Invest or payoff home

You know you are bound to get this question right? Wanted to know your thoughts.

We have no debt, but our homes. We live in HCOL area in Southern Ca. Our second property is a wash but it a personal investment for aging parents.

Our current primary home is something we would like to pay off but know the math in regards to investing. We go back and forth, sometimes doing both, sometimes just investing, then sometimes going “ham” on the mortgage. It’s been hard for me to pick one and stick with it. The main goal I guess would be done with payments in 15 years (that’s when the kiddo would be off to college), that’s a nice medium for us but I’m still hung up on whether I should invest the money or not.



Hi Jessica! I think this link might be of benefit to you. Someone just had a similar question. Please feel free to ask more questions, if you have them! Glad you’re here!!

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Hello Jessica,
If you bought your home more than 2-3 years ago or more, maybe it will be a good idea to refinance it since interest rates are at their lowest. If you do that you might pay the same every month but reduce it to a 15 year mortgage.
If your interest rate is really low, I would invest instead of paying it off. Less than 3.5% interest is practically “free money” and you might be doing much more $$$ if you invest it (specially now there are great opportunities in the stock market).


Good question I’ve been thinking about this too. I used to pay more toward my mortgage but now I’m going to refinance because the rates are so low and I plan on investing more. I know the math for investing makes sense but sometimes the sight of my mortgage balance just burdens me. I’ve heard a lot of people say it’s called personal finance because it’s personal so I think whichever you choose is good because you’re building your net worth!

Hey @Jessica_Cho!

I think there’s no “wrong answer” on this one. Once you’re on phase 6, then you’re out of the realm of making horrible mathematical mistakes with money, and on to optimizing your own life. I think it’s more of a personal/psychological choice, than a correct mathematical one.

  1. If you really love the idea of being debt free, not having a mortgage payment, less risk and less banks in your life and a fully free income to direct as you see fit, sure go after the mortgage first.
  2. If you want to be as aggressive as possible and keep taking advantage of the leverage on your primary home, as long as you have your finances in order, that is fine too!
  3. If you want to split the difference, and do some of both, why not! You’ve taken care of your shit. Have confidence in your choice.

Basically, all three options above are “winning with money”. So I’d have an honest conversation with your partner. Discuss where you want to be in 5 or 10 years. Are you trying to maximize wealth? Maybe keep the mortgage around and go hard at investing. Are you trying to minimize stress and maximize tranquility? Sure pay off the mortgage. Both scenarios are wealthy people!


Thanks everyone. Yes, we are on step 6, but also are doing step 4 (max out employee contributions plus Roth IRAs and put money in brokerage accts) and 5 (set aside an amount each month) in conjunction. On good months due to a side hustle, there is extra to be allocated and I always waver which way to go. But yes both interest rates are low and we will likely Refi to a lower rate next month even though the current one is at 3% and 3.75%.

Just wanted to hear your thoughts on this. Thanks so much!


Check this link out:
Shows you 3 scenarios on paying off mortgage principal early, doing it midstream, and investing it.

I have a HELOC debt that I took over for my parents in tune of $67k. It’s a simple interest rate of 3.99%. So I’m selling some of my dividend stocks that does not have much capital gain appreciation but below 5.09% dividend yield (3.99/1 - (effective tax rate)= %). But psychologically, I think I would feel better to get this debt paid off. Just a little punch in the stomach along my FI journey. Blessing in disguise as I now have joint title for a $281k - $321k home.

Coincidentally, we wrote up a whole post on deciding whether to pay off your mortgage or invest extra capital!

I’d generally summarize by suggesting that unless the mortgage has a higher interest rate than your expected investment return (net of expenses, taxes, and risk value)—then you’re probably better off investing. This was a harder question when interest rates were higher, but mortgage rates these days below 4% make it pretty easy.

HOWEVER, there’s one big caveat. When you carry a mortgage, you have to pay for it! What I mean by that is, you have to realize (or earn) income in order to pay down that monthly mortgage payment.

If you’re looking at retirement or one to micro manage your tax strategy, subsidies, etc—sometimes it can be REALLY beneficial to lower your expenses by paying down a mortgage because you can then earn less income in the future. You don’t have that mortgage payment.

For some people this can make a big difference for subsidy cliffs or qualifying for certain income-based programs.

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