Should you pay off our house early? According to Garrett Gunderson…. definitely not. And in the shore video below, he explains why. However, Dave Ramsey has a different take on why you should. Is it about the numbers, or about the peace of mind? Is there a right or wrong answer? Here both sides of the story below.

Garrett Gunderson’s Take (No!)

 

Recap

  • If you have your money trapped in equity, it will only be available to you if you are in a good financial position. And banks are incentivized to go after someone who has more equity in the home as it is easier to get the cash back on it.
  • On the other hand, if you save the money on the side, you will have better access to it if a crisis hits and puts your financial situation in turmoil.
  • It lowers your “cost of money” (overall rate of return on your cash flow). If you are making a greater return on your investment, than you are paying interest on your mortgage, then you are accumulating money faster than if you paid off the mortgage.

 

Dave Ramsey’s Take (Yes!)

 

Recap

  • Ramsey discusses a case study on Millionairres and how they got to where they are. Most got there with a 401k & a paid Off House, as opposed to investing and keeping their mortgage.
  • Having a paid off house changes the way that you operate with your money because you are standing on a solid foundation with no risk.
  • Because you would never borrow on a mortgage to invest money, then you should never keep a mortgage to do the same.

 

Bonus Video (The Money Guy Show)

 

Their Conclusion:  It depends on age & opportunity cost.

 

What is your take?


Commercial Real Estate

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