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Old 10-06-2018, 12:50 PM
 
Location: The Triad
34,090 posts, read 82,575,378 times
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Quote:
Originally Posted by spalam01 View Post
LOL... I have been hearing Dave Ramsey's radio shows...
Take it easy with the Ramsey stuff.
The concern is on how much of your NET INCOME is required to cover your housing costs

Most people spend way way too much (on mortgages and rent).
Don't be one of them.
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Old 10-06-2018, 03:03 PM
 
Location: Florida
6,594 posts, read 7,263,609 times
Reputation: 8107
Quote:
Originally Posted by spalam01 View Post
Thanks for the reply. I am sorry I dont get what you mean by "I would invest as inflation should make a loan a good deal"
What I am trying to say is if your borrow 100,000 today and pay 1,000 per month for 30 years the payment you are making toward the end of the mortgage may only be worth 500 in todays dollars.

Thus the mortgage gets cheaper as time goes on.

The opposite works for an investment. Say you invest 1000 now inflation could make it worth 1500 in 30 years.


Note the math is not accurate just trying to paint the picture of how inflation can help you.
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Old 10-06-2018, 03:06 PM
 
26,165 posts, read 21,415,004 times
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Quote:
Originally Posted by spalam01 View Post
Thanks for the reply.

It looks like you mean that you are suggesting to save the cash and use it for the down payment for new home (if I end up relocating) rather than getting tied up with that money in the sales proceeds.

Am I getting it right?
I actually don’t understand fully what your scenario is. You don’t have the money to pay off the mortgage now, you may move in 1-2 years and you may have the ability to pay off the mortgage in 2 years.


When will you actually have the money to pay off the mortgage?
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Old 10-06-2018, 05:09 PM
 
741 posts, read 1,741,106 times
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Quote:
Originally Posted by Lowexpectations View Post
I actually don’t understand fully what your scenario is. You don’t have the money to pay off the mortgage now, you may move in 1-2 years and you may have the ability to pay off the mortgage in 2 years.


When will you actually have the money to pay off the mortgage?
Yes. I do not have the money to pay off the mortgage now. If things work out I can move 2 years (not 1 year) from now. If my wife and I are motivated, there is a good possibility to pay off the mortgage within 2 years.

Paying off the mortgage would be a good motivator for the hard work my wife and I planning to put. That could also be a motivator to be prudent as far as expenses are concerned.

Having said that, my wife and I can set other financial goals and work towards that as well, if we need a motivation to keep us going.
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Old 10-06-2018, 05:27 PM
 
26,165 posts, read 21,415,004 times
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Quote:
Originally Posted by spalam01 View Post
Yes. I do not have the money to pay off the mortgage now. If things work out I can move 2 years (not 1 year) from now. If my wife and I are motivated, there is a good possibility to pay off the mortgage within 2 years.

Paying off the mortgage would be a good motivator for the hard work my wife and I planning to put. That could also be a motivator to be prudent as far as expenses are concerned.

Having said that, my wife and I can set other financial goals and work towards that as well, if we need a motivation to keep us going.
No one can give you solid advice because you can’t give any accurate level of possible repayment
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Old 10-07-2018, 07:55 AM
 
Location: Henderson, NV
7,087 posts, read 8,596,922 times
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I’m not quite sure I’m understanding either. If you’re moving in 2 years and would also pay off the mortgage in 2 years, I’m not sure why you’d do that lol. I have a 4% interest only mortgage with a sad $50K balance left I’m paying off this year even though I may move as soon as next year but it’s that or leave the cash in the bank making nothing so it makes no sense for me to keep the mortgage even if it’s a matter of moving 6 months later.
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Old 10-07-2018, 08:32 AM
 
3,910 posts, read 9,434,589 times
Reputation: 1954
Quote:
Originally Posted by spalam01 View Post
Yes. I do not have the money to pay off the mortgage now. If things work out I can move 2 years (not 1 year) from now. If my wife and I are motivated, there is a good possibility to pay off the mortgage within 2 years.

Paying off the mortgage would be a good motivator for the hard work my wife and I planning to put. That could also be a motivator to be prudent as far as expenses are concerned.

Having said that, my wife and I can set other financial goals and work towards that as well, if we need a motivation to keep us going.
Since you don’t have the cash today, and are planning on selling the house 2 years from now, it would be pointless to pay off the mortgage early. If you have to spend every last penny to pay off the mortgage just to sell the house it defeats the purpose. You would be better off maximizing your cash holdings for a down payment towards the next house. Your mortgage has to get paid off either way. There is no monetary advantage and your position will be weakened by having less cash.

Save the $160k in a money market account and use it toward the next house. If you buy a $300k house you could put a 50% down payment. Or do a 15 year fixed loan instead of a 30.
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Old 10-07-2018, 02:00 PM
 
741 posts, read 1,741,106 times
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Quote:
Originally Posted by Nolefan34 View Post
Since you don’t have the cash today, and are planning on selling the house 2 years from now, it would be pointless to pay off the mortgage early. If you have to spend every last penny to pay off the mortgage just to sell the house it defeats the purpose. You would be better off maximizing your cash holdings for a down payment towards the next house. Your mortgage has to get paid off either way. There is no monetary advantage and your position will be weakened by having less cash.

Save the $160k in a money market account and use it toward the next house. If you buy a $300k house you could put a 50% down payment. Or do a 15 year fixed loan instead of a 30.
Ok. Thank you. I will focus on saving the extra cash instead of paying off the mortgage.

By money market account, do you mean these money market accounts: https://www.magnifymoney.com/blog/ea...et-rates-2017/

OR

do you mean money market mutual funds https://www.investopedia.com/article...et_savings.asp
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Old 10-09-2018, 12:41 AM
 
30,871 posts, read 36,796,993 times
Reputation: 34446
Quote:
Originally Posted by spalam01 View Post
Thanks for the reply.
LOL... I have been hearing Dave Ramsey's radio shows regularly lately and that's how I got inspired/getting motivated to pay off the loan.
But he also talks about putting away 15% for retirement before getting rid of the mortgage. Are you doing that?
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Old 10-11-2018, 12:24 AM
 
424 posts, read 643,414 times
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Quote:
Originally Posted by spalam01 View Post

Having said that, my wife and I can set other financial goals and work towards that as well, if we need a motivation to keep us going.
Do not pay off the mortgage, cash is king. Due to some strange good fortune, I ended up having enough cash in a short amount of time to pay off a house if I wanted to...chose to use that money as downpayment on another house instead. Also on a 4% interest loan with the stock market averaging more, over the longer term you make off better investing that money. Yah it's riskier so you have to balance that risk and time horizon.

Debt is NOT a bad thing if the rate is somewhat cheap and your money is being used efficiently to generate higher returns. Where people get killed is borrowing too much money. If you plan to move or relocate in 2 years have cash around for flexibility to make decisions rather than having to sell a house to unlock that cash which can somewhat be a pain.
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