How to Pay Off Your Mortgage Early - Fastest Method Explained

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How to Pay Off Your Mortgage Early - Fastest Method Explained

Рет қаралды 43,054

Күн бұрын

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Пікірлер: 294

@JakeBroe 2 жыл бұрын

Thanks for watching! Check out my entire playlist of videos on buying a home here: kzfaq.info/sun/PLscTZuOqKWIz97DBmq5r-4IciwL6uKJfQ

@AliceKovska 3 жыл бұрын

the amount of value in this video is astronomical

@JakeBroe 3 жыл бұрын

Haha, I agree Alice! This is more complicated than some people want to make it, but it is the FASTEST method for sure. Cheers!

@ThaChavez 3 жыл бұрын

Absolutely agreed. I was going through depression when I accumulated what felt like insurmountable amounts of debt. I had to put my head down, and grind for almost two years to dig myself out, now I'm debt free and purchased my condo in the city with cash. My mentality and happiness is at all time high. Great video, and great advice. I watch your vids all the time.

@JakeBroe 3 жыл бұрын

Thanks for watching my videos and sharing your story Edgar! Sounds like things are looking up for you. Cheers!

@reewazkhanal 3 жыл бұрын

Aaaand, this is how you EARN a subscriber rather than keep on begging to subscribe to your channel every 2 minutes! BRAVO! Thanks for the video. Appreciate all the effort that went into making these videos.

@JakeBroe 3 жыл бұрын

Welcome to the channel Reeewaj! Glad to have you with us!

@jonathanbennett1155 3 жыл бұрын

It's important to note that this is the "fastest" method (which you did). You will end up paying more interest this way than in paying extra each month, but you will indeed pay it off earlier. The reason, of course, is that you aren't lowering the remaining principal any faster than by doing nothing (because you are doing nothing until you pay it off in a lump sum). Paying extra each month lowers the remaining principal faster, and interest paid each month is a function of remaining principal.

@DavidLee-js8ew 3 жыл бұрын

You'll pay more in interest but isn't that number still smaller than the return on your investment so it cancels it out and then some?

@alainruben 3 жыл бұрын

@@DavidLee-js8ew no, it isn’t. In his examples he is taking the money out of the brokerage just when he has enough to page the remaining loan balance so nothing left out BUT as @Jonathan Bennett mentioned you are indeed paying more in interest, so even though you pay some years before the house you end up paying more money…hence this doesn’t look like a good strategy for me.

@davebowen4483 2 жыл бұрын

Agree with this comment. Did the math on my situation and although I will pay the loan off 3.5 years quicker if I invest the extra and payoff in a lump sum instead of apply to principal each month it would cost me more in the long run since the majority of early mortgage payments goes to interest. My loan is a 30 year and only about 4 months old. Difference was about $20k more in interest and that was before factoring in the capital gains taxes. To accumulate that extra money may erode the 3.5 year quicker payoff and will also increase the total out of pocket.

@ryan1993ish Жыл бұрын

@@alainruben that’s true but would you rather spend 10 bucks on a tool that makes it so you only make $100 a day or would you rather spend 20 bucks on a tool that makes it so you can make $200 a day……… Dot yeah you spent more money on the tool, but you’re able to make way more money because you spent more on something that was able to make you more

@rachaelv1140 3 жыл бұрын

This is a great plan! Doing this to buy a car currently. Acting like I have a car payment and paying that amount to my brokerage account each month. Watching it grow and looking forward to buying a car in cash.

@Glitch852 3 жыл бұрын

Awesome advice! I'm still amazed at how fast you pump these videos out with such high-quality information! You're a financial knowledge MACHINE!

@JakeBroe 3 жыл бұрын

Haha, thanks Eugene! My goal is one video every 48 hours, but sometimes I just have to give myself a day off. Two videos a week is still good I tell myself!

@markplymale 3 жыл бұрын

Good video! My current investment strategy that resets every year: 1. Max out HSA ($7,100 married) as fast as possible. Should take about 2-3 months hopefully done before April 2. Once HSA is done 50% of take home pay goes to brokerage to invest House payment is $825 right now and we will be staying here for about 5 more years. Mortgage was 170K and we put $34K down (20%) In 5 years we would like to cash out refinance but leave 20% in current home and keep it as a rental. We would take the excess funds from the refi plus a portion of our savings as a down payment for our next house (the forever home) Definitely will push to paying off the forever home ASAP but this one we’re good making the regular full payments. I like the Finance vids! You’re good at credit cards too but these are helpful

@JakeBroe 3 жыл бұрын

Thanks for sharing your strategy Mark! I would definitely consider putting money in a Roth IRA, but you are still doing well. Cheers!

