FYI: Putting aside the opportunity cost of the financial markets and 401k contributions and focusing only on making early mortgage payments, are you really making 4%/year if you make early payments on your mortgage? Extra mortgage payments ($50k for example), if paid early would only pay off the last scheduled payments of your payment stream—aka the ones with the highest principal balance and least amount of interest expense thereby reducing your term effectively in this case years 24-30 if paying off 20% days one you take out your mortgage. Here’s where the trick is, those last 20% of your payments have very little interest associated with them—so you are essentially paying off only the interest that would be attributable in the years 24-26, a much smaller sum than 50/250k, or 20%. This effectively makes your rate of return on paying off your mortgage in chunks earlier much less than a 4% return, likely down to less than 1%. Something to consider when treasuries offer a superior return to this and even saving accounts are now between 2 and 2.5%.
Regards,
Ted
https://awealthofcommonsense.com/2019/02/whats-the-return-on-mortgage-prepayments/
