I totally get the appeal—watching that principal shrink is addictive. But with rates this low, I actually refinanced last year and started putting my extra cash into index funds instead. The math just made sense for me: my mortgage is under 3%, but the market’s averaged way more than that long-term.
“Are you sure you won’t need that money for something less... brick-and-mortar?”
That voice in your head isn’t wrong. Liquidity matters, especially if life throws a curveball. Have you thought about what would make you feel more secure—having a paid-off house, or having investments you could tap if needed?
I get where you’re coming from. I’ve seen a lot of buyers lately who are torn between paying down their mortgage and investing elsewhere. Personally, I kept my mortgage at 2.75% and put the rest into a rental property. It’s not as liquid as stocks, but it’s worked out so far—just depends on your risk tolerance and how much you value flexibility.
I get why a lot of folks are drawn to holding onto a cheap mortgage and investing the extra cash elsewhere, especially with rates like 2.75%. But I gotta push back a bit on the whole “just depends on your risk tolerance” idea. There’s more to it, right? Sure, a rental property can be a great move, but it’s not just about liquidity. There’s tenant headaches, maintenance, taxes, and the risk of vacancies. I’ve seen clients get blindsided by unexpected repairs or a bad tenant that wipes out a year’s worth of returns.
On the flip side, paying down the mortgage is a guaranteed return—basically risk-free, especially when markets get rocky. I know it’s not as “sexy” as leveraging debt, but sometimes the peace of mind is worth more than chasing higher yields. Personally, I’d rather sleep well than stress over whether my rental’s roof is leaking again. Just my two cents, but I think people sometimes underestimate the value of simplicity and certainty when rates are this low.
There’s more to it, right?
I know what you mean about the “peace of mind” factor. When I refinanced to 2.75%, I debated hard between paying extra on the mortgage or investing. Ended up splitting the difference, but honestly, seeing that balance drop each month feels pretty great. The rental route sounded tempting, but after watching my brother deal with a burst pipe and a tenant that ghosted, I just didn’t have the stomach for it. Sometimes boring is underrated.
Sometimes boring is underrated.
Couldn’t agree more. I tried the “exciting” route with a fixer-upper rental once—let’s just say my weekends disappeared fast. Nothing wrong with boring if it means fewer headaches and a steady mortgage drop. Peace of mind’s worth a lot.
