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PaperclipPerfector  2d ago (text post)   1782 thread views

Friday Fun Thread for January 30, 2026

Be advised: this thread is not for serious in-depth discussion of weighty topics (we have a link for that), this thread is not for anything Culture War related. This thread is for Fun. You got jokes? Share 'em. You got silly questions? Ask 'em.

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Who here makes extra payments on his mortgage? Or has a paid-off house?

I make extra payments, and looking through my amortization table just now I was incensed to learn that a full 75% of all of the reduction in our loan balance is solely due to our extra principal payments! What in the scam? (Edit: I guess I have to clarify that I am not retarded and do not believe that a 30-year mortgage is literally swindling me through nefarious trickery.)

Further, to say nothing of the compounded benefits, we have a present-day benefit in the form of $2,000 of saved interest, and we're still very near the beginning of our loan term! It's obvious when placed next to an amortization schedule that assumes we only make necessary payments.

(2/1/2026 Loan Balance)minimum payments - (2/1/2026 Loan Balance)extra principal - (sum of extra principal paid) = ~$2,000

If anyone’s interested, I am a mortgage guy by trade. AMA I guess. I have been in the mortgage lending industry since the mid-90’s. I was a loan originator for 15 years and for the past decade I’ve been involved at the executive level managing pricing, secondary market, and risk (I run the underwriting dept and the secondary market desk at my shop now).

I have my house paid off. I mildly regret it from time to time because the interest on the loan when I paid it off was about the same as today's interest on the savings account, so I probably lost some money on that. On the other hand, the peace of mind it gives is not to be discounted. I have lost (and found) jobs twice since then, and in both cases I could feel much less stressed because questions like "could I be in a situation where I'd have trouble paying my mortgage because of cash flow issues" never bothered me. Whatever happens to my job, whatever happens to the market, stock or real estate, my house is mine - that may be a bit irrational financially, but still feels good.

The most strategic way to get ahead on mortgage planning is to use interest only financing…. Here’s a few reasons why:

  1. an amortizing 30yr loan doesn’t convert to a majority of payment going to principle until after year 10
  2. historically, people change the structure of their mortgage every 7.5 years… so the above is never realized
  3. making additional payments to an amortizing loan only reduces the time to pay off (which per above is rarely realized). Making additional payments on an I/O loan provides immediate benefits in that your mandatory payment is reduced the next month. Int only is simply principle x rate / 12.
  4. depending on your age and career, the flip of a majority going toward principle on a 30yr corresponds to when you will be making more money and need the higher interest deduction.
  5. is paying off your home was such a great strategy then reverse mortgage companies ripping off older retirees wouldn’t exist.

Good comment.

Do you have a personal experience with I/O?

As you could probably guess, the general tenor of our home search was one of urgency. I'm not sure how much extra time it would have taken to negotiate an interest-only. Or is this something that any originator would have immediately on hand?

These are excellent points.

You’d probably have liked the old flexible payment/negative amortization adjustable rate loans that got such bad press in 2008.

It's fine, man. A lot of people have not lived (as investors) through a big drawdown or a prolonged bear market, and therefore think more leverage = unalloyed good, but it is taking on more risk. There is a reason your broker won't give you 500k to put on the s&p.

I pay ahead on my mortgage, and I'm going to say something controversial here.

Sometimes you can do something good, even if there are alternatives that are better. You don't have to violently min-max every aspect of your life. Start with what you can do and are comfortable with doing, and reevaluate later on.

Paying ahead on your mortgage is a good thing. Sure, you could invest the money in something instead and gamble on the gains being higher, but that makes some assumptions. Are you sure you can make the right calls? Can you buy and sell at the right time? Are you confident there won't be any big market downturns like 2001, 2008, or 2022? People will argue that the market wins in the end, but the market is immortal and we aren't. If you aren't itemizing, the value of the mortgage interest deduction isn't there either. To top it all off, the actual money might not be that much different if the mortgage value isn't high, and now you have capital gains to factor in while doing your taxes.

I don't know what your mortgage is, but for me, paying ahead sure was a lot better than doing nothing.

Nonononono! Making extra payments is a trap, because all you are doing is shortening the term duration without affecting the monthly payment. In effect, you are robbing yourself of the interest that money could be making, and letting your lender benefit from it instead.

