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re: Never pay off your house?
Posted on 3/10/09 at 6:32 pm to Colonel Hapablap
Posted on 3/10/09 at 6:32 pm to Colonel Hapablap
quote:
Never pay off your house?
I was talking to a guy this weekend who's pretty savvy with all things financial, and he made a statement that I tend to agree with, but I have a hard time bringing myself to implement:
Never pay off your house.
Too late for me. Its a done deal. Has been for four years and I love it.
2
Posted on 3/10/09 at 7:00 pm to pochejp
I am saving up to buy one for cash.
Posted on 3/10/09 at 10:00 pm to coloradoBengal
I just called country wide last week to ask about putting an extra thousand dollars a month on my house. I could save forty thousand in interest and pay it off seven years early. Not sure what I will do.
Posted on 3/10/09 at 11:01 pm to TIGER2
quote:
A large part of the advice revolved around always carrying a mortgage — ideally as large a mortgage as possible with as small a payment as possible, and refinancing every few years to take out even more equity. The idea is to take out as much equity as possible from your home (and possibly from a vacation home, RV or boat as well) and invest it in a nonqualified retirement plan that earns compound interest at a rate equal to or in excess of the rate you are paying simple interest on your mortgage, and to offset taxes that you would pay on retirement money you withdraw by deducting the mortgage interest. It’s arbitrage & offsetting taxes in one.
Posted on 3/11/09 at 7:09 am to Zilla
I paid mine off. Great feeling. Nobody can take it. Some things trump tax consequences.
Posted on 3/11/09 at 8:34 am to Colonel Hapablap
Paying off our mortgage is something I considered recently and decided against. We owe only about 40% of the value of the house and it would be easy to pay off. Our mortgage interest is only 4.75% and I can buy a municipal bond fund for Georgia that is paying 5.97% tax free. Yes, there is some risk but the fund price is pretty beaten up and I think is more likely to rise. Also, our mortgage is from my father and he is not going to get that kind of return anywhere else right now with his low risk tolerance. We have not been able to deduct the mortgage interest for a couple of years so that does not enter into it.
Posted on 3/11/09 at 9:33 am to Tigris
does that type of situation get reported to the credit agencies ?
Posted on 3/11/09 at 9:41 am to Zilla
quote:
does that type of situation get reported to the credit agencies ?
I assume you are asking if his mortgage with his father gets reported? No, it doesn't.
Posted on 3/11/09 at 9:43 am to Zilla
No, when I checked my credit last the mortgage with my father was not on my credit report but my (unused) Heloc was. My credit score was 782 anyway so it does not seem to have hurt much. It has been a good arrangement for my brothers and I as well as my father, most of his retirement income is from us and we get a good interest rate (he lowered it some as rates came down but still does better than he could with CD's).
Posted on 3/11/09 at 9:44 am to Tigris
quote:
our mortgage is from my father
I just couldn't do that, but thats just me.
Posted on 3/11/09 at 9:45 am to MikeBRLA
quote:
I assume you are asking if his mortgage with his father gets reported? No, it doesn't.
Unless daddy reports him.
Posted on 3/11/09 at 10:01 am to Cash
quote:
I just couldn't do that, but thats just me.
Why not? It is mutually beneficial. We all put down more than 20%, signed legal documents, are absurdly fiscally responsible, and were in our 40's at the time.
I guess I could see it creating a family rift in a family that was not tight to start with if one of the sons defaulted; but that was never going to be the case.
Posted on 3/11/09 at 10:22 am to Tigris
I am thinking of doing a refi too. I have about $50k in cash(online savings accounts) and another $100K in retirement investments(401k, roth and beneficiary ira). My house was appraised at $200K in June of 07 and I owe $175k. Principal loan is at 5.75% ($105K) and second at 7% plus ($71k). Was thinking of doing a refi, hoping to get $200K total for value of house, and putting down $15K to get my loan down to 80% ($160k) and just do one mortgage, hopefully at much lower than 5.75%. I know, Pie in the Sky.
This post was edited on 3/11/09 at 10:55 am
Posted on 3/11/09 at 11:05 am to LSU Fan 90812
quote:
What would be the advantage of this as opposed to actually paying the whole thing off and having zero payments.
If you can borrow at a low rate and invest at a higher one, you *want* the payments. As much as you can get.
With mortgage rates at historic lows this is probably as good a time as any to borrow as much as possible. I think short-term that it's dicey whether you can beat that return in investments but over the course of a 30-year mortgage this should be a no-brainer.
Posted on 3/11/09 at 11:20 am to Y.A. Tittle
quote:
Unless daddy reports him.
could daddy do that ?
Posted on 3/11/09 at 1:08 pm to coloradoBengal
quote:
I am saving up to buy one for cash.
True story. My parents' best friends were a couple who worked for the salt mine at Avery Island. He mined and she was a secretary. They lived in a company owned home and paid rent.
They saved money with the idea of retiring and being able to build their dream home paying cash.
They did it. But died a year after moving in.
This post was edited on 3/11/09 at 1:09 pm
Posted on 3/11/09 at 2:08 pm to Colonel Hapablap
quote:
excuse me, I used the wrong word. Your house is not an INVESTMENT.
My house purchases have been investments and, more importantly, they have contributed to "quality of life."
Posted on 3/11/09 at 2:17 pm to Zach
quote:
They did it....but died a year after moving in.
Ironically they were killed while crossing the street to go the mailbox....by a Avery Island Salt Truck.
:rimshot:
Posted on 3/11/09 at 2:44 pm to Tiger Ryno
Nope, they just died of old age. They shouldda borrowed money and enjoyed the home.
Re: "investments"...My houses have earned me a lot of money. That's an investment. Waaaay more appreciation and profit than any stocks. But you have to think years ahead in terms of neighborhood and trends.
I could sell my current home for triple what I paid for it 12 years ago. But I love it and this is the last one till the nursing home for me.
Re: "investments"...My houses have earned me a lot of money. That's an investment. Waaaay more appreciation and profit than any stocks. But you have to think years ahead in terms of neighborhood and trends.
I could sell my current home for triple what I paid for it 12 years ago. But I love it and this is the last one till the nursing home for me.
Posted on 3/11/09 at 11:08 pm to pochejp
quote:
Too late for me. Its a done deal. Has been for four years and I love it.
You could always mortgage it again, ya know.
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