Posted on 12/16/2020 5:30:44 PM PST by SteveH
i paid off my home mortgage yesterday.
(it was a really good refinance rate, but whatever.)
to do it, i liquidated some rollover stock (SPY) (i am retirement age, so it gets taxed as regular income, i believe).
then i did a bank transfer from my broker to a local bank.
finally, the local bank ,happened to hold the mortage, so i simply paid the full mortgage owed amount as of yesterday from my checking account to my mortgage account.
it still has not registered today, but i am not expecting a problem since i have a receipt that shows the internal transfer of the full amount as determined by a visit to the bank office immediately prior to the transfer (the amount evidently changes every day due to compound interest).
otherwise, the mortgage would have taken about 8 more years to pay off at the normally scheduled rate of payoff.
i need to take out about 33+% + 11+% extra money out of the IRA for federal and state taxes. this bumps me up two IRS tax brackets for this year.
in return, however, i get some peace of mind knowing that at least i own my home free and clear if anything serious should start to happen and interfere with ordinary commercial transactions (i have some conjectures about worst case scenarios which i won't go into in this post-- perhaps everyone does) (i have not spoken with any of my neighbors, most of whom are suburbanites who keep to themselves and if i am to believe voting records are somewhat liberal, with many newly arrived middle class professional immigrants from asia).
ok... good, bad, ugly? one person on FR said earlier not to do this. however, i am just too nervous.
along the way, i had an unsettling experience. i am already used to less bank branch offices being open, and those that are, with reduced hours and reduced customer occupancy.
however, last friday at 3:30 PM i was on the freeway listening to the radio and heard the USSC news. so i tried effecting a wire transfer over cell phone. the first attempt, the line went dead, and the second attempt, the wait time increased from 5 minutes to 25 minutes. i thought this was strange since i had been promised over the phone the previous day that this would be a snap to perform over the phone. after driving a couple of exits, i turned around and went back to my brokerage to perform a wire transfer to my local bank in preparation for the mortage payoff.
the brokerage local office appeared deserted, with only two cars in the parking lot. in fact it was open, but there was only one person present, only one desk and only one working monitor in the entire office, which was only dimly lit. a teller appeared on the monitor screen. i was told that no one could help me at that time and that i should try using the phone. they also had a drop box but i had no papers to fill out and there did not seem to be a printer there. i felt nervous and frustrated, and left immediately. later i heard that the brokerage employees were in fact working from home.
the situation was more normal at my usual bank, but the brokerage seemed to me to be a harbinger of a lowered level of service that might be given at the banks if things progress far enough with the bug.
anyways, the entire process took me about 5 business days not including a day or two of investigating different options of proceeding. i could probably have reduced this to three days if i went at a fast pace, and maybe shaved off another day off of that if i had known exactly what to do and when, and let it be the one and only priority for those two business days.
Don’t listen to the naysayers. Your home should be paid off. Income property maybe not but where you lay your head at night - yes.
Paid ours off about 5-6 years ago. Lots of people said “no, keep your mortgage, invest!”
But there’s just something reassuring about owning the domicile free and clear. Have plenty of retirement investments, we’re OK there.
I say good on ya! Congrats!
The Kulaks were unavailable for comment..
(Sorry for the political commentary)
Sincere congratulations! That warm feeling you’re experiencing is freedom!
I am pre-qualified to buy a home and nothing would please me better than to have a little place of my own, with the current mortgage rates. But...there are absolutely zero houses for sale in the area I want to buy in. I wanted to get in with the low mortgage rates before a possible Biden administration screws everything up, but I’m sure you all know that now is traditionally a very slow period for real estate. I think with the COVID complication, people are also just staying put.
😉
I catch Ramsey once in a while. I like his mindset.
Besides our mortgage and occasionally a small car payment we’ve always managed to be debt free.
On occasion we had to play some games, like 1 year interest free on a refrigerator, but we paid for it in a year.
Our last car we took a loan for about half. We could have paid for it but when interest was 3% and we make 16% on the money I made the conscious decision to take the loan.
