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Old 05-11-2015, 08:00 AM
 
71,463 posts, read 71,629,249 times
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it can really suck losing a job , having a mortgage and having to liquidate those investments you made at a loss in a down market to pay the mortgage would be most un-good..

on one hand making gains is nice when you have a mortgage , but needing more money for bills if you fall on hard times can be the negative flip side.

severely down markets and crappy times go hand in hand so the worst time to lose a job is when you have to sell in to a down market.

Last edited by mathjak107; 05-11-2015 at 08:23 AM..
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Old 05-11-2015, 08:09 AM
 
Location: The analog world
17,086 posts, read 9,853,520 times
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Yes, my husband and I paid off our current home at ages 41 & 40. We were not the recipients of an inheritance; discipline (and a little luck) made it possible, and we have never regretted it. Watching my parents struggle through retirement unprepared, made all the worse by an unnecessary late-in-life mortgage, is heart-wrenching. By all means, take a mortgage, but PAY IT OFF! Do not re-mortgage yourself in perputuity. That is a grave mistake.
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Old 05-11-2015, 08:31 AM
 
Location: Tennessee
23,541 posts, read 17,525,434 times
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Quote:
Originally Posted by mathjak107 View Post
it can really suck losing a job , having a mortgage and having to liquidate those investments you made at a loss in a down market to pay the mortgage would be most un-good..

on one hand making gains is nice when you have a mortgage , but needing more money for bills if you fall on hard times can be the negative flip side.

severely down markets and crappy times go hand in hand so the worst time to lose a job is when you have to sell in to a down market.
A lot of folks I know (including my parents, to an extent) basically liquidated everything and threw it all overboard at the bottom. They lost their rears and will never recover, as most of them were 50+ then. They liquidated in hopes of being able to stay afloat or to afford a lifestyle they can no longer really afford. They would have been better off to file bankruptcy - at least their retirement savings would have been protected. It's been the better part of a decade and there hasn't been much recovery locally, so now they're basically in the same boat they were in, but with little to no retirement savings now.
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Old 05-11-2015, 09:20 AM
 
10,604 posts, read 14,188,225 times
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I had a 15 yr mortgage but it was a HIGH rate of 8 1/8th. People with 30 year mortgages were paying 10%.

So yeah, I paid it off asap. I think it was 5 or 7 years and I was early 30's. I was getting bonuses at work and also prepaying payments EVERY MONTH without the interest so it went fast and was fun for me to see it go down.

Obviously as the rates go down in a peak time like that you can recast it to go lower interest rate.

I was fully contributing to my 401K and savings (18 months liquid emergency fund) even with the mortgage so after it was gone I could save more. Isn't that obvious?

Maybe not. Some "advisers" claim you should float on that "cheap loan" interest money forever. I am not that way. I love FREEDOM.

I also had a kid and was able to pay cash for college. I established a trust for that and started contributing to that trust instead of the mortgage payment. So that no matter what happened to me or HIM, that money would be used wisely by the trustee for either school or other life necessities.

OR buying a car without a loan.

It's a matter of discipline and controlled spending. Realistic expectations.

MOST people who aren't natural savers just see the opportunity as one to spend more on whatever they can think of. And justify.

Some people even have a PIPE DREAM of a business and liquidate their savings/retirement then the business fails.

I could go on Amazon right now and blow $500.00 on cool incidental crap for the kitchen.

I bought my condo cash 6 years ago and the paint is NOT my colors. But very expensive paint job about 4 coats and it still looks EXCELLENT. I am tempted every day to have it repainted but am NOT going to do it. Nobody knows I don't like blue in the bedroom LOL. And I have cathedral ceilings and can't do it all myself even if I wanted to. I did re-paint my first house I mentioned and it was a BIG JOB. I kind of enjoyed it back then, though.

Or plan a trip to some of the very many places I've never seen in America. Or...or....or....

LOTS of people are going to disagree and say the principle of saving for retirement using compound interest is wrong and you should do stuff like REAL ESTATE investment. I do not agree with that and feel only a person who WANTS to be an investor AFTER providing for their retirement should do that.
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Old 05-11-2015, 09:42 AM
 
Location: R.I.
970 posts, read 602,748 times
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My husband and I built our home in 1990 and paid it off in 1998 when I was age 41 and he was age 46. We did this by dicipline, and we both were never big spenders to begin with. My husband passed away suddenly in 2001 at age 49, and fortunately two weeks prior I had gotten a full time nursing job with the Federal Government as I had previously been working in a part time job. Those 3 years prior to my husband's death of not having to pay a mortgage we were able to save that money which helped carry me through a few rough spots until I could financially stay afloat on my own.

