I Wanted to Pay Off My Mortgage Early, Then I Realized This

updated Jul 2, 2019
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(Image credit: Apartment Therapy)

Ah, 2009. The year that first-time home buyers in America were majorly incentivized by government funding to get out of their tiny, beige student apartments and invest in their first home. Sounds good, right? So that’s exactly what my husband and I did!

As we set off in our home search, graduate students in our early 20’s, we had two pieces of advice from our fantastic and tolerant real estate agent in mind:

1. The only thing you can’t change about a home is where it is.

2. Buy under what you are approved for.

Phase 1: Settle.

Item number one turned out to be a stretch for us, but we stuck to it. We eventually chose a split-level home in a wonderful neighborhood. While we didn’t love the split-level concept—okay, we kind of hate the split-level concept (no offense to you split-level home owners)—we decided to pick the great neighborhood and put some love (and money) into remodeling.

We were able to remodel because we followed the second piece of advice from our agent. We bought well under our budget, giving us the opportunity to both remodel and get that mortgage paid off as soon as possible. To me, the math was clear: The longer I paid mortgage payments, the more that house was going to cost. We weren’t interested in being in debt until retirement, so we planned to make extra mortgage payments and enjoy not paying more interest than we absolutely had to on the loan.

Phase 2: Build Equity.

Over the next few years, we adjusted dated floor plans, recovered DIY-projects-gone-wrong from the prior owners, and generally made the house our own. We also aggressively paid down our mortgage—the mathematician in me took great satisfaction in watching the principal balance drop in speedy fashion.

Yes, I thought to myself, we are nailing this “adult” thing! Get out of debt! Live free!

And then, after spending eight years in our home, we arrived at a plot twist.

Phase 3: Yield to Plot Twists.

This plot twist was just that—a plot. We had the opportunity to buy a lot and design our own home. And who doesn’t want to design their own home? My husband was ready to jump at this opportunity, and so was I… mostly. My only snag was that this would throw a major wrench into my current plan where “dream home” primarily translated into “paid off”.

What about all the work we’d already done in our current home? We had chosen finishes and products that we loved because we intended to stay there. Would we ever see the money from that investment again? What about the money we’d saved by paying down the balance and avoiding interest?

Again the mathematician in me cried out: A new design is sure to be bigger which feels like a giant step backward, financially speaking.

But there was no denying that our house, although wonderful in a lot of ways, wasn’t our dream home. If we’re going to have a dream home then I’d like to have it sooner rather than later, I thought, I want to live in it, host parties, and get annoyed at my kids for dinging up the walls. I realized that a home we bought and tried to tailor to our family and lifestyle would never come close to fitting as well as one built around our needs.

Phase 4: Ultimately, I Thank My Stars I Didn’t Pay Off My Mortgage Early.

Honestly, if our mortgage had already been paid off, my pragmatic self would probably have suggested passing on the lot, saving for the next few years, and then building a cabin or vacation home. Who trades in a paid-off mortgage for a new build? Insanity! But that remaining balance on my mortgage gave me the push I needed to accept a new challenge.

As much work as we’d put into that first home, I know it would never have been our dream home. The bones just weren’t there. My husband and I are fortunate that the real estate market is great, so we’re getting the money we invested while remodeling back in cash—but I didn’t realize what a risk that could have been when we were renovating. We were eagerly investing in our house, both in remodeling and extra mortgage payments. I can leave that house on good terms: hoping that the new owners of our home will appreciate what we’ve done, but also being ok with them making it their own.

So yes, I have a house payment. We’ll have a mortgage payment this time next year too, but it’ll be a payment for our new home: one with a new design challenge of my own to face. And I think it feels better—more exciting—than it would have felt to settle into the very-near comfort zone of a paid-off starter home.

Updated July 2, 2019—LS

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