You just have to compare the tax and risk adjusted returns from the investments that you make, vs the cost of continuing the mortgage.
False!! he has to consider the other investment opportunity cost as well
Topic: Is it a bad decision to payoff mortgage early (Read 3519 times)
False!! he has to consider the other investment opportunity cost as well
You just have to compare the tax and risk adjusted returns from the investments that you make, vs the cost of continuing the mortgage.
There are a lot of investment property with rental yield higher than 4.4%.
Check out the distress home on hudstore.com.
Check out the distress home on hudstore.com.
Yes but you have risks : market prices going down (like any market); bad regulation; rents not paid; renovations ect.
Paying off your mortgage is an investment : if you have a high rate interest on your loan and you don't think there will be massive inflation it is a good investment but if you can find a better investment (Gold; Bitcoin; energy ressources companies not based in the US..) and you think there will be a higher rate of real inflation than the interest rate on your loan you should use your available cash for those other investments
Maybe you can pay off part of your mortgage and invest the rest of it in precious metal, Bitcoin or abroad
There are a lot of investment property with rental yield higher than 4.4%.
Check out the distress home on hudstore.com.
Check out the distress home on hudstore.com.
Paying off that mortgage is a 4.4% risk free rate of return investment.
Can you get 4.4% risk free anywhere else? What level of risk does investing in the stock market for potentially higher returns pose? Keep in mind tax costs when investing in stocks as well.
In any case, now that your mortgage is paid off, you can, if you choose, take out a HELOC at a comparable rate for a significant fraction of your home's value and invest it in the stock market, if you think that is a good choice.
Can you get 4.4% risk free anywhere else? What level of risk does investing in the stock market for potentially higher returns pose? Keep in mind tax costs when investing in stocks as well.
In any case, now that your mortgage is paid off, you can, if you choose, take out a HELOC at a comparable rate for a significant fraction of your home's value and invest it in the stock market, if you think that is a good choice.
I was so eager that I paid off a 4.4% $150k 15y mortgage in a few years. now some people are analyzing and suggesting that i should have run it out.
thoughts?
thoughts?
4.4% is low, but I'd probably had also paid it, so I could forget about it, I don't like owing money to anyone. If you were comfortable with it, you could had invested in the stock market, which produces 5.2% real return (at least for the last 113 years!).
Well, you don't need to materialize all capital gains. Maybe you have enough with the dividends. So you don't pay that much in taxes. It also depends on your tax bracket, of course.
I was so eager that I paid off a 4.4% $150k 15y mortgage in a few years. now some people are analyzing and suggesting that i should have run it out.
thoughts?
thoughts?
4.4% is low, but I'd probably had also paid it, so I could forget about it, I don't like owing money to anyone. If you were comfortable with it, you could had invested in the stock market, which produces 5.2% real return (at least for the last 113 years!).
I was so eager that I paid off a 4.4% $150k 15y mortgage in a few years. now some people are analyzing and suggesting that i should have run it out.
thoughts?
thoughts?
4.4% is low, but I'd probably had also paid it, so I could forget about it, I don't like owing money to anyone. If you were comfortable with it, you could had invested in the stock market, which produces 5.2% real return (at least for the last 113 years!).
Stock are over valued these days. Municipal bond still have attractive yield.
I was so eager that I paid off a 4.4% $150k 15y mortgage in a few years. now some people are analyzing and suggesting that i should have run it out.
thoughts?
thoughts?
4.4% is low, but I'd probably had also paid it, so I could forget about it, I don't like owing money to anyone. If you were comfortable with it, you could had invested in the stock market, which produces 5.2% real return (at least for the last 113 years!).
A relative of mine is a CPA and a very good one.. He is against being in debt. I just got my house interest down to just above 3 percent and I have diversified my money, silver, gold, bitcoin, cash. I want to invest my cash into something that makes something, but I dont spend more on bitcoin, (i will a little but not too much) and I asked if it was better to put my money into a 401k or moneymarket that averages 7-10 percent a year.. He advised me to pay off my house. But I only pay 3 percent, why not use that money to make 7 to 10? I dont get his thinking. now if I was paying 6 or more percent, i can see his thinking, but I dont get where hes coming from.