For me, having my home paid off I was able to stay in and maintain my home on one income which will happen to all married couples sooner or later.
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Old 05-11-2015, 10:42 AM
 
Location: Long Island
8,743 posts, read 12,177,146 times
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Quote:
Originally Posted by mathjak107 View Post
i agree with all except the don't take a 30 year mortgage part.

that can be a mistake . you can pay a 30 year off in 15 or 20 years years but if money gets tight you cannot pay a 15 or 20 year off in 30.

take a 30 and pay it off earlier , at least you have that choice .
We have a 30 year @ 4.5% that is about to be refinanced to a 15 year @ 3.25% (after paying about 5 years at the higher rate now). Using amortization spreadsheets, by converting to the lower rate of a 15 year, we will save $20k in interest when it's all done, paying both off early at exactly the same monthly paid. Doesn't sound like a lot in the grand scheme, but it is something. Paying a 30-year off early doesn't mean you come out the same. Maybe that's not obvious to some.

It is true there is some comfort in not being required to pay the higher amount of a 15-year loan, but the reason we started paying extra to begin with is because we have enough in savings and 401k already. Also, I'm not a gambler outside of 401k.

Last edited by ovi8; 05-11-2015 at 11:17 AM..
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Old 05-11-2015, 12:35 PM
 
1,504 posts, read 962,785 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.
Quote:
Originally Posted by Emigrations View Post
They can help home values by keeping appearances up and uniform, etc, but this condo was only $90k, and would probably really go for much less. It's in a very affluent zipcode, and the condos are somewhat older, but the development is very well kept and the inside of the one I was focused on had been updated and was very stylish.

You're getting snow removal, trash removal, and lawn maintenance, in addition to the tennis courts, clubhouse, and pool areas. I suppose if you took advantage of all the social aspects, it might be worth it, but it's still a big expense to swallow.
What you get for an HOA varies greatly. For townhouses, some cover all exterior maintenance, mowing, snow removal, cable, internet, trash, who knows what else plus amenities like community pool, tennis courts, park use, health club, free car washes in the batcave parking for the property (true - I know of one such place - and the underground parking is heated in the winter, so if you want, you could keep a pretty clean car all winter long) and - again- who knows what else. When we refinanced last month, the loan officer mentioned that she has been writing loans for downtown Minneapolis condos recently where is was common to see the HOA fees match or exceed the monthly mortgage.

Or, in our case, the HOA cover trash removal, snow removal for common areas and bike paths, and amenities (pool, which our kid uses a lot), ice skating rink (yet to use), free use of one of two community centers.

That said, I would much rather not have an HOA (our old house in another community was non-HOA).

But the reality is, at least when looking in the 'burbs we considered around the Twin Cities, HOAs dominate most neighborhoods built within the past 30 years. If we wanted to live in those 'burbs, it was going to be very tricky to find a house outside an HOA that still had other things we valued (location, schools, contemporary design, neighborhoods with kids were all high on our list).
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Old 05-11-2015, 01:06 PM
 
8,820 posts, read 5,119,154 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.
If you live in a condo or townhouse, the alternative is far more frightening. Would you want to be attached to neighbors who choose not to maintain their homes, and have no recourse at all? If it is time to replace the roof but your attached neighbors don't want to cooperate, what will you do? If it is time to repave the parking lot but other homeowners decline to share the cost, what will you do? If the premium is due on the insurance policy covering the exterior of the building and the other homeowners won't pay, will you pay the entire premium yourself or will you go without insurance? What a nightmare.
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Old 05-11-2015, 01:14 PM
 
8,820 posts, read 5,119,154 times
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Quote:
Originally Posted by Emigrations View Post
Part of the point of the thread is the psychological comfort/fall back in the event something goes wrong. Let's say you lose your job and your income is drastically reduced. Having no mortgage payment and keeping housing costs to utilities, insurance, and taxes could very well keep you afloat. Also, if I had a paid for condo and rented it out, I could probably make at least a little money off of that, as well as having a paid for place back in Indiana if I decide to move off.
True, but you won't get that security until the mortgage is paid in full. If you lose your job and you still have your mortgage, you still have to pay. It doesn't matter at all that you have paid the principal down quickly. If all of your excess funds went into paying down the mortgage, now what? If you have fat savings and investing accounts, you will stay afloat just fine, even with a mortgage payment.

I am not against paying down a mortgage, just against doing it to the exclusion of all else.
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Old 05-11-2015, 01:36 PM
 
Location: The analog world
17,086 posts, read 9,853,520 times
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What I've seen happen in my own circle of family and friends is the extension of the mortgage obligation. By all means, re-finance your mortgage to lower the interest rate, but if you're already fifteen years into a thirty-year mortgage, what on earth are you thinking when you take on another thirty-year term? That's just dumb. Stay on the same pay-off schedule no matter how many times you re-finance, and you'll be sitting pretty at retirement.
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