What you want to do is recast the loan (which will admittedly require a more substantial payment) possibly combined with a refinance. This will reduce your monthly payments without modifying the loan term, which gives you the interest rate advantage.

Then you can use your increased monthly available cash to pay down the loan more aggressively if you are really trying to burn through it.

Huh. So instead of constant payment/shorter term, you're arguing for smaller payment/same term.

I had never heard of a recast I must admit. I'm not even sure it's an option for me. I was just gonna refinance when rates dropped enough.

Recasting is one of those things that is never, ever mentioned by the people who are handling your loan, unless you directly ask about it. Funny how that works.

To make sense of mortgages, you really have to take into account inflation and the time value of money. Yes, it pays off a lot faster when you pay a little extra. But in inflation-adjusted terms, it decreases even without you paying any principal at all. And then you can put the extra payments into an investment that earns more than the mortgage rate.

I'm apparently one of the few people on Earth that thinks Trump's 50-year mortgage idea could actually be a good idea...

I mean, it all depends on the rate. Once you get up to 6%, it gets real narrow if you can beat it with investing. Especially after paying taxes on whatever your profits are. Maybe if you were chucking everything into an IRA in an S&P500 index fund. But the difference between a post-tax, post-inflation, highly variable "10% average return" and a guaranteed 6% return from paying down debt is extremely marginal for most people. I wouldn't fault anyone for paying down a 6% mortgage over investing. I mean, I'd probably invest anyways, because I reason I'd rather have the extra money in case of emergencies than less debt. But that's a separate reasoning than it being a better rate of return.

Man, I'd love to be able to get a 6% mortgage instead of 26%.

You could have gotten a Dodge Charger for an interest rate like that.

Thankfully, I am not a boot.

instead of 26%.

Where the heck are you to that rates are 26%?

ortho is russian (currently in russia, it must be clarified) I believe

That only makes sense if you paycheck keeps up - I guess if your job is connected to extracting or selling natural resources (oil, gas?) it could be real. But I think actually Russia has subsidized mortgages: https://realting.com/news/russian-mortgage-market-analysis I imagine that's what people actually do.

I think I'm going to go make tender, emotional love to a bald eagle now.

Except that stock returns are also juiced by inflation- something like 7% plus inflation for the S&P500. Admittedly there's extra variance, but it really is a significantly better return than what you'd get from paying off a mortgage, especially averaged out over 30 years. And you've got the option to refinance to a lower rate (plus take out money!) any time you want.

What is your interest rate? Why would you pay it off fast when basically every other asset class has been on a mega bull run for like 15 years and returns higher than your interest rate?

One of the most OP parts of homeownership is the leverage. No bank is giving you $500k to buy SPY.

Milk that baby. The people who locked in at ultra low rates at the bottom of COVID have printed. A mortgage with a rate lower than inflation is quite literally free money (for you).

6.5%.

Trust me I know the optimal thing to do is make the required payments and put everything else into SPY.

But debt is icky. Another party makes sure I pay the same amount every month at the same time or the bank takes the house, which isn't the case in the counterfactual: I just miss out on some percentage points in a brokerage account. And I don't want to arrange my life so that suddenly everything snaps into place when I'm...old and tired.

I largely go half-and-half investing and paying the house down these days.

Real talk risk free and tax free 6.5%... mortgage sounds like the correct call.

Can't you deduct mortgage interest payments from your income taxes? That would make it "not quite" tax free.

This deduction is much less common with the post-2017 standard deduction increase.

6.5% means it's actually much closer to equity returns and the psychological benefit does matter

I realized when I read through the mortgage documents that the full 30 year term would have me paying double what I borrowed for the house, so resolved to pay it off as fast as possible.

I probably lost out paying down the mortgage vs putting the money in an index fund, but I don't really regret it. If all goes well everything will be paid off by next year, and I'm looking forward to not having a mortgage.

In US now I think there are laws now in many states that require the loaners to tell you how much you will be paying in interest (and therefore overall) at least at some point of the process, and have you sign on that. So theoretically it shouldn't be a surprise, but practically of course not all people read that anyway.

Yes, that's what I meant, I was looking through the mortgage documents prior to signing them and saw the total interest.

They also tell you how much of what you're paying each month is principal/interest/escrow, which provided additional motivation.

