Graham Stephen and housing

Real Estate
#1

What are your thoughts on Graham Stephen for advocating a 15 to 30 year fixed mortgage and just paying off minimum payments and Investing rest? Mathematically, it made sense to do this since the return on investments is way higher than interest paid on home. However, he did state that most don’t have discipline to do that…What is the PFC thoughts on this?

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#2

We just refi’ed to a 15 year because we have been paying our mortgage like a 15 year anyway and couldn’t resist the rates. I have been grappling with 30 or 15 year, but we made a personal decision to want to pay off the home to free up the ability to travel/quit work earlier when the kiddo graduates HS. It was a personal decision that went against the math, but we realized that the opportunity cost did not work with our family.

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#3

I have no problem with that strategy. I think the “pay off your mortgage vs invest more aggressively” question comes down more to personal preference and behavior than getting the math right. If your finances are secure (no non-mortgage debt, emergency fund, etc) and you want to pay the minimum on your mortgage to grow more wealth, cool. If your finances are secure and you just want to have a paid for home because that will make you feel happier and more secure, go for it.

Personally, I probably lean more towards the pay the minimum side. Although I currently live in a paid for condo because I didn’t qualify for a loan as I have no job.

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#4

Thanks Jeremy! Would you recommend in the case of investing long term to just do a 30-year fixed and invest the difference at 32 years of age if we invest 25% of our income we should be close to 3 and 1/2 million dollars by the time we’re for 64. So to me it would make more sense to have a lower housing payment even if the interest is higher at such a low percentage and then we can continue to invest a larger portion of our income possibly even 30% of our income

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#5

Interested in this discussion. I refid from 30 to 15. I know the math doesn’t make sense because of opportunity cost but 30 years just seems like so long. I’d rather not have a large bill to pay each month. But I also agree it’s good to invest more so I got a 2nd job :sweat_smile: problem solved!