garysears, it’s definitely to each his own. There’s no one right answer for everyone. Only you know what’s right for you. The way I see it is, you need $x in expense to live from now until you die. So you need to make $x in order to not become homeless. Whether you pay off $x in 3 years or in 30 years, it doesn’t really matter. Paying it over 30 years will make your life more constant in term of expense vs income. That’s without counting in inflation. Just looking back 30 years ago and see how cheap things where in nominal dollar term, it’s a no contest for me. If you live well below your mean and have plenty of $ saved up for rainy day (2-3 years), you shouldn’t really need to worry about your job.
Here’s one example, you pay off your $50k condo in 5 years, but you’ll have very little in savings in 5 years. Then 5 years from now, you lost your job and economy stinks even more than it does today. You won’t have enough $ saved up to live until you get a new job. What good is a paid off house when you’re in that situation? The other scenario would be, you get a 30 year fixed loan for that $50k condo, which allow you to save $540/month ($214/month payment over 30 years vs $754/month payment over 5 years). After 5 years, you lost your job like the first scenario. But now, you’d have $32k saved up. Which is enough money to pay your mortgage for the next 12.5 years. Which scenario would you rather be in?
