Comment by apsurd
18 hours ago
I enjoyed the linked post overall, but want to highlight one thing:
>The real insight: paying down your mortgage reduces your monthly burn, which reduces the chance you’ll need to sell stocks in a downturn. It’s not about math, it’s about resilience.
This seems more emotional than anything. The feeling of paying off a mortgage and being relieved of some monthly burden. But there will always be monthly burdens, that's life. Everyone needs monthly cashflow. So the insight of putting extra cashflow into a mortgage to offset the burden is just reversing the purpose of why you got the mortgage in the first place? What I mean is money has time value, a mortgage is paying for the time. So being in a hurry doesn't automatically insightfully make sense.
The post is all about resilience, I suppose my point is that there will always be a need for monthly costs, so trying to be free of the stress of a monthly cost -a time cost- is overly emotional in my view.
But it doesn't, does it?
If I have $300K on my mortgage and a monthly payment of $2000, and I pay an extra $100K, that 100K reduces the principal of the mortgage by $100K, and so the mortgage will run for several years less than it would have. But my monthly payment is still $2000 for the years I have left on it.
There are other ways to structure it - you can pay ahead, paying next month's payment this month so that you don't have to pay anything next month if you don't want to. Can you pay $100K so that you don't have to pay the next 50 months' payments? I don't know, but probably. You have to be clear with them what you are trying to do, though.