Doesn't it make sense to keep paying a low interest loan and invest in something that makes money? He's insistent that hes right, but he hasn't had the time to explain it to me.. next time i visit with him, I want to know, lol.. I think he just so against being in debt that it doesnt matter what interest your paying.. Gotta listen to him though, he is very comfortable with a meager salary by not getting into debt, paying cash for everything and investing properly..
I wish I would have listened to him when I was younger, I would be in a much better position than im in now..
IMHO, I think if you have a low interest mortgage, like mine, its a good idea, unless you can easily pay it off, but ive heard from a lot of people that renting is better off financially, until you can pay cash for a house..
Doesn't it make sense to keep paying a low interest loan and invest in something that makes money? He's insistent that hes right, but he hasn't had the time to explain it to me.. next time i visit with him, I want to know, lol.. I think he just so against being in debt that it doesnt matter what interest your paying.. Gotta listen to him though, he is very comfortable with a meager salary by not getting into debt, paying cash for everything and investing properly..
I wish I would have listened to him when I was younger, I would be in a much better position than im in now..
IMHO, I think if you have a low interest mortgage, like mine, its a good idea, unless you can easily pay it off, but ive heard from a lot of people that renting is better off financially, until you can pay cash for a house..
I'm sorry but that defies logic.
Doesn't matter how low your interest rate is, You're paying money in to a black hole if you owe interest on anything. Paying it off as quick as he did he essentially recovered the entire cost of the house as he avoided just as much in interest(or more) than the principal on the house he bought. That's a win and a better reason to pay off early than any reasoning that could be given on stretching it out over the whole loan term.
As was stated earlier. Owing no one is better than owing someone.
If you can earn more by investing the money you borrow then you will end up with more money at the end of the day. The issue is that it is very difficult to get any kind of guaranteed return with any investment. Doesn't matter how low your interest rate is, You're paying money in to a black hole if you owe interest on anything. Paying it off as quick as he did he essentially recovered the entire cost of the house as he avoided just as much in interest(or more) than the principal on the house he bought. That's a win and a better reason to pay off early than any reasoning that could be given on stretching it out over the whole loan term.
As was stated earlier. Owing no one is better than owing someone.
I agree that not owing someone (a mortgage company) money on your home does provide piece of mind which in itself should be worth something.
I'm sorry but that defies logic.
Doesn't matter how low your interest rate is, You're paying money in to a black hole if you owe interest on anything. Paying it off as quick as he did he essentially recovered the entire cost of the house as he avoided just as much in interest(or more) than the principal on the house he bought.
All fiat money is debt. Annual inflation is effectively the annual interest rate the government charges you for holding it. Holding cash as an asset is, in reality, a liability. Just because there's no bill or receipt showing how much value your USD loses each month, that doesn't mean it's not happening.Doesn't matter how low your interest rate is, You're paying money in to a black hole if you owe interest on anything. Paying it off as quick as he did he essentially recovered the entire cost of the house as he avoided just as much in interest(or more) than the principal on the house he bought.
If your mortgage is @ 3.5% annual and CPI increases 4%/yr, you are effectively making .5%/yr on your debt even though nominally, it looks like you're losing wealth (when in reality, you're gaining wealth and losing money). 4% annual inflation, though, is historically low, so it's clearly a fantastic time to buy since inflation rates always cycle and you can get a fixed-rate mortgage at 3.x% with good credit. What to buy is a bigger question... Idunno about houses.
I'm sorry but that defies logic.
Doesn't matter how low your interest rate is, You're paying money in to a black hole if you owe interest on anything. Paying it off as quick as he did he essentially recovered the entire cost of the house as he avoided just as much in interest(or more) than the principal on the house he bought. That's a win and a better reason to pay off early than any reasoning that could be given on stretching it out over the whole loan term.
