Back in 2011, I made the decision to hold off on paying off my mortgage until I retired. At that time, I was still entrenched in my banking career, enjoying a robust cash flow, and anticipated working for at least another five years. However, retirement came sooner in 2012, thanks to a windfall that covered six years of living expenses.
After retiring, I ended up clearing the mortgages on two properties by 2015. Today, despite having three fully paid properties, we’ve taken on a new mortgage for a house we bought during the pandemic in mid-2020. As full-time parents and part-time writers, we felt compelled by the favorable market conditions, and now we’re navigating through another mortgage pay down journey.
Reflecting on my original stance from 2011, I maintain that holding onto a mortgage can be beneficial. It certainly helped extend my career, providing a sense of purpose and motivation. At 24, after some successful stock investments, I had significant savings, enough to make a substantial down payment on a home in San Francisco. Yet, the thought of having an easy life so early demotivated me; my job lost its luster as I no longer found meaning in just accumulating more wealth.
The 9/11 attacks, having hosted a conference at 1 WTC earlier that year, profoundly impacted me, compelling me to seek a more meaningful life. Despite my ability to afford a comfortable lifestyle without much, owning a home felt more grounding than renting, which often felt like money down the drain.
In 2003, the solution to my housing dilemma presented itself when I found a two-bedroom condo in Pacific Heights, which cost less per month to own than to rent. The act of buying reinvigorated my motivation to work hard, a necessity to keep up with mortgage payments.
Years later, the financial benefits of holding a mortgage became even more apparent. The condo turned into a rental property, with its income significantly exceeding the mortgage payments thanks to rising rents and refinancing options that lowered my payments.
Today, I see the importance of maintaining liquidity over outright ownership. The potential risks, like a total loss from a disaster, reinforce my decision to hold onto the mortgage. Additionally, the tax benefits of mortgage interest deductions provide further financial advantage.
In conclusion, while paying off a mortgage early can be tempting, there’s substantial financial logic in maintaining one, especially if it aligns with broader investment strategies and cash flow management. This approach has served me well, allowing flexibility and growth in my investments while ensuring financial security.