@zs8850 2 жыл бұрын

This video was very informative. I’ve been thinking a lot about this lately…whether to pay off the mortgage with extra payments or invest it and drop a lump sum later. Thank you for the research and calculations. Great video.

@pabloriquelme7739 3 жыл бұрын

Definitely the best recommendation KZfaq has given me to learn. I am new and I want to learn, I don't know a lot of English but it seems great that there is this type of content, thank you for your time that you invest in teaching what you know.

@JakeBroe 3 жыл бұрын

Thanks for watching my videos pablo! Best of luck to you!

@louisnaidu9140 10 ай бұрын

Thanks Jake for that financial advice.

@tiffanybusscher8799 2 жыл бұрын

Great info. I’ve been contemplating this lately as a means to pay off our 4% secondary loan (and our interest rate is so low on the primary loan that we’re not planning on paying that off early).

@JakeBroe 2 жыл бұрын

Glad you found the video Tiffany! Cheers!

@darrellsellers 3 жыл бұрын

solid information Capt! this also goes to say ,. use the market as a high interest bank account

@JakeBroe 3 жыл бұрын

Thanks D! I appreciate the comment and support!

@beachn200 3 жыл бұрын

Great video as always. Congratulations on almost 20K subscribers!

@JakeBroe 3 жыл бұрын

Thanks beachn! I should hit 20K subs next week! I am so grateful!

@oazizpharmd2993 3 жыл бұрын

Jake, great video for those who plan on holding the house for many years. In our circumstance, we paid off a 30 year mortgage in a little over 6 years. I do not believe this particular strategy would have worked for us, but thank you for thinking outside the box.

@limabean7235 8 ай бұрын

How did you go that in 6 year? How many months extra year did you have to pay?

@CuzYoureStupid 3 жыл бұрын

Holy cannoli! I love this approach of investing extra payments. Your videos are very helpful, thanks for taking the time!

@JakeBroe 3 жыл бұрын

Awesome! Glad you found my video and appreciate this approach to investing. Cheers!

@catt3911 3 жыл бұрын

You are one of the only people on KZfaq besides me screaming the investment account approach. I’ll have mine house paid off after 7 years of owning it.

@JakeBroe 3 жыл бұрын

That's awesome T-CATT! Congrats!

@poolking25 2 жыл бұрын

Great video! I was about to pay an extra $100 on my mortgage today. Will put in VOO

@JakeBroe 2 жыл бұрын

Thanks poolking! Cheers!

@roderick5429 3 жыл бұрын

Great video! I’d never even considered that strategy.

@JakeBroe 3 жыл бұрын

Glad you learned about this method Roderick! Cheers!

@rjbalaji 3 жыл бұрын

Great analysis and it's enlightening. Thank you, Jake!

@JakeBroe 3 жыл бұрын

Thanks for watching RJ! Cheers!

@toothybj 3 жыл бұрын

That’s great advice - thanks! We’ve owned out house for about 2 years and pay a little extra towards it every month, but I love the idea of putting that extra $ into one of those ETFs, like VOO & leveraging that at a later date to pay down/off the mortgage.

@FiscalForward 3 жыл бұрын

I hadn’t considered this. I going to play with combining two of my spreadsheets and use a very conservative return to see where I am with the payoff date. Thank you so much.

@JakeBroe 3 жыл бұрын

You are very welcome FF! Playing with the numbers is fun for sure!

@marklonganilla6077 3 жыл бұрын

Love it. Straightforward and makes sense.

@JakeBroe 3 жыл бұрын

Thanks Mark! Cheers!

@RevitalP 3 жыл бұрын

Wow, that was just the information I needed as I am looking into refinancing. This makes so much sense. I'll let you know in 20 years if I was able to shave time off my mortgage payment. I don't want to still be paying it when I retire (got a 30 year loan at age 47) This strategy should give me some peace of mind. Thanks!

@TomSramekJr 3 жыл бұрын

Given the time frame, would a Roth IRA make sense to avoid the taxes if you are old enough when you first buy the house?

@JakeBroe 3 жыл бұрын

Yep! Absolutely! If you are comfortable with your 401k retirement balance, then maxing out your Roth IRA and using that money after the age of 59.5 would be a better option than using a taxable brokerage account. Brilliant idea!

