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I see it as a personal preference given OP's situation.
If it makes sense or not - I prefer not to have outstanding debt.
I agree. It is an individual thing. In our case we have it both ways - we still own a small home that was our main home since 2008, but we moved to a town 70 miles away. We have a mortgage on our main home, but we recently decided to pay off the other one (which we still own) because it is in an area of extreme rising values, but also we consider it an "ace in the hole" if you will. We were losing money in our accounts and this was a good way to "save it" from going down further. I have no regrets. We may or may not pay off our main home in the future. I do like the feeling of owning outright. We are retired, aged 68 and 72, income from SS and pension.
You will never be able to borrow money at 2.5% again. Don't rush to pay off that mortgage. Your intuition about keeping $60,000 cash in the bank is correct. You should do that in case of some emergency. If you had more I would invest it, but that is a good amount to have for an emergency.
There is a thing I notice among many old people about having to have a "debt free home". Its much more emotional than it is logical. It causes them to pay off low interest rate loans early when this is actually a bad financial move.
Agree with this. Never understood the "must pay off mortgage when retired" mindset. I just retired, and am not paying off my mortgage any sooner than I was scheduled to. And that will be in about 4 years.
You will never be able to borrow money at 2.5% again. Don't rush to pay off that mortgage. Your intuition about keeping $60,000 cash in the bank is correct. You should do that in case of some emergency. If you had more I would invest it, but that is a good amount to have for an emergency.
There is a thing I notice among many old people about having to have a "debt free home". Its much more emotional than it is logical. It causes them to pay off low interest rate loans early when this is actually a bad financial move.
It's because many people will earn less in retirement. They want to eliminate their largest monthly bill before their income drops.
I was paying off my mortgage quickly (8 yrs worth in 4 yrs), then did the calculations and realized with a low-ish interest rate I was better off not paying it off on that accelerated basis.
I continue to make biweekly payments automatically (every 2 weeks). That comes out to 26 half mortgage payments a year, 1 extra month of a mortgage payment each year. That's fast enough.
Ours is 3.875%, though. Thrice we looked into refi (no cash out) to a lower rate... particularly the 1.9%. but costs were prohibited. Even the loan officer said just pay the fees we'd pay to principle and add the amount we'd save to principle and voila! We could pay it off early.
Also, while we took a 30yr fixed in November of '15, our plan has always been to pay extra and pay it off in 10 years.
But, should something come up, we'd only be obligated to pay the lower regular 30 yr payments.
We only have the mortgage, the utilities bill, the car insurance bill, water and garbage (quarterly for those two) as due every month. Nice to not have to pay the hazard insurance and the school taxes and the property taxes also, as they are paid by escrow.
But we also have whatever food and gas maintenance and we pay off anything we charge on the credit card and back up credit card as it posts.
I like fewer bills!
We can still pay off the mortgage...we figure by Feb of 2024... Still a year and half earlier than our self imposed 10 yr deadline.
We are also seeking to retire elsewhere, so having a balance payoff come the sale of the house doesn't bother us, it doesn't HAVE to be paid off to be sold...
OP I'd say your mortgage is easily manageable so, unless you'd sleep better with it paid off, keep it a while longer.
* I'd love it if we only had one or two bills a month, lol.
But it's the planning and saving for those pesky annual, semi annual or quarterly payments that annoys me, lol.
Keep the mortgage. You are paying it back with $$ that are worth less and your liquid cash position isn't that great. AND you have a great rate.
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