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Old 10-14-2015, 12:16 PM
 
Location: Tennessee
23,614 posts, read 17,589,896 times
Reputation: 27693

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Quote:
Originally Posted by engineer20 View Post
Is Paying off your mortgage worth it?
Is it worth it to pay off your mortgage as soon as possible? I heard that after paying off your mortgage, there were taxes, but everyone is like "pay it off asap or as soon as you can" to get rid of a tremendous burden, but is that right, or do the tax increases offset the benefit of paying off your mortgage asap? What about if you have 2 houses? Any tax benefits/disadvantages if paying off an investment home? I'm all for paying it off ASAP but a family member is against it and wants the tax benefits to it. Please advise. Thanks. Specifics and thorough info would be great!
I would want it paid off just so I have the flexibility in the event my income were to decrease.
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Old 10-14-2015, 01:43 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,420,368 times
Reputation: 1971
Quote:
Originally Posted by Serious Conversation View Post
I would want it paid off just so I have the flexibility in the event my income were to decrease.
But then ALL that money is trapped in the house. With decreased income you will have a hard time accessing any of your equity.
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Old 10-14-2015, 05:03 PM
 
39,288 posts, read 20,376,459 times
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Quote:
Originally Posted by fumbling View Post
Interest is low now so you could pay off the mortgage faster. I was mortgage-free at age 49 and financially it feels great.
Yes I was mortgage free for a couple months then my mom took a stroke and my mortgage payment turned into her medical bill payment. So much for saving and investing
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Old 10-15-2015, 02:18 AM
 
71,700 posts, read 71,801,099 times
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Quote:
Originally Posted by Serious Conversation View Post
I would want it paid off just so I have the flexibility in the event my income were to decrease.
it can be a double edged sword . being house rich and cash poor can be an issue . in order to get cash out if you need it you need to be able to take a loan and pay the loan . but if you don't have the cash to pay the loan the money stays trapped in the house .

Last edited by mathjak107; 10-15-2015 at 03:37 AM..
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Old 10-15-2015, 03:05 AM
 
6,353 posts, read 5,164,700 times
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I was 53 if I remember correctly. Maybe 52 or 54.

For me, living mortgage-free meant saving a relative pittance ($956 a month) since the mortgage was taken out decades ago on a small principal amount and then refinanced at a low interest rate. But every little bit helps. The money now goes into savings. It made it easier for me to quit my job at 55 and set up a consulting business.
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Old 10-15-2015, 03:18 AM
 
71,700 posts, read 71,801,099 times
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that is a point i bring up frequently . we all got homes back in the 1970's in suffolk county long island . the homes were 30-35k back then and we got 30 years to pay for something that is less than a car loan today .

the fact that 250 buck a month mortgage is paid off today represents about 1/2 a utility bill in the scheme of things . taxes are 15k on the house so when it comes to making things more affordable down the road it may not represent much as far as affordability 30 years later .
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Old 10-15-2015, 05:00 AM
 
174 posts, read 112,101 times
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Quote:
Originally Posted by Submariner View Post
HOAs frighten me.

Why any same person would submit themselves to the whim of a group of neighborhood busybodies is beyond me.
You've probably never watched a single home drag down *your* entire neighborhood.
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Old 10-15-2015, 09:50 AM
 
Location: Central Massachusetts
4,800 posts, read 4,851,516 times
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Quote:
Originally Posted by Submariner View Post
HOAs frighten me.

Why any same person would submit themselves to the whim of a group of neighborhood busybodies is beyond me.
It isn't about that either. HOA's will keep the value of your home up because they force people to keep their homes in good repair. They also provide services that some towns do not take care of. Some towns make you either pay for trash removal or tell you to bring that to the local land fill/transfer station. They also in most cases are responsible for grounds keeping and exterior building maintenance in the case of condos. They are responsible for delivery of services such as water, gas, and electricity. Not that they pay for it but they take care of the delivery system. How many have ever had to pay for a telephone pole? I have. They don't give those things away anymore.

Quote:
Originally Posted by Serious Conversation View Post
The HOA fees are a big concern of mine. Even the modest condo complexes I'm looking at often have HOA fees of $200 per month or so.
Please see the comment above. Condos are not for everyone but if you have a good condo association they will provide you good value for that cost.

If you worry that the association is going to go hog wild then become a part of the process. Those meetings have to be held in public. Go to them. Become a voting member if you can. Then you can curb their craziness.
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Old 10-15-2015, 11:44 AM
 
Location: Idaho
1,455 posts, read 1,156,701 times
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We paid off the mortgage on our first home when I was 27. The house sat on the market for several years when we went back to grad school. We bought the second home at the peak of the market in a booming, high COL area (MA 128 corridor in the 80's) and sold it at a loss when I graduated with we both got nice job offers in NY. We could have paid off the mortgage of the current home earlier but kept it a while (until I was 45) for the mortgage interest deduction.

So we did have the mortgages paid off at relatively young ages, but I very much doubt that it has any impact on our retirement. If we had rented homes instead of owning and paying off the mortgage, the housing cost could have come out the same, and with hardly any impact on our current financial situation. I know there are others who are much luckier in real estate with their houses appreciated significantly resulting in a sizable portion of their net worth. I also know others who bought houses at the wrong time and suffered financial losses having to sell the houses at way below what they paid or owed.

For us, the main positive impact of paying off the mortgage early is to develop a good saving habit, to practice and reinforce a frugal lifestyle of living beneath our mean. We doubled or tripled our monthly mortgage payments along with automatic payroll deductions for 401K/discounted company stocks, and automatic monthly transfer from cash accounts to mutual funds. I think mathjak or someone had made some statements along the line of money is like water with your cash keeps flowing down to replenish your spending (ie your spending level rises up to your income). By putting portions of your income away upfront (toward mortgage payment, 401K saving etc), it helps to keep your spending level low.

So the bottom line is that paying off our mortgage early did help with retirement planning but in an indirect way. The value of our current home is only ~4 to 5% of our net worth so owning a home for us is definitely not a good investment and the mortgage-free home does not factor much in our retirement life.

Last edited by BellaDL; 10-15-2015 at 12:03 PM..
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Old 10-16-2015, 07:34 AM
 
Location: Tennessee
23,614 posts, read 17,589,896 times
Reputation: 27693
Quote:
Originally Posted by Larry Siegel View Post
I was 53 if I remember correctly. Maybe 52 or 54.

For me, living mortgage-free meant saving a relative pittance ($956 a month) since the mortgage was taken out decades ago on a small principal amount and then refinanced at a low interest rate. But every little bit helps. The money now goes into savings. It made it easier for me to quit my job at 55 and set up a consulting business.
For a lot of folks, $956/month isn't a pittance - it's a significant sum of money. Housing is most folks' largest expense.
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