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re: Would you carry a mortgage if you didn't have to?
Posted on 6/5/18 at 2:59 pm to Tigerpaw123
Posted on 6/5/18 at 2:59 pm to Tigerpaw123
quote:
Imagine having $150,000 back in 2008 to invest after the crash. HELOC
quote:
or
Imagine having the balls to borrow 150K in 2008 after the market crash, and not knowing what direction it was going, and investing in the market
Yep. Or Imagine losing your job and the HELOC gets called when the credit markets froze up. Course, maybe the Magic 8 ball would predict all of that too.
Borrow against your home to invest in the stock market =
As for the OP, I like his idea of going with a 15 year and paying it off in 5+/- years - mainly because he’s looking to retire within that time frame. Yeah, I wouldn’t pull from the retirement funds either, in his case.
This post was edited on 6/5/18 at 3:00 pm
1
Posted on 6/5/18 at 3:52 pm to Ace Midnight
quote:
The min/maxxers inexplicably value housing at $0, too.
Yeah that is a fair point. It’s not like paying off your house is worth nothing and is a worthless asset
Posted on 6/5/18 at 5:06 pm to kywildcatfanone
I know it’s not the smartest money move but I paid off my houses. No mortgage for me.
Yes at the end of my working life that money could have made me another 100-150k. But I get to live everyday not worrying that much about my family if something happens to me or my employment
Yes at the end of my working life that money could have made me another 100-150k. But I get to live everyday not worrying that much about my family if something happens to me or my employment
Posted on 6/5/18 at 5:16 pm to kywildcatfanone
"I'm trying to retire in about 3 years". Stay in your paid for house.
Posted on 6/5/18 at 7:36 pm to Jag_Warrior
You can laugh if you like.
But common sense knew that millionaires were going to quickly be made in 4 years after the stock market fell 30%.
But you need to have money to make money. Only those with cash outside of the market were able to take advantage.
This is basic economic and financial knowledge that you probably don't possess.
But common sense knew that millionaires were going to quickly be made in 4 years after the stock market fell 30%.
But you need to have money to make money. Only those with cash outside of the market were able to take advantage.
This is basic economic and financial knowledge that you probably don't possess.
Posted on 6/5/18 at 7:45 pm to stonerolledaway
quote:
"I'm trying to retire in about 3 years". Stay in your paid for house.
That's my worry, but the wife really wants to move, and I sort of do to. Our neighborhood has changed, and I just feel like building one more house, getting the latest tech in it, and being in another quieter neighborhood. I'm on track to do that, but not if I move, at least not if we continue to want to drive nice cars.
Seriously though, my retirement is going to be solely dependent upon the cost of healthcare. My wife is a retired teacher, so we can jump on the retired teacher healthcare, but 3-4 years from now, who knows what the cost will be, or if it will be a benefit that gets cut.
Posted on 6/5/18 at 9:32 pm to kywildcatfanone
quote:
The new home will cost me about $100-150K more than my current home will sell for I am pretty sure.
even if I did a 15 year loan and paid it off in 5 years, it would still cost me about 15K in interest or so.
If it matters, I'm trying to retire in about 3 years as well
If your IRA is out performing what you would be able to secure a mortgage for, I would stick with the mortgage until you are ready to retire. At that point, I would strongly consider paying off the rest from retirement funds so I don't have that monthly note hanging over my head.
Posted on 6/6/18 at 6:00 am to Weekend Warrior79
quote:
If your IRA is out performing what you would be able to secure a mortgage for, I would stick with the mortgage until you are ready to retire. At that point, I would strongly consider paying off the rest from retirement funds so I don't have that monthly note hanging over my head.
This is probably how it will play out.
Posted on 6/6/18 at 11:49 am to meansonny
quote:
You can laugh if you like. But common sense knew that millionaires were going to quickly be made in 4 years after the stock market fell 30%. But you need to have money to make money. Only those with cash outside of the market were able to take advantage. This is basic economic and financial knowledge that you probably don't possess.
