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re: When to pay off the mortgage
Posted on 9/16/22 at 9:14 am to iAmBatman
Posted on 9/16/22 at 9:14 am to iAmBatman
quote:There are several reasons. What if you're already maxing retirement and are hitting your goals elsewhere? Sure paying it off or paying extra wouldn't be high on the priority list, but it would still be on the list.
In a rising interest rate, high inflation environment, why in the hell would you even consider paying off a low interest, long term debt?
This is especially true if you're a couple years away from paying it off anyways - why invest it with a bleak market outlook when you can instantly avoid paying even a low interest rate for the next several years. I would say you instantly "earn" that interest rate by paying it off, but I mentioned that in another thread months ago and it opened up a whole can of worms I'd rather not revisit now...
quote:Please explain. I hear this so often and have never heard any sound logic for it. It ends up boiling down to making an excuse to spend more money than you can really afford to spend. ETA: I'll amend that last sentence to remove the absolute. Most of the time it's someone trying to justify to me to spend more than they can afford. On rare occasions does someone really understand what they are doing and is disciplined enough to see it through, understanding the risk involved...
Debt is one of the best hedges against inflation.
This post was edited on 9/16/22 at 9:42 am
Posted on 9/16/22 at 1:16 pm to Niner
quote:
Please explain. I hear this so often and have never heard any sound logic for it. It ends up boiling down to making an excuse to spend more money than you can really afford to spend. ETA: I'll amend that last sentence to remove the absolute. Most of the time it's someone trying to justify to me to spend more than they can afford. On rare occasions does someone really understand what they are doing and is disciplined enough to see it through, understanding the risk involved...
With respect to a mortgage, it’s pretty basic. You have a real, hard asset that has securing a dollar denominated fixed debt. All else being equal, if a dollar goes down in value over time, your hard asset is worth more dollars while the dollar debt is unchanged. The assumption is that you’re using the debt to create leverage to purchase things that can be relatively easily exchanged for dollars.
I’m batting about .010 when it comes to convincing clients that paying off their home early is a relatively poor financial decision, but I don’t lose much sleep over it as long as they’re educated on the pros/cons.
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