@stephenmarra3120 3 жыл бұрын

Your out of the box thinking is excellent! Keep the videos coming!

@helenmeza8681 3 жыл бұрын

Excellent Video! Great, clear, to the point. Examples and calculators helped greatly. Appreciate your time and effort.

@JakeBroe 3 жыл бұрын

Thanks for watching Helen! Cheers!

@sk1657 Жыл бұрын

I wish if you could do these financial videos more.

@Geocon04 3 жыл бұрын

I was able to double the principal when I could on my payments every month, and the house went way up in value after fixing it up. When I got the check a few years later after selling it did give me money to reinvest while waiting to buy a new house after this assignment.

@JakeBroe 3 жыл бұрын

That's awesome Geocon! Sound like you made a great amount on the sale!

@AsadAli-eg9lw 3 жыл бұрын

Very informative breakdown! I do wonder what Uncle Dave's reaction to leveraging debt would be 😅

@JakeBroe 3 жыл бұрын

Thanks Asad! Pretty sure Dave is taking me off his Christmas Card mailing list once he sees this video, lol

@MrsCine 3 жыл бұрын

Wow thank you so much! This is very educational. Glad I found your channel.

@JakeBroe 3 жыл бұрын

I am glad you found my channel as well! Cheers!

@is20206 8 ай бұрын

Wow you are so smart!

@salocin911 2 жыл бұрын

I love the point that you stressed to be "Disciplined".

@shijoabraham1730 3 жыл бұрын

Wheres a "really like" button when you need one?

@JakeBroe 3 жыл бұрын

Haha, KZfaq is going to have to make one! Thanks Shijo!

@Sonny0276 2 жыл бұрын

Great Video. Thank you for posting.

@JakeBroe 2 жыл бұрын

Thanks for watching and leaving a nice comment Sonny! Cheers!

@Bscott00789 3 жыл бұрын

What's up Jake, good info.

@JakeBroe 3 жыл бұрын

Thanks PN! Good to hear from you!

@jonb3189 3 жыл бұрын

Quick correction. Please google phrase "What Is the Average Annual Return for the S&P 500?" It is from Investopedia (I am uncertain if I can give a link or not). It states, and I am quoting here: "According to historical records, the average annual return since its inception in 1926 through 2018 is approximately 10%-11%.[cite] The average annual return since adopting 500 stocks into the index in 1957 through 2018 is roughly 8%." Therefore, more accurate is to state the S&P 500 averages 8%, and not 10%. Personally, I have a few houses. All rented out. I am using the overflow of rents (after mortgage, insurance, taxes, etc.) to pay off only one other mortgage. Then after than is paid, I pay off mortgage two, mortgage three, etc. Here it snowballs. While the idea of putting cash in the S&P is a nice idea, I personally will just put it direct in my mortgages. My investment money is different. At present however, your way, considering what is going on in the world nowadays (pandemic, mentally unstable president who is attempting a coup, zombies supporting him, etc), I will just pay it off straight. Besides, now it takes just a year to pay off each mortgage in full, so why mess with it.

@JakeBroe 3 жыл бұрын

Hey Jon. Starting the index at 1957 wipes out all the gains made by companies in the post world war 2 boom... more years equals more data, I'd rather use the average since 1926 which gets us closer to 100 years. If we look at just the years since 2010 it is over 13%. The government TSP C Fund (S&P 500 index) goes back to 1988 and averages 10.5%. Lots of way to slice it. I am going with the 100 year average.

@JacksonWelch 3 жыл бұрын

Jake you should make a video about the national debt. Approaching $30T and another stimulus check on the way, the value of the USD is dropping fast.

@JakeBroe 3 жыл бұрын

Haha, I would love to get political, but that is going to have to wait until I get out of the military.

@tombrownrigg8794 3 жыл бұрын

That’s a great idea, thank you

@JakeBroe 3 жыл бұрын

You are very welcome Tom! Cheers!

@raulurquiza2211 3 жыл бұрын

Big fan ! This was the video that made me subscribe.

@JakeBroe 3 жыл бұрын

Awesome! Welcome to the channel Raul! Glad to have you with us!

@KB-dn9xu 3 жыл бұрын

Excellant advice and great content. You are awesome!

@JakeBroe 3 жыл бұрын

Thanks KB! Cheers!

@jessieyang6079 3 жыл бұрын

Very clear!! Thank you so much!

