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Do you guys keep a homeowners policy after you pay off your mortgage?
Absolutely. Without insurance, what would you do if your house burned down? I've already had one roof replaced by the insurance company due to hail damage (common around here).
The only exception would be if you are so rich that you are basically self insured.
A mortgage in and of itself is only part of anyone's financial calculus when making retirement decisions. Our house was paid off when I retired and we moved to another city. While we could have paid cash for our current (and more expensive) home, we chose to take out a 10 year mortgage on a portion of the cost. Why? Because it was hard to turn down rates of under 3%. We guessed that our investments would offer a greater return, and so far they have. In the meantime, we are taking the tax deduction. Finally, at any time, we can choose to pay off the mortgage balance should it make sense to do so.
I have many, many friends - in their 50's who have never owned a home. Most of them live in California. Or lived in California and left it. Because they couldn't afford the down payment. I have young coworkers who think renting is the way to go and think homeownership is a hassle.
In my career, I had one opportunity in NYC and two job offers in SoCal. I have to say that I declined both as I could not live afford housing comfortably in those markets.
Personally, I really do not like home ownership. However, it sure beats the 3Rs - rent, rats and roaches that I have encountered in my rental units. As a renter, even if you find a great rental situation, something always seems to happen - i.e., landlords die and their spoiled kids take over or other tenants begin an illegal business next door, etc.
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With having a mortgage a good portion of that is interest which is wasted money that can be invested for a return to you and not line some financial companies pockets. When you first finance most of that payment goes into interest not principal. Even if you can't pay it off, if you just double your payments you'll save a substantial amount of interest over the shorter life of the mortgage. After it's paid off invest the monthly savings you'll now have.
We've been mortgage free for many years and took what was then the house payment and invested that. Now we live comfortably off our investments.
A paid off home is a very high paying investment. It takes care of your housing expense, and still appreciates while you own it. Eventually you will either die or have to move into assisted living. When that happens it is either an excellent inheritance for your heirs, or a big mountain of cash to fund your nursing care. If you fund your retirement through the "lots of socks" plan, a thousand bucks a month here, a thousand bucks a month there adds up.
a house is just an expense until the day you sell it and do not roll it into other housing which is doubtful as you always need housing. sell the house and rent and now the money goes for rent , assisted living ,etc.
a house cost you money every month. like i said it may be lower cost than renting but it still represents your housing costs.
own or rent the register keeps kachinging through a lifetime housing you . it all just keeps adding up on the liability side of a balance sheet.
the value as you see from the discussion is meaningless until set free by not needing housing.
if you logged every penny over a lifetime ,whether you rented or owned that bottom line is an expense. the only question is who spent less.
about the only time you can say it was really on the asset side of things is if you downsized and the new home was cheaper so you got cash out that isn't used for housing.
but then again a renter going from a 3 bedroom apartment when the family lived there to a 1 bedroom apartment after retirement would also see improved cash flow.
you really need to die and then your heirs can call it an asset. unless they live in it. then it is back to being a consumption item and an expense.
Last edited by mathjak107; 02-12-2014 at 03:38 AM..
Be debt free the day you retire. People talk about renting verse owning but everyone rents. There's only enough room in a casket for a body. I think the biggest issue is if people have a plan or not. Just consider the cost of a home verse apartment living from day one to the end.
A house is always going to drain you and you never own it. Skip some taxes and its gone. I guess it all comes down to planning. Pay it off and be debt free.
With having a mortgage a good portion of that is interest which is wasted money that can be invested for a return to you and not line some financial companies pockets. When you first finance most of that payment goes into interest not principal. Even if you can't pay it off, if you just double your payments you'll save a substantial amount of interest over the shorter life of the mortgage. After it's paid off invest the monthly savings you'll now have.
We've been mortgage free for many years and took what was then the house payment and invested that. Now we live comfortably off our investments.
I started paying down my mortgage by adding one extra payment per year. I forget how much that took off my 30-year debt but it was significant. Young homeowners are often advised to do that. Then I started doing double mortgage payments till it got paid off finally. It was a stretch but I'm glad I did it. My loan rate was 4.5%.
I'm not retired yet, but thought this might be somewhat related to the topic.
I was fortunate enough to be able to pay cash for my current condo when younger due to moving from a very high COL area to a low COL area, and some luck with the stock market (the move wasn't based on COL, but because of a job transfer for my then husband, and we are now divorced). I probably will never be able to find a nice home like I have now for the price I paid, should I decide at some point in the future to relocate due to the cold winters, but otherwise this small city has everything I need. The paid-off condo has carried me through some hard times , raising young children, and not having a higher-paying job, including a couple job layoffs. For my situation, I've never regretted it. I've been able to save for those unexpected home repairs (HOA takes care of outside upkeep), debt free from credit cards and car, and have money left over for savings (during the good times). I definitely have homeowner's insurance.
Last edited by smpliving; 02-12-2014 at 08:41 AM..
Do you guys keep a homeowners policy after you pay off your mortgage?
Absolutely. The home should always be insured to it's replacement (not market) value.
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