Posted on 07/15/2009 6:48:43 AM PDT by Kaslin
Why not?
Pay it off and sell,sell,sell and take the money and run before you lose your shirt on your property.Get cash rich and invest.
Speaking from personal experience, when you have the money to pay off the house, do it.
“All bets are off if the government decides that interest deductions for homes are benefits of the “rich” and puts a stop to the practice.”
I think there’s a strong chance that will happen. The Dems tried to make everyone a homeowner, but found that poor people tend to have bad habits, such as not working, or paying their bills, which would include a mortgage.
In frustration over the inability to give a house to everyone, I expect the Dems to punish homeowners by removing the interest deduction for just the reason you state... it’s a benefit to the “rich”.
Complete and total claptrap! Paying off your mortgage means you’re relieved of a $900+ burden every month, EASILY overcoming the tax benefits realized from maintaining the mortgage.
How these financial planners promoting mortgage retention stay in business is beyond me. That’s the first, and often the last, question I ask when I meet with a financial planner. If they advocate for holding the mortgage, I get up without a word and walk out.
A half-million to begin with; but she could then funnel her mortgage payments into her investment portfolio and build it up quickly.
More simply, if you had a paid for house would you borrow against it to purchase CDs? My guess is no. This question takes the emotional aspect into account, something that most finance geeks forget.
I’m also amazed when the “tax deductibility” issue arises and supposedly smart people say to keep the mortgage to get the deduction. How much more ignorant can a person be? Why on earth would someone want to pay $10K to a bank to avoid paying $3K to the government?
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Yes, wrong answer. Under only the right conditions does the tax on your CD interest get canceled by the tax break on the mortgage interest you pay.
I got screwed in 2007 from this. Other capital gains pushed me into a bracket where my mortgage interest deductability got seriously reduced. So I pay taxes on the CD interest and did not recoup it on the mortgage side.
“One other point to consider...”
That is the tack my wife and I are taking. If inflation kicks in, and I believe it will, it makes sense to pay off the note with cheaper dollars. Our plan is to use the best vehicle to get the highest rate of return on our portfolios. It isn’t foolproof - but nothing is. My only caveat would be if you don’t have a fixed rate mortgage - I would pay it off as soon as possible. -—JM
If inflation rears its ugly head(which is almost a near certainty), the interest rate on her mortage could be less than the rate of inflation and she would be able to invest her expiring cds at at rate exceeding her mortage rate.
Great point and that is what we did over 20 years ago
Well, if it were dollar for dollar, I'd rather pay it to the bank than the goobermint, because at least the guys at the bank have a job, of sorts. Starve the beast. But $3 to save $1? No thank you. My father in law spouts this crap.
Gee a reasonable person using common sense - too bad the guys in congress don’t have the same stereet smarts you have used to explain debt, cash flow and investing.
I really like Dave Ramsey on liability management (i.e. get out of debt, and don’t overspend on cars). I also have found his life insurance advice very helpful, (term insurance + savings is better than “whole life” in most cases)
One area where I don’t agree with him is in investing of assets. He’s so convinced that at all times the stock market is the way to go that he has gone right ahead encouraging people to put their money in “growth stock mutual funds” right through two stock market bubbles. I wish he would recognize that just as with houses and cars, the price you pay for a stock market investment has a huge impact on whether it works out or not. There ARE times when it makes sense to put money in the market (now is probably one of those times) but there are also times when the PE is above 30 or something, when it’s crazy.
Pay off the mortgage. Debt is bad, unless you are from the government in which case the solution to debt is more debt.
If someone really, really, really wants to starve the fed government and they have a paid for house, they are still free to give to charity. In addition, if the person really finds that they hate having a paid for house, then they can always go get another mortgage for it....
Very good advice.You think like I.
“Paying off your mortgage means you’re relieved of a $900+ burden every month.”
It also means you are “relieved” of the possibility of earning a higher rate of return on the money you used to pay off the mortgage.
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