@JakeBroe 3 жыл бұрын

Thanks for watching Jessie! Cheers!

@jordonwang6971 3 жыл бұрын

Another great video Jake! This makes sense if we keep with the full 30 yr period, because of the differential interest rate compounded over 30yrs. I wonder would your recommendation change if we sold the house in 5yrs, 10yrs?

@user-hi7lz5uy8h 3 жыл бұрын

Awesome content! So glad I found this channel!

@JakeBroe 3 жыл бұрын

Glad you found the channel Paul! Glad to have you with us! Cheers!

@robertnelson5660 3 жыл бұрын

Very nice video. Knowledge is key!

@cwichinski 3 жыл бұрын

That’s slick!!! Great info I’m sharing the bleep out of this. Btw GO ARMY next week!! ⚔️⚔️⚔️⚔️

@JakeBroe 3 жыл бұрын

Thanks for sharing my content Christian! I appreciate that!

@richard1113 3 жыл бұрын

Another great video Jake! I don't know if I would count on a consistent return rate from the stock market but the basis for this idea is solid. In general, if you can make more money investing than the rate on your debt, why not do it?

@JakeBroe 3 жыл бұрын

Pretty much! People can plug in their own numbers. Anything greater than 3% and this strategy is viable.

@venchenzo4493 3 жыл бұрын

A 9.8 percent rate long-term, say 15 plus years is completely doable.

@Joeylikeswakkie 3 жыл бұрын

This broke my brain, but in a good way. Oooh, it “broe-k” my brain...Jake Broe...get it? Okay no more coffee today.

@JakeBroe 3 жыл бұрын

Hahaha, thanks Joe! I think you are doing just fine with your coffee.

@Armando-jh8lc 3 жыл бұрын

its an option. However, the market could drop 50% a year before your mortgage is paid off and not recover for years after; defeating the entire purpose. Also, your presumed interest rate of 9.8% seems overly optimistic, its an average with declining interest rates. The market going forward will see increasing interest rated which will counteract stocks going up. You should account for a margin of safety and assume 5%. Then decide if the years gained is worth the risk of losing 50% in one year. You could rebalance using a target date fund but this will limit your gains, at the trade off of limiting your losses. In the end, its not as simple as you put it. One must understand the risk to reward and evaluate at better parameter presumptions.

@JakeBroe 3 жыл бұрын

Hey Armando! You can believe and do whatever you like. This video is just an idea.

@chrisfreeman4876 2 жыл бұрын

I agree with Armando. HUGE assumption as to forward returns, also HUGE assumption as to future capital gains rates. You might end up owing 30% or more cap gains as taxes by the time you get to that point. Lots of risks, but presented as a "risk free" idea effectively. Personally I do not pay down my main residence mortgage much because I have a 2.25% 30 year loan, so its so cheap its not worth it really, but I surely would be if it were 4% or more. That would be 4% guaranteed return versus high both of equity return and tax rates.

@charlesbradley181 3 жыл бұрын

Thank you for the video. Really great way of looking at paying off the mortgage early. Is this strategy as effective for a 15 year mortgage loan?

@JakeBroe 3 жыл бұрын

Hey Charles! It would not since the 15 year requires more money to go to the principle. Check out my 15 vs 30 year video. kzfaq.info/get/bejne/osCeqthjs93bpIU.html

@jeffnoisette 3 жыл бұрын

This was awesome! Thank you.

@JakeBroe 3 жыл бұрын

Thanks Jeff! Cheers!

@reversiontothemean6129 3 жыл бұрын

Another way to look at this. The average mortgage payment is around 1200 dollars a month. If you go into retirement without a mortgage, you're gaining positive cash flow for your mortgage amount without worrying about the stock market, at all. Well, for that portion at least. To each their own. We prefer having a pension, a ROTH 401k, 2 ROTH IRA's, AND a paid off mortgage as we retire.

@ciblll1 3 жыл бұрын

That was really good information. Best Regards

@JakeBroe 3 жыл бұрын

Thanks Bora! Cheers!

@keishrich 3 жыл бұрын

I enjoyed this video greatly.

@tauaitualatamalelagi7833 3 жыл бұрын

Wow really helpful for those looking to buy a house 🏡 ty👍

@JakeBroe 3 жыл бұрын

Thanks for watching tauai! Cheers!

@billyl2463 3 жыл бұрын

Damn... mind blown. This is why I enjoy watching YT vids

@JakeBroe 3 жыл бұрын

Thanks for watching! Cheers Billy!

