Hi all,
I’ve been browsing several investment and homeowner subs and I’m still unsure what makes the most sense financially. From what I’ve read, the consensus seems to be that the decision basically depends on mortgage interest rate. Seems like ~6% is sort of the grey area. Ours is 5.75%.
A little over a year ago, I got a much better job so my income level is relatively high but I’ve only recently been able to contribute meaningfully (pretty much at all) to retirement and savings. Right now, I’m maxing my Roth IRA, HSA, and 401(k). We also just bought a house with a 5.75% mortgage. From what I understand, investing in broad ETFs like VTI and VXUS would historically yield more than 5.75% in the long run (like ~8%?), so I could potentially grow my wealth faster by investing. I feel a bit behind in savings for my age (31) and could afford to put money in now to try to catch up.
But, I keep going back to thinking we could be paying down our principal, especially at the beginning it would be more powerful than doing it later. I’m wondering if it’s really as simple as just comparing the mortgage rate to expected market returns, or if there are other factors I should consider. Maybe it is best to do some of both?
Thank you!