One of us had his own money to invest heavily after the crash and one of us is WISHING that he’d had a HELOC back then, putting his home in jeopardy if this roll of the dice didn’t go to plan, or other factors had interfered with the repayment.
I don’t know how old you are (rather young or maybe just immature), but this make believe common sense of which you speak was not present. I was in the thick of it with my company and my own businesses. Lines of credit were being canceled and loans were being delayed, even for companies and people with healthy finances.
Although I came out the other end in great shape, no one knew how or when the equity markets would recover, or by how much. Like some, I had *faith* that we would have a recovery. But would I have been silly enough to bet my home on that faith? I would not. A couple of missteps by the critters in Congress and the story could have easily played out differently. So let’s stop with the revisionist rewrite of the financial crisis, shall we?
It wasn’t initially my intention to insult you with that other post. Seems that I did, so sorry about that. And if you believe in using your home to make speculative bets, more power to you. Whether trading options or buying raw land, I still believe in mitigating and managing risk. So, not something I would do.
Sorry to the OP for taking his thread off track with this. Again, I agree with his plan of action, with retirement in his sights.
Posted on 6/6/18 at 1:01 pm to Oenophile Brah
quote:
I wouldn't tap a retirement vehicle to avoid a manageable mortgage payment. The retirement money will be there if something changes and you can utilize it in the most effective manner. As for the mortgage, you may want to ask about an ARM. I'm not familiar with current rates, but you can possibly get a lower rate. The fact you have the money to pay off the mortgage eliminates the risk associated with the potential for increasing future rates.
This is exactly what I was thinking. Quick search tells me 15 year rates are a better option, but the benefit of this is being able to pick and choose when you pull money out to pay down the principal based on how your accounts have performed (or not performed).
Posted on 6/6/18 at 1:31 pm to OceanMan
quote:
You will get some guys in here saying that “peace of mind” is not something taught it finance classes but they are wrong. It’s built into risk tolerance, which is never a given in the real world.
This.
quote:
I’ll save my debt for business opportunities.
I'll just say that relatively speaking, mortgage debt offers more advantageous rates, especially if business debt is unsecured
Posted on 6/6/18 at 2:50 pm to GenesChin
quote:
I'll just say that relatively speaking, mortgage debt offers more advantageous rates, especially if business debt is unsecured
Well I haven’t ruled out borrowing against my home. I’m just not going to carry a mortgage strictly because it is “cheap money”
Your point is well taken though.
Posted on 6/6/18 at 9:01 pm to foshizzle
quote:
ut if I had to borrow at 10% like my parents did then I'd pay that off with the quickness.
But there checking account paid 5%
Posted on 6/6/18 at 10:52 pm to Jag_Warrior
quote:
It wasn’t initially my intention to insult you with that other post. Seems that I did, so sorry about that. And if you believe in using your home to make speculative bets, more power to you. Whether trading options or buying raw land, I still believe in mitigating and managing risk. So, not something I would do.
I can agree to disagree.
No one knew how low the stock market would go. But everyone knew that down 30% was a great opportunity to buy. The recovery would put the investment up 42% and that takes into account losing an extra 10% before the upswing.
Real estate prices were down as much as 60 and 70%.
Our country has had large downturns before and every one with capital makes a fortune in those environments. If you never heard the term "on sale" before, then I can't help you. We won't agree on what a no-brained opportunity is. And I'm comfortable with that.
Personally, I had just financed a car in the spring of 2008 on my HELOC. No issues with the HELOC despite your reference to bank troubles. No issues with the used car. Paid the car off in 2 years (just in time for the recovery to be in full swing).
It is what it is. I have a brother in finance who evacuated the markets before the fall and did great. I got some funds out prior to the collapse, but they were my smaller accounts. That was enough to let me visualize what might have been.
A heloc with $0 owed is great for a no cost tap into my earned wealth (home equity). There is absolutely zero downside to have a $0 balance HELOC on the ready. To each their own.
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