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re: The reoccuring question.. should I pay off my mortgage?
Posted on 9/19/12 at 4:39 pm to Powerman
Posted on 9/19/12 at 4:39 pm to Powerman
quote:
This seems like terrible advice
Things like "peace of mind" don't trump actual math
It's not terrible advice. You're getting instant return on your money paying off the mortgage and you free up your income to invest elsewhere. In the long run it's a financial no brainer.
2
Posted on 9/19/12 at 4:43 pm to slacker00
quote:
On paper many folks can beat the interest rates, but I think most don't because they don't put forth the proper time/effort. If you have better investment vehicles or are willing to put the time in great, but for most people who don't do that, I think paying off the mortgage faster, is a better bet.
I agree with all of this. I would bet you come out nearly the same paying off the mortgage and investing your income in the long run. You will also have less stress and free up your time to do other things than calculate ROI on every little thing.
Posted on 9/20/12 at 7:47 am to AngryBeavers
I hate these threads. People saying things like
quote:Just makes me
In the long run it's a financial no brainer.
Posted on 9/20/12 at 7:50 am to AngryBeavers
quote:Current market rates and history disagree with you, and just because you're too lazy or unconcerned with your investments to try and make the most out of them doesn't mean everybody is.
I would bet you come out nearly the same paying off the mortgage and investing your income in the long run. You will also have less stress and free up your time to do other things than calculate ROI on every little thing.
So, no, this as you say, is not a "no brainer" and for me it's a "no brainer" not to pay off the mortgage in this environment.
Posted on 9/20/12 at 10:31 am to LSUAfro
You can shake your head all you want but I do not like dividing by 12 and making payments if I don't have to. If the OP has the financial means to pay off his house and have some left over then I don't see how you can call it stupid. I have a strict financial plan I follow and it will result in me retiring a multi millionaire that is anything but lazy.
This post was edited on 9/20/12 at 10:32 am
Posted on 9/20/12 at 2:09 pm to Fat Bastard
quote:
quote: I recently came into a good bit of change. Enough to pay off all debt, etc.. This tells me nothing. Bottom line how much will it cost to pay your house off? IF you pay it off how much money do you have left total? that you have in investments, savings? etc?
still waiting OP. I would like to know these numbers.
Posted on 9/20/12 at 2:52 pm to AngryBeavers
quote:
I have a strict financial plan I follow and it will result in me retiring a multi millionaire that is anything but lazy.
Are you a Wizard?
I was debating on starting a new thread about this but new mortgage question threads get a bit old.
I just bought a house and will make my first payment at the end of this month. After the first payment my mortgage will be sold to another bank where it will remain for the foreseeable future.
My plan is to make twice monthly payments that will add to above my required monthly mortgage, thus shortening my loan term and decreasing my total interest paid. Do any of you money wizards know of a good calculator where I can play with the numbers to see how my payoff date, interest paid, etc will be when I adjust my payment amounts. My google fu doesn't seem to be very strong today and I haven't found a good website.
I'll hang up and listen off the air.
Posted on 9/20/12 at 2:52 pm to AngryBeavers
quote:Those words didn't come from me.
I don't see how you can call it stupid
Posted on 9/20/12 at 3:27 pm to LSUAfro
quote:
I hate these threads. People saying things like
quote:
In the long run it's a financial no brainer.
Just makes me
Agreed 100%.
Posted on 9/20/12 at 7:50 pm to Brian Wilson
quote:I completely agree with this.
Pay off the home and then build the stash back up, all while not having a mortgage payment. You'd be surprised at how fast you can save/invest when you don't have monthly payments. I've done exactly that and the feeling of completely owning my home is one that cannot be replaced.
When I was younger I always took the finance side of the argument and couldn't conceive of paying it off.
However, after taking the opportunity to do so, it is a great feeling. Just to hedge it a bit I took out a HELOC to have that "cash" available. And I still put aside more money every month, automatically deducted, than I used to pay towards a mortgage.
Posted on 9/20/12 at 9:19 pm to Bayou Tiger
quote:
Just to hedge it a bit I took out a HELOC to have that "cash" available
Can't argue with the HELOC use with current rates, but that too will soon pass.
Posted on 9/21/12 at 6:50 am to Swifty
quote:
Are you a Wizard?
Posted on 9/21/12 at 6:52 am to Swifty
quote:
Swifty
If you are interested......
give me your email and I will send you a spreadsheet i use that should fix you up.
This post was edited on 9/21/12 at 7:21 am
Posted on 9/21/12 at 7:04 am to Bayou Tiger
quote:
When I was younger I always took the finance side of the argument and couldn't conceive of paying it off.
same here. but not anymore....although technically looking at it purely from a interest rate versus my current rate of return ......let say in my 401k for example.... I am getting a 13.79% return right now. So.........using those numbers i cannot fault if...especially a younger chap..... wants to keep the mortgage. I just prefer paying it off for the reasons i stated earlier.
You have to remember different circumstances also. I paid off my 30 year mortgage wayyyyyy before 30 years. I did not have alot of principal left to pay off when I chose to pay it off and finish. for a new guy with nothing in a house but the down payment...with 80% left to pay off......i would stick with the investment(if he knows how to invest well)for at least now.......however, If i had as much in the bank as I owed principal pay off i would still pay it off especially If i did not plan on moving anytime soon. It all depends on the guy's situation.
Hell the guy can actually do both at the same time if he chooses. Make an extra payment(out of your paycheck) every other month towards principal and yet still use the other money to invest with. win-win situation.
That way you still have plenty to invest with and yet you have accelerated your payoff.
This post was edited on 9/21/12 at 7:55 am
Posted on 9/21/12 at 8:24 am to Swifty
quote:
Swifty
check out the calculators on bankrate.com
Posted on 9/21/12 at 8:35 am to jmtigers
quote:
Fat Bastard
bechererm@yahoo.com
Posted on 9/21/12 at 8:39 am to Swifty
I might just be weird, but the poor grammar in the subject line has been driving me insane.
Posted on 9/21/12 at 10:19 am to Swifty
quote:
Swifty
sent!
Posted on 9/21/12 at 10:44 am to AngryBeavers
quote:
It's not terrible advice. You're getting instant return on your money paying off the mortgage and you free up your income to invest elsewhere. In the long run it's a financial no brainer.
Um, no.
If you pay down a mortgage right now, this is equivalent to buying a guaranteed bond with a rate of return equal to your after-tax mortgage rate. Let's assume you are in the 25% tax bracket.
If you have a 6% mortgage, you are getting a guaranteed 4.5% return. Subtract inflation and that isn't a whole lot. If you have a 4% mortgage then your ROI is only 3%. Subtract inflation and you're basically left with nothing, there is really no reason to pay it down early.
Bear in mind also that these are 30 year rates. So if you believe inflation is going to go up much at all during the next 30 years then paying down the mortgage is a net negative return.
Note that "freeing up your income" is irrelevant. You are essentially using your savings to buy a bond that increases your monthly income by a small amount, that's all.
If the guaranteed return net of inflation were 3% or so then I'd start looking at paying it down early. But rates aren't anywhere near that high.
Posted on 9/21/12 at 10:55 am to foshizzle
quote:Logic is not welcome in these threads.
foshizzle
"Peace of Mind" trumps logic.
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