Pause Extra Mortgage Payments and Put Money in I-Bonds
Does it make sense to pause extra mortgage payments with inflation?
Our mortgage has a fixed 2.1 percent interest rate. The mortgage balance is $104k and is our only debt. If we make no extra mortgage payments, the mortgage would be paid off in 11 years in 2033. We are 48M, 39F, and plan to stay in our home for a long time. We are also contributing to retirement accounts (about 30% of gross income). I enjoy my job and do not plan to retire until at least 65. We have about $35k in I-bonds and are contributing $750 to I-bonds each month. We were paying $750 per month in extra mortgage payments but have shifted extra mortgage payments to I-bonds for now. If we took just the money in I-bonds, we could pay off the mortgage in about 3-4 years.
I understand the emotional satisfaction in paying off the mortgage, but financially, does it make more sense to stretch out the mortgage?
Reddit personalfinance
We get asked this question regularly. First, we want to emphasize the importance of a plan for your finances. Once you set your goals and start following the plan, questions like these become easier to answer. (https://unstuckmoney.com/how-about-money-gears/)
This couple has only mortgage debt. They are already contributing up to 30% of income to retirement!
Wouldn’t it be great to have a paid-off mortgage? Yes… but, only if other goals are met. They can generate a lot more wealth by investing the extra money, or saving it. I would count iBonds as medium-term savings. You have to keep the money in them for a year, and you incur an interest penalty if you withdraw before five years.
So we would say to invest the extra money, be it in mutual funds, business ventures, other real estate, or stocks, but iBonds would also be acceptable.
