Why You Should Never Pay For A House In Full

Mark Zuckerberg still has a 30 year mortgage

You may or may not like Mark Zuckerberg, but aren’t you curious about why he’s still paying a 30 year mortgage?

Mark Zuckerberg has more than enough money to pay off his mortgage tomorrow. Zuckerberg’s homes are several million dollars while his net worth is in the billions.

Paying off the mortgage would be a rounding error for Zuckerberg’s net worth. Shouldn’t be just get that gremlin off his back?

So many people are in a rush to pay off their property and it makes no sense. This rush to paying off the entire property is completely unwarranted and should occur as slowly as possible.

As long as you pay the mortgage bill that comes your way each month, you’re golden.

You shouldn’t go beyond that minimum because you can’t deploy money you put into your house. Once you use money to pay your mortgage, it’s gone.

Technically, that money goes into your property’s value. Shaving off $1,000 from your mortgage increases your equity in your property by $1,000.

But excessively shaving off the mortgage doesn’t make sense from any standpoint.

If you are a homeowner, you likely have a relatively low interest rate. According to Bankrate, the average interest rate on a 30-year mortgage and 15-year mortgage are 3.30% and 2.72% respectively.

Meanwhile, the average return on the stock market is 8% or 10% each year depending on who you ask.

Rather than quickly pay off your mortgage, you can deploy your money into the stock market, see some appreciation, and then sell some shares when your next mortgage payment is due.

Better yet, make and save enough money each month so you can keep the shares and still pay the mortgage.

You don’t even give yourself a chance to earn a return on your investment if you immediately pay the mortgage in advance. Sure, the stock market goes up and down, but if you pay your mortgage month by month instead of getting several months ahead, you’ve got more time to get a higher return.