Most would have probably been better off over the last 15 years to have paid down their mortgage with after tax dollars instead of contributing to a 401K.
A variation of this is to max out 401K contributions with pre-tax dollars and then borrow 50% of your account of pre-tax dollars and pay down/off your mortgage. The other 50% remains sheltered.
You are guaranteed a compounded return on pretax dollars equivalent to your mortgage rate.
This strategy is not for everyone due to the danger of job loss and repayment of 401K loan.
There is no guarantee of a compounded return in the market.
Mortgage interest is always paid in arrears, never in advance. Unless a program is set up differently, in most cases there is absolutely no advantage to paying your mortgage payment before the 15th of the month. Interest nor principal gets credited faster if you pay on the 1st.
(HELOCS are figured on daily interest, not monthly. The above does not apply)
You can only pay off ANY debt faster by paying down extra principal in addition to interest due. There is no other secret formula.
The average person is better off with a 30 YR mortgage than a 15YR. YES, they will pay more dollars over time, but in most cases end up paying back with inflated dollars and virtually everybody has more income over 30 years to service the debt and it is easier for them to pay….Mortgage debt is usually the cheapest debt consumers have and it’s tax deductible for most.
It’s idiotic to accelerate mortgage payments and carry 10%-30% non deductible consumer debt, yet some people actually do this…. HLS