@RG-1045 3 жыл бұрын

Jake THE MEN😎

@JakeBroe 3 жыл бұрын

Thanks RG! Cheers!

@aSlimtube 3 жыл бұрын

Brilliant stuff. Thanks.

@JakeBroe 3 жыл бұрын

You are welcome aSlimtube! Cheers!

@sballard5840 3 жыл бұрын

Great video. I have to wonder though how mortgage tax deductions could play into whether this is the best thing to do.

@JakeBroe 3 жыл бұрын

Interesting idea! I'd have to run the math.

@ageisonlyanumber8334 3 жыл бұрын

The one potential factor you did not mention is the likelihood that the long term capital gains tax rate will be increased. With the federal deficit at 3.007 trillion dollars as of 9/30/2020 tax rates ARE going up in the future. The SECURE Act will cover a portion of this deficit by speeding up the income received from inherited qualified accounts (IRAs, 401ks, etc,), but I doubt long term capital gains will be spared. There has been much talk in the past about raising this tax rate to at least 20%, so 15 or more years from now, the rate will probably no longer be at 15% meaning you will need additional time and growth in the account to cover the higher taxes.

@JakeBroe 3 жыл бұрын

I agree, long term capital gains might be going up. Ideally they need to change that 0% bracket to something higher. Then maybe none of the rest of them have to change.

@michaelvieira2113 3 жыл бұрын

Great video!

@JakeBroe 3 жыл бұрын

Thanks Michael! Cheers!

@michaelmoreton5042 3 жыл бұрын

I have had 4 Mortgages in my life the first 3 were at 7.5 -8.5% I worked hard to pay them off early. Now I have a mortgage at 1.89% Why would I want to pay it off early???

@thenewfire 3 жыл бұрын

You don't. Pay it off as slowly as possible. Contribute to your retirement bucket ladder instead. Max 401k, roth, hsa, mega back door, etc etc etc. People have this very backwards now. Peace of mind is not a higher house payment for 15 years, having less retirement, less tax breaks, less disposable income. In case of emergency you have to break into equity because you're strapped... Peace of mind is taking care of your future, actually having more money, paying less overall on the house, not needing to tap equity in case of emergency... If your interest rate is around 3%, invest instead. Pay it off as slowly as possible.

@AndriyBaranskyy 3 ай бұрын

Great video! Would be cool to have an update when interest rates are way above 3%. Does the strategy still make sense when your mortgage interest is above 6%? Also, thank you for donating your birthday to Ukraine and your support in general!

@naturalbeauty_abena1230 3 жыл бұрын

Great info.

@JakeBroe 3 жыл бұрын

Thanks for the comment! Cheers!

@mozs6429 3 жыл бұрын

Thanks, Jake, for this video. What do you think of opening a Schwab intelligent portfolio just for setting aside extra cash for paying off the mortgage? Can you think of any downside of it?

@thechatterbot 3 жыл бұрын

Thanks for this video

@JakeBroe 3 жыл бұрын

You are welcome Juan! Thanks for watching!

@leet0809 2 жыл бұрын

I am torn between buying a home with cash, therefore no debt and great peace of mind, and putting only minimum down payment and use the remaining cash to work on the Stock market returning 7-8% a year.

@dmnick123ify 3 жыл бұрын

What ur saying is great, and it works. However I think most ppl dont over wont do it because they may think it's complicated.

@JakeBroe 3 жыл бұрын

Yep! Just paying down the mortgage faster is easier for people to understand and plan for. But I am just the kind of guy who likes to optimize my money for the best results!

@jsera011275 3 жыл бұрын

Thank you!!

@JakeBroe 3 жыл бұрын

You are welcome Jose! Cheers!

@TheMuljo 2 жыл бұрын

My comment is a bit late, but I think I can add to the "big brain idea" by suggesting putting your money into a robo advisor which performs tax loss harvesting. That way you wouldn't even have to worry about capital gains as much, if at all (in theory).

@ImpeccableMoment 3 жыл бұрын

Subscribed!

@JakeBroe 3 жыл бұрын

Awesome! Welcome to the channel ImpeccableMoment! Glad to have you with us!

@shawnstanley4784 3 жыл бұрын

Jake, I’d like to bounce an idea off of ya...What if by about year 16 or so, the earned interest on the brokerage account is used to pay the annual mortgage payments. That way at the end of the term, you’ll still have about $150k or so at the end of the mortgage rather than zeroing it to zero the mortgage’ s balance. Thoughts???

