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This isn’t a theoretical question — it’s my real-life decision.
I owe about $108,000 on my home — which is worth roughly $650,000 — at a 4.875% interest rate. My monthly payment is $837, and if I keep making those payments, my last one will be due on December 1, 2040.
But lately, I’ve been wondering:
Would it make more sense to pay off the mortgage right now, and then take that $837 each month and invest itinstead of sending it to the bank?
Let’s look at both sides.
🏠 Option A: Keep the Mortgage
If I keep things as they are, I’ll pay off the home in 15 years and pay around $42,000 in interest by the end.
That’s not terrible, but it’s still money that could be working for me elsewhere.
Pros:
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I keep my savings intact for emergencies.
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I benefit from inflation over time (my payment stays the same even as prices rise).
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I retain flexibility with my cash.
Cons:
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I’ll still be paying $837 every month until 2040.
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I’ll pay tens of thousands in interest to the bank.
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The debt — even manageable — still hangs over my head.
💸 Option B: Pay Off the Mortgage Now and Invest the $837 Monthly
Now imagine this: the mortgage is gone. No more payments. And instead of sending $837 to the bank each month, I invest it — steadily, month after month — for the same 15 years.
Here’s what that might look like based on different average annual returns:
| Scenario | Average Annual Return | Total After 15 Years (Investing $837/month) |
|---|---|---|
| Conservative | 4% | $181,000 |
| Moderate | 5% | $225,000 |
| Optimistic | 6% | $243,000 |
| Aggressive | 7% | $264,000 |
That’s the potential of compound growth — even small, steady investments can snowball over time.
Of course, markets can fluctuate, and returns aren’t guaranteed. But history shows that long-term investing tends to outperform the cost of most fixed-rate mortgages — especially ones below 5%.
⚖️ Comparing the Two Paths
| Pay Off the Mortgage Now | Invest the $837 Monthly |
|---|---|
| Guaranteed 4.875% “return” | Potential 6–7% long-term return |
| Complete peace of mind — no debt | More financial growth potential |
| Frees up $837/month immediately | Keeps the mortgage until 2040 |
| Simplifies retirement and lowers expenses | Keeps cash more flexible and liquid |
🧭 The Bottom Line
Financially, investing the $837 each month could lead to greater long-term gains — assuming the market performs well.
Emotionally and practically, though, paying off the mortgage offers a guaranteed return, immediate relief, and flexibility with future cash flow.
✍️ Tracy’s Take: Why I’m Leaning Toward Paying It Off
For me, peace of mind carries real value. Knowing my home is completely mine — no bank, no payment, no balance — feels like true financial freedom.
Once that monthly $837 isn’t going to the mortgage, I can redirect it however I choose:
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Invest it each month and watch it grow.
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Use it for home improvements that boost comfort and value.
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Or simply enjoy having a little more breathing room in my budget.
It’s not just about numbers — it’s about freedom, flexibility, and the feeling of owning my home outright. And that, to me, is worth every penny.
