#16
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Our situation was similar, choosing between paying out a mortgage early, or not. We chose to pay the mortgage outright, the peace of mind was worth it to us.
YMMV, of course, but good luck with your decision.
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"pouring from the empty into the void " |
#17
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I invest in real estate on the side, and I have yet to lose money in a deal. I think investing in real estate is less risky than the stock market where your money is at the mercy of Wall Street.
Me and my wife also coach people in debt reduction strategies, and the most common debt people want to pay off fast is a mortgage. Get a hold of your amortization schedule, and add all the interest you still owe. Now think of an investment that could give you a better return than that, and you can make your decision from there. |
#18
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Even though my home has been a good investment, I don't think of it as an investment. It is/was a lifestyle decision. So I was happy to pay off my mortgage, and don't really think about whether I would have done better if that money had been invested in a rental house (that would be an investment) or the stock market.
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#19
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First off, 100% of foreclosures occur on homes with mortgages. Think about that for a minute.
The interest tax deduction is the standard argument for keeping a mortgage. But it doesn't work mathematically. Let's say that you pay $10K in mortgage interest in a year, and are in the 25% tax bracket. You get to deduct that $10K for your top line income amount, not from the amount due. The $10K you sent to the bank only nets you $2500 in actual bottom line deduction value. You are out an extra $7500 in real dollars for the goal of saving $2500 on your taxes. You are much better off paying off the mortgage and having no interest deduction. You might make some money on the spread (interest earned by investments versus interest paid on the mortgage) but that is far from guaranteed. Remember 2007 and a stock market under 7,000 points? Or to put it another way - say your home is already paid off. Would you take a new mortgage out against it just to have money to play the stock market? Once you've paid off the mortgage, then pay yourself those house payments. You'll be amazed at how quickly funds pile up for emergencies, investment, retirement savings, vacations, guitars, etc. And you'll have the peace of mind that comes with owning your house outright. I'm not a financial advisor, but this is what we did. We've paid off three homes over our lives. Paid off the first one using a lump-sum severance amount from a corporate downsizing. Moved up in both house quality and size when relocating to Alaska, and had a small $35K mortgage for about three years. Then sold that one and use the proceeds to pay cash for the latest house for this final move back to America. We have not regretted paying off our home even for a moment. My wife retired earlier this year at 56. 'Nuff said. |
#20
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It's easier to get into debt than to get out of it. You can always take a home equity loan if you need a chunk of money in the future. But for now, you will be able to sleep at night.
I would set aside the money you have been using to pay the mortgage and invest it monthly - then you'll have the best of both worlds.
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The Bard Rocks Fay OM Sinker Redwood/Tiger Myrtle Sexauer L00 Adk/Magnolia For Sale Hatcher Jumbo Bearclaw/"Bacon" Padauk Goodall Jumbo POC/flamed Mahogany Appollonio 12 POC/Myrtle MJ Franks Resonator, all Australian Blackwood Blackbird "Lucky 13" - carbon fiber '31 National Duolian + many other stringed instruments. |
#21
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Their are different ways to look at it .
I had a 30 year mortgage i paid off in about 15 yr's. when interest rates dropped , I renegotiated the loan believe it or not , i continued to pay the original payment amount plus one extra payment per year( towards the principal ) -it pretty much killed the principal very quickly. My Dad taught me that two of the worst investments you can make is a home and a Car - Though i feel the Car is the number 1 biggest waste of money - had a discussion with someone who has gone to lease vehicle to lease vehicle for many years and wonders why hes broke - that's a silly thing to do ! .
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--------------------------------- Wood things with Strings ! Last edited by Tony Burns; 12-12-2018 at 03:59 PM. |
#22
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Yep. The worst thing you can do is to stick to the original payment schedule. You want to know what’s the real interest paid on a 30 year mortgage? Take the Interest of the loan, double it, and then add a zero at the end. So a mortgage at 4% is truly a loan at about 80%. Buy a $100k home at 4% and make every single payment all the way to 360, and you’ll end up paying the bank around $180k. It’s absolute robbery how they call that 4% interest. What me and my wife coach, is a strategy to do what you did, attack the principal and bypass that ridiculous interest, but without pinching pennies or taking on a second job. |
#23
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We haven't made house payments in a long, long time. Yes we paid it off early. Often when people talk money in the realm of Home tax deductions and interest on an old home loan once you go through the math the amount of money isn't that much. For me it is getting something accomplished and moving on. Rather than sit and think about it for years to save accouple of bucks that you probably wouldn't notice anyway. Things happen in life meaning your goal could disappear. Making money via investing means taking a risk. The more the risk the more money there is to be made and the possibility of losing it is larger. The less risk the possibility of keeping it becomes larger and the possibility of losing it is less. And the gain is less.
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Waterloo WL-S, K & K mini Waterloo WL-S Deluxe, K & K mini Iris OG, 12 fret, slot head, K & K mini Follow The Yellow Brick Road |
#24
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Most people think that when taking a risk, the odds are overwhelmingly against them. That’s true if you take an uneducated risk. If you invest in let’s say real estate, you can educate yourself, and do your due diligence, check the market trends, and that way you minimize the risk almost to the point of being a non-issue. |