@michealsizemore1 3 жыл бұрын

Bruh... This is a fantastic video. Thanks for posting.

@JakeBroe 3 жыл бұрын

Thanks for the comment and support Michael! I hope more people find this video, lol. I think it's a pretty good idea.

@francescordova5173 2 жыл бұрын

Jake what about cash out refinancing at some point and putting that freed up cash into the investment account? Would love to see the math on that!

@MarcyJ2F 2 жыл бұрын

So based on your projection, putting $100 more a month onto your principle would save you $19,000 and 3 years on the mortgage. The other option would be to invest the the $100 and in 26 years you will have $144,000 I think you said. The question is what would you have paid in interest to the bank for your mortgage in those 26 years on a $300,000 house, $155,000? How is that better?

@j6077xxd 2 жыл бұрын

Awesome

@JakeBroe 2 жыл бұрын

Cheers J B!

@trackguy4038 2 жыл бұрын

If you go to a 15 year loan, you usually get a better interest rate than a 30 year year loan. That is what I did

@michaelmoreton5042 3 жыл бұрын

I shudder a little at the word. Mortgage essentially means “pledge till death.” The English word mortgage is derived from the Old French : mort, meaning dead (from Vulgar Latin *mortus ) + gage, pledge, of Germanic origin

@VickiBowers 3 жыл бұрын

...four years sooner, plus savings on the interest on the mortgage. Way smart!

@JakeBroe 2 жыл бұрын

Hey Vicki! You left this comment 5 months ago, but I can see it right away now. Thanks again for being a member!

@austindrury856 3 жыл бұрын

Hi Jake, what are some financial benefits of paying off a mortgage early other than peace-of-mind and the potential for a new mortgage? In one of your examples, you considered a 30 year loan with 3% APR, and contributing $100/month into a taxable brokerage account at 9.8%. In this example, you have enough to pay off the remaining loan after 23 years (the calculator I'm using says $93,763.76 instead of $102,009, I'm not sure why but I'll go with mine for the example since its what I have). However, if you instead continued investing just the $100/month and see the loan through for the remaining 7 years, if my math is correct, you would have $191,721, which, after accounting for taxes, is $132,362. I can't directly compare this number to yours to show the loss of potential since the calculators didn't match perfectly, but it seems to me that continuing for the remaining 7 years would be the better financial decision. So, to bring the question full circle, what reasons would a person have to cash out the investment and pay off the loan, aside from peace-of-mind?

@JakeBroe 3 жыл бұрын

Hey Austin! I believe there is none. If you just look at the math, it is better to keep your money invested and only pay the minimum on your mortgage. But this isn't how ordinary people think. At some point, people would rather earn/save less and just be debt free. I think you understand!

@tenzinjorden9994 3 жыл бұрын

Thank you very much Jake. I have been watching a ton of youtube tutorials on investing and growing your wealth. I can say with quite certainty that your channel is one among the best if not the best, the way you explain little things in detail is what makes your videos stand out. Liked, subscribed and looking forward to more from you. Edit: For once i would like to thank youtube for recommending a correct video.

@JakeBroe 3 жыл бұрын

Thank you so much Tenzin! It is great to have you with the channel. I like to keep it simple and informative around here. If I learn something useful or interesting, I just like getting the information out there. I'm not trying to sell anyone anything, lol. Happy New Years!

@Thedoctorjosh 3 жыл бұрын

Hi Jake. Do you recommend a similar strategy with student loans? Federal loans have a fairly small percentage on interest and could would out the same. Only asking since the federal loan interest freeze is due to expire the end of December. Thanks!

@JakeBroe 3 жыл бұрын

Hey Josh! No, I wouldn't recommend this for student loans. Your house is an asset that should be gaining value over time and saving you money by NOT renting. It is a true financial asset and mortgage interest is fixed for decades. Student loans is just debt. Does nothing to help you. I would completely pay those off before getting aggressive about investing in anything other than a 401K matching from your employer (always take that).

@jasonnysacleomedes5084 3 жыл бұрын

What if you take your example and pay just 10% and invest the $30,000 while paying the PMI? What would the following three scenarios look like? 10% down, $30,000, some PMI payments, no contribution vs. 10% down, $30,000 and $100 monthly contribution vs. $60,000 down and $100 monthly contribution.

