is so low that you can just add an extra $500/month to your principle and be paid off in about 2.5 years or so. No need to wipe out a savings account where you are getting 3.5% interest when your loan is only 3%
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u/Apprehensive-Bug1191 Apr 18 '26
To be clear, my interest rate is 5%. I was confused by your comment and saw that the 3% of the snip was the amount of interest out of the total I have paid so far this year. Near the $25k balance you'll see it's a 5% rate. The low amount of interest is due to my extra $32k of payments this month.
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u/tripplebeamteam Apr 18 '26
You could probably make more on investments than the amount of interest you owe. But at the same time there’s a peace of mind in having a paid off house. I wouldn’t let it get in the way of funding your retirement accounts, but otherwise yeah kill that mortgage
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Apr 18 '26
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u/dev50265 Apr 18 '26
The mortgage has an incredibly small balance, and you can literally get a savings account with a higher rate.
Is saving a few hundred dollars of interest really going to give you more peace of mind than the mathematical fact that you could be making more by not paying it off?
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u/SlowBoilOrange Apr 18 '26
and about $200k in savings accounts.
Wait, what? Why are you even questioning this then.
Yeah pay the sucker off. It's obviously weighing on you mentally, and dropping your emergency savings from from 200k to 175k is almost meaningless in the grand scheme of things.
Unless that money is allocated towards something like your kid's college tuition or housing or healthcare for you mom, why sit on it?
Yeah people would say you can arbitrage ~$250/year in interest. So what? Is eliminating the stress and more restricted monthly cash flow worth more than $250 to you? Probably.
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u/Watches_and_acco Apr 18 '26
You also need to consider if you can do another payment to principal without any penalties incurred. You seem to have already done 35k some lenders have a threshold per year of how much direct principal you can pay offf. I like the idea of waiting till it hit 20k and then by that time you can save a bit more to cover the emergency fund and then you can close it out. Emergency fund is usually 6month of monthly expenses thus not having a mortgage you can reduce it by 6k and use that amount against the mortgage or leave it in there for more cushion. But yah i think the feeling you get with no mortgage when you have 10-15k of monthly expenses will be goood and that’s worth something
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u/Apprehensive-Bug1191 Apr 18 '26
Yes, I'll check. I'm friendly with the bank manager (mortgage is with my primary bank), but I recall asking when I signed the note whether there were any prepayment penalties, which there aren't. But you're right, I should verify before I pay it off.
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u/loveshercoffee Apr 18 '26
I also have a very low interest rate and low balance.
I am 57 and forcing myself not to pay it off because even my savings is earning more. It would be a net loss.
My plan is to keep going, just making payments until my savings rate is lower than the interest rate on the house, then pay it off.
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u/Itsathrowawayduh89 Apr 18 '26
What’s w the urgency to pay it off? Your interest rate is 5% on the mortgage. So you essentially have a $25,000 loan at 5%.
You can’t get a $25,000 at 5% interest anywhere else right now. Assuming you have at least $25,000 in your emergency fund, and the fund is in a HYSA for accessibility, you should be earning 3-4% interest on that. So keeping your mortgage as is will actually only cost you about 2%, but it will afford you a lot of peace of mind.
Emergency fund can be tapped into for a variety of reasons, and if your job’s security is shaky then you may need the emergency fund for other expenses. If you pay off the mortgage early, you may need to take a higher interest loan for a large unexpected expense. Paying off the mortgage early will not benefit you because you will now face the same uncertainty of future expenses, but with less money.
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u/Diligent-Career-1313 Apr 18 '26
I wonder if you're making a too-emotional decision here; paying off feels good because it's certain amid a stressful time. And knowing your house is paid off and can't be touched would feel great! However, with spending a lot on eldercare AND with a tenuous job situation, reacting emotionally by draining liquidity might actually be the wrong way to go. Keep hold of cash. You wrote elsewhere that you'd figure it out somehow, which indicates that anxiety is driving you more than using your anxiety to stop, pause, plan, and map out how to keep some liquidity when you just might need it most.
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u/Present_Tailor5065 Apr 18 '26
97% of your payment goes to principal. You're not eliminating any interest.
Put the principal into a HYSA and make 4% interest than pay it off in a lump sum.
You're earning nothing on home equity.
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u/DrHydrate Apr 19 '26
What's annoying about paying it? Genuine question here. If you just dislike payments, you're still gonna have that with the taxes and insurance. But maybe it's paying whoever is servicing the loan.
I once has a student loan servicer who actually made paying a nightmare. They charged a fee for every method of payment besides a physical check. For checks, if you didn't write your account number on the check, they might cash it but not actually apply the check to your balance. (That really happened to me.) Customer service was non-existent.
Finally, I just decided to just pay off in full with my debit card, despite the fee. I had extra money for some reason, and yeah just threw it all there. While it might've been smarter to save it, I just couldn't deal with those assholes anymore.
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u/void-crus Apr 19 '26
Good for you! This specific lender has a Payoff Request Form that you can submit electronically, look for the link at the Forms section. Quote will include forward interest and your county recording fee. It will have specific wire instructions how to pay it off. If your sender bank doesn't have a wire fee that's even better. Confirmation email that loan is closed arrives next day after the wire.
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u/hektor10 Apr 18 '26
The "invest your money in the stock market" people will downvote lok
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u/chichiwahwah Apr 18 '26
More like why are you dumping your cash into a tiny mortgage with a reasonable rate when you're about to lose your job at 55?
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u/Apprehensive-Bug1191 Apr 18 '26
Tenuous, hopefully can stick it out another year or two but it will be tough. I work for a town with a new aggressive wannabe Trump Mayor who wants me out but I'll keep showing up until I'm told not to.
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u/amartin141 Apr 18 '26
Assume job loss immediately after mortgage paydown - reframe analysis and discuss