We only buy cheaper used cars.
We just refinanced the house last week. 2.6%. We skip the first two payments which we’ll pay anyway, right to principle.
> Just make sure you can keep up the taxes and insurance when they come due now. I’ve know folks who did this and then did not prepare for the quarterly hit every three months.
I’m ok, and i will try to estimate as best as i reasonably can. i suppose the professional way would be to find a tax prep specialist / financial advisor. however, i have been using turbotax myself for years, and managing my own investments, without any serious problems.
in fact, during the last 4 years i have been doing rather well, thanks in large part (imho) to trump and his america first economic policies.
i am using some of the profits i made during the last 4 years to pay off the mortgage. i have already converted to cash much if not most of the equity needed to pay the taxes, which to my understanding will come to me as taxes on ordinary income due to rollover IRA rules.
i still have a relatively small amount (eg ~$40k) to convert from stock and set aside. My understanding is that the taxes need to be sent in the USPS by January 15 (eg by bank checking account check) to avoid penalties, and i intend to do this.
What makes me a bit nervous right now is that I still have no clear idea of what will happen later this year and early next year politically.
Personally I think I am out of most action. This is because (1) I live in California, far from the centers of power that seem to matter the most, and (2) I am retirement age, which nominally limits my effectiveness in anything beyond pontificating from my front porch, packing up and moving to a safer location for a few weeks while things settle down, or staying put and letting any trouble find me (if it can).
The main place where my plans go wrong is if i am forced to move permanently by safety considerations. i think i can do this although i have family members who might be impeded by physical considerations for which i will need to compensate. hopefully these are all challenges i will not have to be concerned about... one way or another... i would be happy if they all remain hypothetical... anyway a forced physical move would involve leaving the real estate, possibly without compensation. however, if it came to a choice between that and staying alive and free, i am hoping that the latter would remain a viable option... be prepared (so the motto goes)...
Smart move. Now buy some silver eagles and save them to pay your property taxes if the SHTF. BUT you must sell them for fiat (dollars) to make a payment, because they will give you only “face value”. a silver dollar to them, is a dollar. Plenty of people will buy them because its easier to “spend” than a 1500$+ gold coin, and they can make topical antibiotics from silver.
thats what we did but we still owe quite a bit on homestead.decided to pull from retirement to pay off real estate. of course with virus we do not plan to rent till that bs is over.
Do you know anyone in the area you want to move to/buy in?
Maybe an elderly homeowner will be selling, soon....with a fixer upper that you can get in, before they list it...and, they’d have to update.
Just a thought.
I absolutely agree with you. Owning is renting when it comes to real estate tax.
Paid my house off 20 some years ago. It was 15 years early. Now my real estate and insurance rates dwarf my mortgage, real estate and insurance from back then. That being said I rejoice that I own my house and only the government can take it away from me
You are never free and clear if they can take your home for lack of paying property and school taxes. That needs to change.
It is a sellers market so offer higher if you love it.
> ... when Trump tax cuts dropped the top rate to 25%.
i might have missed something because if i read the tax table correctly i need to pay more than 25% in my tax bracket. i wonder if something changed in more recent years (i suppose i missed out if so). but who would have been able to predict we would be in this situation now from four years ago (other than pelosi and clinton types lol)?
You’ll also save on interest, as in not paying it.
“Don’t listen to the naysayers. Your home should be paid off. Income property maybe not but where you lay your head at night - yes.”
With home loans under 3% you can find many stocks paying that.
In ten years your mortgage payment will be the same but the dividend income will have doubled. Stock value will also probably double.
“Owning is renting when it comes to real estate tax.”
ROTFLMAO!
Awesome... you just de-levered yourself...house rich and cash poor. Your house is worth no more now, but now you have no money. Yup, yer very smart...
With interest rates below inflation, you’re so smart that you’ve decided to cheat even that by not having a mortgage.
But hey, now you OWN your home!! No more payments.
Except taxes, maintenance, repairs.... and again...you got no money.
Congrats on such a fine post.
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