Technical detail: States are all over the place for required mortgage disclosures, but there is a federal disclosure requirement. The cost of credit (finance charge) must be disclosed on the LE (loan estimate) at application and again on the CD (closing disclosure) at closing.

This has been the standard since TRID replaced the GFE/TIL in (I think) 2015, but before then the finance charge has been a required component of lending disclosures since the TIL (Truth in Lending) Act of 1968.

I think it is underestimated that for a certain type of person, the mental peace of owing nobody else any money (which gives them a piece of leverage over you) and having a decent amount of savings squirreled away GENUINELY outweighs an extra 2-3% of gains from keeping things in the market.

Best way to describe it is that debt = fragility. If you get behind on payments, the interest rate marches on. The creditor can call in the funds under certain circumstances, whether you have the money or not. You get behind and it can be a struggle to catch up, and it inhibits you in other ways. And bankruptcy is an option but you have to be in dire straits to pull that lever.

And it can also make it harder to take on new debt even when that would be advisable.

I'm not one of those "usury is evillllllll" guys, but I am one of those "I pay every debt on time and as owed" guys so the mental stress of knowing I gotta keep up with payments is annoying.

Me, I like short term, secured loans as my go-to. Seen too many people get screwed over by personally guaranteeing debt for things that weren't productive enough to justify it.

Maybe, but let me put it like this. In 2021 when I bought my house, I sunk about 20% of my net worth into the down payment. I'm talking everything btw, crypto, 401k, brokerage, cds, gold, savings, etc. Now theoretically, and inadvisably, I could have cleaned out everything and just bought the house outright. I mean, lets pretend for a moment that I wouldn't have paid massive penalties on my 401k.

Well, 5 years later my investments have more than doubled. The value of my house has not. Also I "benefit" from the value of my house regardless of whether I've paid off my mortgage or not. I put benefit in quotes because mostly it means I just pay more taxes and insurance. To access any of that "wealth" I'd have to either take out a home equity line of credit, or sell the house, putting me back at square one. Also, now I could far more easily pay off my mortgage in full, and have 70% of my net worth left over, versus essentially resetting had I paid in full in 2021.

Also, as someone who was recently jobless, having 10 years of living expenses in assorted accounts was an enormous relief. Now I'm assuming with a paid off house, and resetting from 0, I would have probably saved up a good amount having no mortgage. But my napkin math says probably 20-30% what I actually have today. And I'd have suffered an enormous opportunity cost with my investing to boot.

All that said, rates change everything. With rates over 6% I often consider whether I would just pay in full for my next home. I likely could. But I'll cross that bridge when I get to it.

I mean, I liquidated almost my entire crypto holdings to get the funds for my house/holdover for extra expenses.

And I don't regret it, because the crypto world went FULL retard after I bought the house, and while the house value increased a lot, the mere fact of "I can live here and not be bothered by increasing rents or volatile crypto markets" was a source of peace. Decent interest rate too.

I've had some investments perform better, but none that were as directly beneficial to me in the interim period.

Buying a house you intend to reside in for the long term is an easier play than buying one you might or might not be staying in five years later.

But that's very dependent on the labor market. Can't stay somewhere if there's no decent-paying jobs.

There was a point in time where I held two whole Bitcoin. Now I hold functionally zero. Can't live in a Bitcoin, can't store my stuff in one, can't invite friends over to hang out in one, and BTC hasn't provided me with minor projects to work on outside that significantly help with my mental health.

I dunno. I could spend my days tracking the market's ups and downs... or I could tend my garden, do small repairs around the house, sleep in a bed that I cannot be removed from absent an act of God.

Its not so bad.

Your last sentence is 100% correct. You should really not use financing to purchase anything that will not provide a yield in excess of the loan's rate.

Houses don't actually qualify given that criterion, but we're all so confident the price will go up that we look the other way.

There’s a fantasy sequence from the sitcom Everybody Hates Chris in which the father declares they don’t owe anybody a single penny, and I remember thinking, “Whoa could you imagine.”

Congrats on approaching what many consider a fantasy!

I have to say each time I see that $0 in the "non-recurring debts" in my financial dashboard I feel that little warm fuzzy feeling inside. I realize that not all debts are bad debts, rationally, but some part of my brain just insists "neither a borrower nor a lender be" and I can not fully deny it.

