Are the professionals/cons of the Pay Off Mortgage vs Invest debate altered while you take…

by akoloy

I’ve seen a zillion posts on this sub about whether or not or not it is a good suggestion to place further principal in direction of your mortgage and the feedback normally fall into two classes:

  1. The psychological advantages of paying off your mortgage outweigh the additional good points you’d get investing within the S&P
  2. The alternative value of NOT investing is means too excessive to justify any psychological profit

HOWEVER – what I by no means see mentioned is how the chance value of paying off your mortgage early adjustments based mostly on how briskly you pay it off. So for instance, for instance I’ve a $300,000 mortgage on a 15 yr 3% mortgage. Let’s additionally assume that I might get a ten% return by investing the cash as a substitute.

Using this calculator, by placing $500/month in direction of your mortgage, you are successfully paying ~$45k in alternative value. But should you’re capable of put $15,000/month in direction of your mortgage, you then’re solely paying 12k in alternative value.

So am I misunderstanding one thing right here, or does paying off your mortgage early as a substitute of investing turn out to be much less mathematically sinful the extra aggressive you will be on it? Especially since all of that extra cash can begin going in direction of investing AFTER the mortgage is paid off.

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