@rdbeaz 2 жыл бұрын

Why Roth if i live in a high income tax state if I will move to a no income tax state when I retire?

@Lasaro7499 3 жыл бұрын

What about just do principal only payments?

@JakeBroe 3 жыл бұрын

Not sure I understand what you mean? You always have to be making the minimum payment each month.

@jannelle71 3 жыл бұрын

I prefer the idea of using my equity to buy positive geared investment properties, that pay my mortgage off faster. Once that is done, the tenants can finish paying off the investment properties and I'll either live off the rental income or cash in some real estate to supplement my retirement fund. Do you talk about this method in any other videos.

@JakeBroe 3 жыл бұрын

Hey Jannelle! No, I don't have any videos on property investing yet, but I will soon. Definitely pro and con arguments for each idea! Cheers!

@reversiontothemean6129 3 жыл бұрын

What if you had the properties during a 1.5 year pandemic and there was an eviction moratorium and you didn't have tenants that paid a single dime for a year and a half?

@jannelle71 3 жыл бұрын

@@reversiontothemean6129 That's terrible. It makes my stomach turn thinking about it, for the landlords unlucky enough to have crap tenants like that.

@rebeccajohnson1368 2 жыл бұрын

Even in normal years managing a rental can be a pain in the neck if you are unlucky

@oakwoodbrown4548 3 жыл бұрын

Firstly, my understanding is that the earlier you start paying extra toward the principle on your loan the less interest you would pay on the long run. Secondly, can I open a second investment account and put the extra payment in there then use the profit to pay more on my mortgage yearly?

@saraw112 3 жыл бұрын

Hi Jake, what do you think of investing in an s&p roth over the years with the intention to paying off the mortgage in 11 years. )So I pay the tax up front). I’m aggressively trying to pay my mortgage off in 11 years by the time I’m 70. (Prepaying $800-1200 extra a month to mortgage) thanks for the advice.

@JakeBroe 3 жыл бұрын

Yeah! If you are going to be over the age of 60, then there is no penalty for taking money out of your Roth IRA. You are free to invest in there and then take out the money when you are ready to pay off your home. Solid plan!

@ZacharyStrebeck 2 жыл бұрын

Any good spreadsheets out there for calculating this, so I can check different payoff amounts and where the equilibrium happens?

@hyunryu9174 3 жыл бұрын

I’m trying to set up my TSP contribution for next year. My goal is Maxing out TSP contribution (Roth IRA: Max + Traditional: Remaining). My math is this (assume you are paid biweekly), for ROTH IRA: 230 (Biweekly contribution)*26 = 5,980 (because 6,000/26 does not give a natural number) & for Traditional: 520 (Biweekly contribution)*26 = 13,520. Sum of these two would be 5,980+13,520 = 19,500. But another concern arises from this, I heard that if you hit the Max limit you would not get employer’s 5% match, is this means I will not get the employer’s 5% match if I use this method? What do you guys think? Any feedback would be appreciated.

@futureluckk5341 3 жыл бұрын

I would only put in what they match , the rest you can put into s&p500 that you can control, all this after you at least have 10 grand in a high interest saving account. Make your money work for you.

@hyunryu9174 3 жыл бұрын

@@futureluckk5341 Thanks for your feedback, I would 100% agree if I was not where I am. I'm right at the threshold of two tax brackets. I also love the concept of setting up and forget it and all my contributions are going to S&P 500 (I just not control them) so it doesn't make that much difference I believe. Lastly, I'm recently got into investing using my saving and I don't want to take more risk than what I'm currently taking. Once I figure out this investment thing-e I will definitely take your advice. Again, thanks for your advice.

@venchenzo4493 3 жыл бұрын

Your 401k contribution limit has nothing to do with a personal IRA, roth or otherwise limit. Those 2 are separate. 19500 and 6000.

@JakeBroe 3 жыл бұрын

Hey Hyun! If you have a Roth IRA, then that has to be with a private bank (like Fidelity, Vanguard, Schwab). You can put $6,000 a year in to that and you control how it is invested. Between your Roth TSP and traditional TSP, combined you can put in $19,500. If you max that out before your December paycheck, then yes, you can't contribute for December and just for the month of December you would lose the employer match. So you want to be careful not to Max out your TSP early. Good luck!

@floredenpestanas1644 3 жыл бұрын

Excellent content. I just called my mortgage company to stop the extra $200 I added for principal. I'll be investing it to stocks/etf. Stocks/etf moves a lot faster than Roth. Thank you Jake

@JakeBroe 3 жыл бұрын

You are very welcome Floreden! Cheers!