I was introduced to Paradox Development Studio games through Europa Universalis 2. I was too young to actually understand how to play properly, so I just played as the Mamluks (the biggest blob on the map at game start), took out loan after loan to fund my massive armies, and got confused when I went bankrupt. I eventually found a cheat or a console command or something to give me infinite money, but the experience still left me very leery of taking out loans.

"neither a borrower nor a lender be"

Dude, I actually tried my hand at a very modest lending business a few years ago. After that experience I'd rather be a borrower every time.

in which the father declares they don’t owe anybody a single penny,

Easy to do for us rentoids.

You'd be surprised. Most people I know are addicted to their car notes and are never without one.

I remember my parents once telling me something similar about the mortgage on my childhood home - that when they made extra payments, the principal balance went down a whole lot more than one would naively expect. The bankers pay themselves first.

It's amazing how quickly an amortization schedule gets insanely front loaded as rates go up. I have a sub 3% mortgage, in the first year my principle to interest ratio was about 2:3, maybe 4:5. In one more year, the 6th year of my mortgage, it will cross 1:1. At current market rates for the same amount, it starts off 1:4 or 1:5 and doesn't cross 1:1 until the 225th payment, 18 years in.

I don't make extra payments. A high yield savings account offers better return than paying off my mortgage faster. Now if it were a 6% mortgage, I'd probably be throwing as much as I could at it.

I have a worse rate than your hypothetical one unfortunately. What a difference a couple of years make.

Yeah, my wife thought I was insane. The federal reserve was spouting some bullshit about inflation being transitory, and I was ranting and raving "They're lying! We need to buy a house NOW if we are ever going to." Caused some friction the first year or two, but boy howdy have I been vindicated since.

I made the same argument at the same time, but bought a bit later than you for life reasons. And then recently had to spring for a new one because my 3bed/1 bath wasn't large enough for the family.

Thing is, it mostly turns into a zero sum game. When rates were low, people could make crazy offers on houses because their monthly payments were so low. Now that rates are high, there's less competition and prices...well, they didn’t go down, but they also didn’t go up as much. And you can just refi in 5 years. I think you would've been fine buying a bit later.

My brother, on the other hand, who bought in the early-mid 2010s has seen his home triple in value...

Thing is, it mostly turns into a zero sum game. When rates were low, people could make crazy offers on houses because their monthly payments were so low. Now that rates are high, there's less competition and prices...well, they didn’t go down, but they also didn’t go up as much. And you can just refi in 5 years. I think you would've been fine buying a bit later.

Eh, "fine" is relative. Sometimes it feels like I really got the last house I could have gotten. We spent all spring 2021 looking, things were drying up by summer, and the noises the fed were making were increasingly concerning. One year later rates had nearly doubled. At the worst of it, when rates were topping 7% and prices were still going up, I would have been looking at a mortgage getting really close to twice the one I had. Now it's a mere 50% higher. Then again, I got a house which had plenty of room to grow, and I'm not at risk of needing to climb the "housing ladder" any time soon.

I'm building equity in the home incredibly quickly, because I pay down the principle so much quicker, making it easier to buy a new home when I have to. And the money I pocket with a lower mortgage goes straight into the S&P500 too.

I mean, sure, if I absolutely had to, maybe I could have stretched and gotten way less house for way more money with a far worse mortgage a year or two later and been "fine".

Instead I'm great, and it's a hell of a snowball effect.

Buy now or be priced out forever. Simple as.

Man, WhiningCoil’s household finances take W after W.

I-

Yeah, that's how that works. Those are the assumptions involved. Society is a trap for normal people whereby they get fleeced by the smart ones. This is good or bad if you like; else it simply is.

What I'm not clear on is what you're asking.

You can start with the sentences with question marks at the end.

Edit: sorry, I have to revisit just what a smartass response this is from you. Imagine a scenario where someone says to another interested party “did you know that the Marianas Trench is deeper than Mount Everest is tall?” Do you find yourself having to bite your tongue to avoid saying something like “I—Yeah, just what did you think 10,984 meters meant? Deep or shallow if you like.”

Who here makes extra payments on his mortgage? Or has a paid-off house?

I make extra payments on loans, given that the interest rate makes this rational, and do not have a paid-off house.

What in the scam?

See previous response.

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