Paying DOWN vs Paying OFF a Mortgage And Should You Do Either?

Exploring liquidity & cash flow

Mortgage rates have doubled in a few short months. Housing prices are off highs, but have not yet dropped commensurate with the increase in mortgage payments yet. And there are a bunch of hot takes being tossed around about mortgages and what is good/bad and what to do.

So lets add 2 of ours into the mix.

“Paying DOWN your mortgage is not the same as paying OFF your mortgage.”

And

“Paying OFF your mortgage may be counter productive for your goal of financial independence.”

Neither of these comments should be controversial. Unfortunately there is a swath of ‘no debtors’ out there who muddy the waters. Let’s walk through each statement.

That face when you realize you just gave up all your liquidity to get ‘house rich’ but asset poor

[Note - Also, who are we kidding, we have written about mortgages before, this isn’t the first time we added our opinion on the matters…see our other pieces on mortgages:

• Should You Buy Or Rent (All Else Equal)

• Maths Behind Downpayments on a Home

• What Are Mortgage Points & Should You Pay Them

• What’s Better, 15 or 30 Year Mortgages?

• 2 Better Ways To Pay Off A Mortgage Than 15-Year Mortgage

In short, we have been actively sharing how you can calculate your decision trade-offs on a home for a while.]