When we sold our company, one of the first things we did was pay off the mortgage on our house. Our family, our friends, and our financial advisors all told us not to.
Two years in, it's still one of the best feelings in the world. That is the part I actually want to write about, because nobody talks about it.
Let me be clear about the math first, because I did run it. If we had put 20% down and invested the rest in the S&P 500, we would be in a better financial position today, especially with the market at all-time highs. The S&P has averaged around 10% a year over the last decade. Mortgage rates are nowhere close to that. The spreadsheet is not subtle here. Get the leverage, invest the difference, let the debt shrink against inflation.
So this post is not an argument about the math. The math people are probably right. This is about the thing the math never captures.
A paid-off house feels amazing.
Don't take advice from people who haven't done it
Here is what frustrates me. Someone tells me they wouldn't like a cruise, and they have never been on one. Someone tells me they'd be bored without work, and they've never taken more than a week off. Everyone has the right to an opinion, but when I'm weighing one, I try to listen to the people who have actually done the thing, because they can tell me how it feels on the other side.
Same goes for a paid-off home. I know plenty of people who espouse the value of a mortgage and have never owned a home free and clear. How are they supposed to tell me which one is better if they've never done it?
It's like asking someone who has never owned a Ferrari whether you should buy one. They'll have an opinion, probably rooted in the numbers. But nobody buys a Ferrari for the numbers. They buy it for the feeling. Until you've driven one down a winding road on a sunny day with the top down, you can only speak to the numbers, not the feeling.
That's why I'm writing this. I've been on both sides, a house with a mortgage and a house without one, and I can tell you the feeling of owning it free and clear beats the math every time.
What the feeling actually is
When I try to describe the feeling of a paid-off home, it comes down to two things. Security and freedom.
Start with the security. If the economy craters, if the income slows down, if our investments take a haircut, the most important thing in the world is a roof over our head. Because we paid cash, there is essentially no scenario where we lose it. (As long as we keep paying the property taxes. LOL.)
Now flip it. You put 20% down, you are 80% leveraged, and you are counting on investment returns to cover the payment. Small drawdowns, probably fine. Big drawdowns, that payment is still due every month for 30 years, no matter what is happening in the world.
I come back to the Great Depression as the gut check. By 1933, something like 40 to 50% of US home mortgages were in default, and foreclosures were running over 1,000 a day. The people who got wiped out were the ones who owned homes with leverage on them. Their income dried up, the bank still wanted its check, and when the check didn't come, the bank took the house. The people who came through okay were mostly the ones who owned free and clear.
Then there's the other half, the freedom. For most families the mortgage is the single biggest line in the budget, by a wide margin. Even if you can cover it easily from investment income or business cash flow, something changes when you look at your P&L (yes, families should run a P&L) and that line is gone.
It changes how you think about everything else. How much you need to earn each month. How much risk you can take with your career. How long you could go without a paycheck if you wanted a sabbatical, a career change, or a new thing you're a little scared to start.
House shopping after a windfall
This one is more for people who come into money all at once than for people paying a house down over time, but it matters. I've watched people come into serious money, sometimes tens or hundreds of millions, and go house shopping. The mistake is the same one I made when I went house shopping after we sold our company. I stopped looking at the price and started looking at the monthly payment.
Hypothetically, if you have $20M in the bank and the mortgage is $30,000 a month, it feels like that payment will never make a dent. So instead of asking "is this house the right size against my whole net worth?" you ask "can I cover the monthly?" Of course you can. You can cover almost any monthly. That is exactly the trap.
Paying cash forces you to price the house against the whole pile, not against a payment. It's the same discipline that keeps you from overspending on a car when you write the full check instead of signing a payment plan. If you take one thing from this, take that: when the money lands, stop thinking in monthly payments.
The takeaway
I'm not writing this to brag, and I'm not telling you paying cash is the optimal financial move. It usually isn't. I'm writing it because the housing conversation is dominated by people running calculators, and almost nobody tells you how it actually feels to own your home fully. No bank. No payment. No monthly obligation.
If you've got the cash, consider it. If you don't, work toward it. Make "debt-free home" a real goal, not a someday-maybe. The math people will tell you it's suboptimal. They're probably right. But the feeling of a paid-off home is something I'll never want to lose.
From people who've actually done it
A lot of you may not even know someone who has paid off their house, so I reached out to some friends who have. Their experiences are below. If you've paid off yours and want to add to this, leave a comment below.
“The first thing I did was pay off the houses. One of the tenets of financial security is not owing anything to anybody. If I can eliminate the chance of a bank having the power to remove the roof over my head, I'm in.
— Ladd
“Feels great to have no debt! Our mortgage has been paid off for a year. We like not having a monthly payment, and the freedom that comes with it lets us take more risk in other areas.
— Vijay
“I was raised with the mindset that you shouldn't carry much debt. That made me not want to take the risk, especially with interest rates going up in recent years.
— Christian
“Best feeling ever! I prefer to collect interest, not pay it. But more importantly, owning my home and being debt-free gave me the confidence to take more risk in my professional life. It's a peace
— of-mind thing for me, which in my brain is priceless." -John
“Doesn't matter the lost potential ROI, nothing beats the stress relief of a paid-off home that can't be foreclosed on in 90 days if you miss a payment. It's better for your stress, your relationship, your peace of mind. I highly recommend it to everyone who can swing it. Did you know the root of the word mortgage means death pledge?
— Jesse
“I spent a few months this year going back and forth on whether to pay off my mortgage ($2M at 6%) or keep that money invested in the market. Even at today's higher interest rates, the return-optimizing path is usually to keep the mortgage and let your investments compound while the debt gets whittled down with inflation. That would normally be attractive to me, but in this case it undervalues the mental freedom of not having mortgage debt, my largest monthly expense. It means I can spend my time however I want without guilt, and that's what we're all striving toward, right? Learn a new skill, build a new startup, spend time with family.
— Orien
“We got aggressive with paying off our mortgage and had it done within 2 years, and now my husband and I are totally relaxed. Whatever comes our way, we can handle the storm. After being a business owner for almost 40 years, this has brought peace of mind to me and my family. Instead of paying money to the banks, I gave my daughter a 3-week trip to Africa for her honeymoon, I'm funding my grandson's 529, and I give generously to charity. I travel when I want and no longer have the stress of overhead. I wish someone had talked to me about paying off this kind of debt when I was younger, because it gives such a sense of freedom.
— Maureen
“I've paid off a primary, and I love that I know my family has a place to stay even if things got REALLY weird and my income would crash. We'd already be set on housing AND our monthly mandatory expenses would be low which would give us more for other essentials. Relatedly, I knew a couple that lost one of their two incomes from a Pandemic Era layoff and they had to start looking at other houses because they could only make it about 3 months without a new job. Unexpected things like shutdowns, depressions, market crashes, wars, do come up a couple of times a century and they (and millions of others) got hit by it in a way that wouldn't happen if they'd paid off their primary first.
— Sean
“The stress level disappeared once I paid off my primary and secondary homes. I had read rich dad/poor dad years ago and always thought of my main house as a liability and not an asset - if the world went south I still have to make a payment. I now don’t worry about it. Yes I could make some more money elsewhere and yes I could have deducted interest but instead I live life better.
— Martin
“Cash buyer here! At one point, I owned five properties and my accountant told me to leverage everything and take mortgages so I did, but I hated having all of that debt. I had the income to support it at that time but I didn't like that feeling at all.
— Sue