By: Jon Dulin
In reply to <a href="https://compoundingpennies.com/pay-off-mortgage-early-no-extra-payments/#comment-143821">Stephen</a>.
I agree. But by using my strategy, I keep my cash liquid. So if something comes up, I have cash on hand. If I just throw it all at my mortgage, the money is tied up in the house. The only way I can access the equity is to take out a new loan or line of credit.
If the ultimate goal is to get rid of the mortgage as fast as possible, it is smart to throw everything at it. But I am looking at it from a different perspective.
By: Stephen
I think you're missing the point. Every dollar you put into a bond at a rate lower than your mortgage is earning less than it could by paying down your mortgage. Instead of putting the 40% cash into bonds, you'd be better off taking that cash and paying down your principle then the remainder in stocks.
By: Jon Dulin
In reply to <a href="https://compoundingpennies.com/pay-off-mortgage-early-no-extra-payments/#comment-143807">Stephen</a>.
I am not looking higher paying bonds than my mortgage. My money is split 60/40 which offers me an average annual return of 7%. Additionally, while my mortgage is 3.75%, after taking into account the tax write off I get, the effective rate I am paying is closer to 2.8%. I feel confident that my plan will work out in the end.
By: Stephen
It doesn't make sense to invest in bonds that have an interest rate lower than your mortgage. At a mortgage rate of 3.75, I doubt youre finding any bonds to put cash. Would go 100percent stocks until bond rate increase s.