As was stated earlier. Owing no one is better than owing someone.
In case of massive inflation and you have a fixed interest rate it is a good thing to have loans and real assets
Doesn't matter how low your interest rate is, You're paying money in to a black hole if you owe interest on anything. Paying it off as quick as he did he essentially recovered the entire cost of the house as he avoided just as much in interest(or more) than the principal on the house he bought. That's a win and a better reason to pay off early than any reasoning that could be given on stretching it out over the whole loan term.
As was stated earlier. Owing no one is better than owing someone.
You made the best decision paying it off. When everything goes to shit you don't want to be owing the Banks or the Government anything. They will roll over you and take everything you have.
Be sure to have all ownership documents in order, to prove without a doubt everything is paid off and legally in your name.
Be sure to have all ownership documents in order, to prove without a doubt everything is paid off and legally in your name.
I was so eager that I paid off a 4.4% $150k 15y mortgage in a few years. now some people are analyzing and suggesting that i should have run it out.
thoughts?
thoughts?
In case of massive inflation and you have a fixed interest rate it is a good thing to have loans and real assets
It depends on what you'd be using the extra money (that would be used to payoff the mortgage early) for otherwise?
IF it's just sitting in a savings account, earning very little interest, it might be smart to payoff the mortgage early, resulting in a 4.4% return on that money (in the form of having avoided the interest).
If you're able to make more than 4.4% on that extra money it would not be as wise to payoff the mortgage early.
The question can't be answered as simply as I just described it but this is how you should start to think about it. Remember that owing no one is always better than owing someone.
IF it's just sitting in a savings account, earning very little interest, it might be smart to payoff the mortgage early, resulting in a 4.4% return on that money (in the form of having avoided the interest).
If you're able to make more than 4.4% on that extra money it would not be as wise to payoff the mortgage early.
The question can't be answered as simply as I just described it but this is how you should start to think about it. Remember that owing no one is always better than owing someone.
Debt is slavery, although in some income tax brackets a little slavery is preferable to rape.
Why would it be bad to pay it off so fast? You know hoe much rent you saved right?
I don't know how it is in your country, anyway...
I don't know how it is in your country, anyway...
You made the best decision paying it off. When everything goes to shit you don't want to be owing the Banks or the Government anything. They will roll over you and take everything you have.
Be sure to have all ownership documents in order, to prove without a doubt everything is paid off and legally in your name.
Be sure to have all ownership documents in order, to prove without a doubt everything is paid off and legally in your name.
I was so eager that I paid off a 4.4% $150k 15y mortgage in a few years. now some people are analyzing and suggesting that i should have run it out.
thoughts?
thoughts?
In case of massive inflation and you have a fixed interest rate it is a good thing to have loans and real assets
You made the best decision paying it off. When everything goes to shit you don't want to be owing the Banks or the Government anything. They will roll over you and take everything you have.
Be sure to have all ownership documents in order, to prove without a doubt everything is paid off and legally in your name.
Be sure to have all ownership documents in order, to prove without a doubt everything is paid off and legally in your name.
I was so eager that I paid off a 4.4% $150k 15y mortgage in a few years. now some people are analyzing and suggesting that i should have run it out.
thoughts?
thoughts?
Can use the liquidity you have to buy bitcoin or lend it out.
rhodium has lovely volatility ...
http://www.kitco.com/scripts/hist_ch...rly_graphs.cgi
it was up to 10,000 dollars an ounce in july 2008 then down to fuck all 1000 dollars january 2009, then back up to 3000 dollars in march 2010 then down to 900 dollars last xmas, now back on a roll rising up fast 50%
http://www.kitco.com/scripts/hist_ch...rly_graphs.cgi
it was up to 10,000 dollars an ounce in july 2008 then down to fuck all 1000 dollars january 2009, then back up to 3000 dollars in march 2010 then down to 900 dollars last xmas, now back on a roll rising up fast 50%
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