Hi all, so today, I pay $2500/month for my 30 year mortgage on a 600k house. My rate is in the 5% range, so I have been contributing an extra $1000/month to paying it off early, with the consideration that I would like to refinance for a lower rate eventually or potentially sell it off in the short term (3 to 5 years).
The $2500/month is under 33% of my take home, and I am already maxing out all the traditional pre-tax buckets like 401K, HSA, and I also have a backdoor Roth IRA setup that is maxed out as well. Beyond this I also save an additional $2500/month in HYSA and brokerage, roughly a 35% pre-tax savings rate annually.
However paying an extra $1000/month is obviously a lot and it puts me above the 33% of my take home. But is still under 33% of my pre-tax income. I've never been quite clear how to align the 33% rule to be honest.
My logic has always been that paying off the mortgage early is a form of investing since it puts additional equity into my pocket and reduces the future interest that I pay. And given that 5% is higher than average rates of returns for savings right now, I feel like it's worthwhile. But should I consider paying down less of my mortgage and investing more instead?
Submitted January 29, 2023 at 11:29PM by filleracc69 https://ift.tt/UmLc0Xl
