Where to put an extra 2k a month with a 6.625% mortgage
Recasting my mortgage this week and the monthly payment will drop from 5k to 3k. I’ll owe 480k once the recast is completed. It’s a 30 year mortgage at 6.625%, and we took it out this past April.
This will free up 2k a month. We already have a 1 year emergency fund in a HYSA, 401ks are maxed each year, and household income is around 325k.
Right now I’m deciding between the following:
1. Invest 2k a month into low cost index funds; or
2. invest 1k a month into low cost index funds and put the other 1k toward mortgage principal.
I’m having a hard time passing up what is basically a guaranteed 6.625% return by paying down the mortgage. It also makes my head hurt thinking about how much interest I’m going to pay over 30 years if I just let the loan ride.
Long term returns from investing are attractive, and investing rather than aggressively paying down a mortgage has worked out better historically. I know past performance doesn’t guarantee future performance, but I also don’t want to give up decades of compounding and liquidity by throwing too much cash at the house.
Curious what you would do in this situation, any of the two options above or something else entirely?