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re: The reoccuring question.. should I pay off my mortgage?
Posted on 9/21/12 at 10:56 am to LSUStjames
Posted on 9/21/12 at 10:56 am to LSUStjames
quote:
should I pay off my mortgage?
Pay it off, then promptly take out a HELOC with a good rate that you can draw on if ever needed. I can't help but think rates are going to skyrocket in the coming years, and you'll be in good shape if you have access to cheap money through the HELOC.
2
Posted on 9/21/12 at 11:06 am to Putty
I can't imagine many if any banks are offering a lock option right now on HELOCs.
HELOCs generally offer prime + %.
HELOCs generally offer prime + %.
Posted on 9/21/12 at 11:50 am to LSUAfro
quote:
Logic is not welcome in these threads. "Peace of Mind" trumps logic.
and some cannot read, or have not read the whole thread clearly.
Posted on 9/21/12 at 12:01 pm to Fat Bastard
Defensive? Don't believe I was referencing you and if you READ the thread you'll realize that you obviously can not, as that thought process has been mentioned several times.
Posted on 9/21/12 at 12:13 pm to Putty
quote:
Pay it off, then promptly take out a HELOC with a good rate
Absolutely not.
With rates as low as they are, it pays to borrow if you qualify for the best rates. You should refi the mortgage, a cash out if possible. If you can get the best rates you should be borrowing as much as you can. It is a license to print money.
Seriously, if you can borrow at nearly zero real interest, then your ROI is basically zero by paying it off early. Keep the money.
A HELOC is also good to have.
ETA: Just to be clear, I referring to a case where you qualify for the best rates and you can borrow for 30 years at a fixed rate. Adjustable rates won't help here.
This post was edited on 9/21/12 at 3:42 pm
Posted on 9/21/12 at 1:30 pm to foshizzle
My Dave Ramsey friend came up to me yesterday and said "i'm debt free"
I promptly responded, "I've never carried more debt in my entire life"
Their response was "yeah, but you've got money"
It didn't register.
I promptly responded, "I've never carried more debt in my entire life"
Their response was "yeah, but you've got money"
It didn't register.
Posted on 9/21/12 at 3:41 pm to ItNeverRains
Posted on 9/21/12 at 4:11 pm to ItNeverRains
DING DING!
Posted on 9/21/12 at 5:03 pm to BestBanker
I love when people start these open ended questions, don't provide any details, and disappear. Way to go OP!
Posted on 9/21/12 at 6:18 pm to Costanza
quote:
I love when people start these open ended questions, don't provide any details, and disappear. Way to go OP!
yup. you took the keystrokes right from my fingers.
We had the same thing happen in a thread where some young guy(i assume) asked about what type of business should he start/open. he never answered the questions that were posed so he could get help from posters here.
Posted on 9/23/12 at 10:17 am to LSUStjames
Without giving out too much info.. paying off the mortgage would represent using roughly 25% of the money. I would still have 75% to invest. I've already started looking at investments and a decision is still not made. I have spoken to 3 different financial planners and all 3 are suggesting to not pay it off for at least 3-5 years to let the principle build and see what inflation does. They've also recommended setting up a small draw off the investment interest to pay the note so I still would lose the bill.
I already have an emergencey account that represents 6 months of salary. My kids college should be completely taken care of through 529 accounts that get about 1k put into each monthly automatically, I don't even see it. The kids are 1 and 3. They will afford Stanford if they choose at that rate.
There is also a chance for another windfall in 2-3 years. And this was not an inheritance, much worse.
Forgot to add: My Tax Att recommends paying it off. The FP's make commission based off the amount I invest so it's in their best interest for me to invest it all.
I already have an emergencey account that represents 6 months of salary. My kids college should be completely taken care of through 529 accounts that get about 1k put into each monthly automatically, I don't even see it. The kids are 1 and 3. They will afford Stanford if they choose at that rate.
There is also a chance for another windfall in 2-3 years. And this was not an inheritance, much worse.
Forgot to add: My Tax Att recommends paying it off. The FP's make commission based off the amount I invest so it's in their best interest for me to invest it all.
This post was edited on 9/23/12 at 10:45 am
Posted on 9/23/12 at 4:27 pm to LSUStjames
quote:
Forgot to add: My Tax Att recommends paying it off. The FP's make commission based off the amount I invest so it's in their best interest for me to invest it all.
Consider using a fee only FP that would design a plan for you using low cost, passive investments. You could revisit the FP as necessary over the coming years and you wouldn't have to worry about leeches/commissions/churning/wrap account fees, etc.
If you pay off the house you would own an asset that should appreciate with inflation longer term. Yeah, you would lose the leverage the mortgage provides, but your primary concern isn't maximizing returns. No one seems to want to address the uncertainty of future market returns, and QE isn't going to last forever. Given the fact you are contemplating commissioned FP's implies you don't have much investing experience, which is neither good nor bad in your situation and you are exploring options which is good.
I paid off my house. I didn't get a huge sense of relief or anything, but it didn't feel terrible, either. I owe debt on one rental property and own 3-others outright and I am not rushing out to re-mortgage them. I am also sitting on a large cash pile waiting on better opps, which may or may not come along, but I do have a significant investment portfolio with risk bearing assets, too. Everyone is different, being conservative with money is not the worst thing in the world. Even if you pay off the mortgage it appears you still will have plenty left if you choose to invest in other opps,you are taking care of future college costs for your kids, and potentially could have another large influx of cash. Maybe refi'ng into a lower rate 30-yr mortgage could be appealing as well.
Here is a link to NAPFA, an association of fee only planners, maybe your tax attrny can help with referrals to find someone suitable.
LINK
Posted on 9/24/12 at 8:26 am to LSUStjames
quote:
paying off the mortgage would represent using roughly 25% of the money. I would still have 75% to invest.
In that case you should be good either way then. Up to you in the end.
Posted on 9/30/12 at 8:49 pm to Brian Wilson
pay it off. you could be unemployed tomorrow. not having that mortgage hanging over your head is a good thing, not a bad thing. if your completely debt free, bank it. so what if your not making 15% anymore. your liquid in case an emergency comes up. after saving up to have a on year of salary, THEN look into investments. it won't take you long to save up without debt. the hard problem for most is to STAY that way
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