@racewiththefalcons1 3 жыл бұрын

How does the math work out if you put $100 a month into your brokerage AND pay an extra $100 on the mortgage? Would that be quicker than putting $200 into a brokerage?

@JakeBroe 3 жыл бұрын

No, that would not be quicker. The mortgage is costing you 3% and you are earning 10% in the market. It is always faster to just pay the 3% to earn the 10%.

@racewiththefalcons1 3 жыл бұрын

@@JakeBroe, ah, I see. Would it be _cheaper,_ though, in the long run to do half market/half mortgage?

@Frank020 2 жыл бұрын

Hi, what would you give more weight to for older man still working on list after #4? With a lower int mortgage, small mortgage payment, but growing property taxes factor in CA. House pay off, brokerage, or 401k. I'm thinking brokerage, because of taxes on 401k, and less years for it to grow.

@kalatitati8795 3 жыл бұрын

Have you done a video on Thiel Roth IRA?

@JakeBroe 3 жыл бұрын

Hey Kala! I have not, but I will look in to it!

@kalatitati8795 3 жыл бұрын

@@JakeBroe I would like to see your opinion on it since I have seen almost all your videos on roth ira

@kylerichards2155 3 жыл бұрын

Good content as usual. Would you recommend investing in something like FZROX or do you have a better suggestion? Thanks!

@JakeBroe 3 жыл бұрын

Hey Kyle! FZROX is great, but it is a mutual fund and you need to be banking with Fidelity to buy it and avoid any fees. If you bank with Fidelity, it's a great option. If you don't, you can't go wrong with Vanguard's VOO ETF. You can buy that with any account that is zero commission trades.

@kylerichards2155 3 жыл бұрын

@@JakeBroe Thank you for the reply.

@venchenzo4493 3 жыл бұрын

The problem with those zero fee index funds is that the dividends and capital gain payouts are lower than a normal index fund. Less money to reinvest.

@venchenzo4493 3 жыл бұрын

FXAIX has low fees, .015% and higher dividend and capital gains payouts.

@MayrahC7 3 жыл бұрын

Hi Jake! Great video. If I am currently paying an extra 1,400 into principal, and according to their amortization schedule I should be done in 16 years (330k, 2.75 VA loan, refinanced). Doing it via a brokerage as you mention, about how long will it take for me to pay it off? Also, do you recommend just putting this money every month on just one S&P ETF or multiple?

@JakeBroe 3 жыл бұрын

Hey Mayrah! I don't have the number for your specific scenario, but $1,400 a month is a lot! If I were you, I absolutely would be investing in index funds first and making the minimum payment on the house. Then pay off the house once you have enough in a taxable brokerage account. I guarantee you could do it sooner than 16 years. Check out my playlist on Fidelity if you don't already have a ordinary brokerage account! kzfaq.info/sun/PLscTZuOqKWIxSG8kRA7uxvJZQkz0q9Hko

@masfishing1 3 жыл бұрын

Wow, i wish i knew this 30 yrs ago. Definitely will do on my next house. Jake, i guess i could use this same idea as to buy a bass boat?. 1) start contributing now before i buy a boat 2) then keep contributing after i purchase the boat until i get it paid off early. But would I take whatever money I saved out for a down payment once i find the boat then keep contributing or skip the down payment and just keep putting $ into acct until I have enough to take out and pay the boat off?

@JakeBroe 3 жыл бұрын

Hey Mike! It depends on the interest rate you are paying on the loan. With mortgage rates being so low right now, money is better being invested in the market at a higher rate. But yes, this idea applies to other loans if the interest rate is low enough to make your time and effort worth it.

@masfishing1 3 жыл бұрын

@@JakeBroe Thanks for the info Jake.

@drej1785 3 жыл бұрын

Hypothetically: If i’m married filing jointly, say about $120k on the mortgage, did this investment strategy and have enough money to pay it off. Could i take out just below the max of the 0% tax bracket, wait a year then take out the reminder of the money to pay off the mortgage to avoid paying capital gains?

@ryan1993ish Жыл бұрын

My goal is to get my 30 year mortgage paid off in three years I’m a year in and it’s down to 70,000 from 114,000………… Should I have not paid extra and have put it into the S&P 500 instead because all your examples are over a decade long?

@ryan1993ish Жыл бұрын

My rate is 3.25% by the way.