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Old 09-23-2008, 08:24 AM
 
Location: USA
153 posts, read 373,826 times
Reputation: 114

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The jist of it. 1st time buyer of new home & put 40% down. Plan is to pay it off in 3-4 yrs. My question is why do I hear people say pay down the mortgage but don't pay it off? I thought it was only a tax shelter for so many years like 7 or so? I don't want the bank making any more $ off me if they don't have to. If I ever did get a refund from owning the home it would go straight towards the property taxes if anything or back in the bank. I'm all about ownership and don't concern myself with tax breaks etc however, I still want to educate myself on the whole process before making a decision too.

Thanks for any insight!
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Old 09-23-2008, 09:35 AM
 
Location: Fort Myers, FL
1,286 posts, read 2,709,079 times
Reputation: 249
I would recommend sitting down with a CPA to get a tax plan to help achieve your goal as well as take full advantage of tax sheltering. Only a licensed accountant can really comment on your situation.
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Old 09-23-2008, 09:47 AM
 
Location: Montrose, CA
3,031 posts, read 8,291,915 times
Reputation: 1961
Agree with brokerdave. However, I will say that there is a certain freedom felt when living in a house that is paid off. Especially when we've got the economy like it is now. I like it a lot, it's security.
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Old 09-23-2008, 10:08 AM
 
Location: Cary, NC
1,036 posts, read 3,755,900 times
Reputation: 510
There is no 7 year time limit to how long you can deduct mortgage interest. The reason some people say not to pay it off are 1) tax deduction 2) leverage and 3) credit.

You understand the tax dedution reason. If you have no other debts and healthy savings for emergencies (1 year living expenses) then go ahead and pay off the mortgage. After all what good is getting back .50 cents on your 1.00 dollar in tax benefits (if even that high), you still lost 1/2 your money by paying interest.

With leverage, if you have other debts at higher interest rates that are not tax deductible, then don't pay off your mortgage! Who cares if your debt is on your home or on your car, its all practically the same. Just pay off the highest rate debt first and work your way down. Having free cash instead of money tied in your home is good for emergencies and if you want to invest. Of course its a risk vs. reward tradeoff and not for everyone. If you feel better knowing your home is paid off and don't want to invest the money in stocks (which is scary these days to most people) then do that.

The credit reason is because having a mix of accounts and a long history of on time payments helps buil credit. I have seen people with no or average scores not because they did anything bad, but because they don't believe in debt. Just make sure you are using the system, which if you are in such a strong position now I am sure you are.
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Old 09-23-2008, 11:29 AM
 
Location: USA
153 posts, read 373,826 times
Reputation: 114
Thanks everyone. I get the part about only getting back X cents on the dollar and have always understood that part, I guess the rationale was because of what others were saying yet really they didn't understand the whole concept behind it. Well for us our only debt is the new mortgage. Credit scores are low 800's but probably around 790 or so now after the credit check. We've got 1 yrs savings and working on the 2nd yr (ya never know) so once we have that established we'll assess our situation then and decide to pay it off or not. I'm just not a fan of bills and if I can keep them to a minimum or not at all, it gives us more wiggle room in the event "crap happens" etc.

This is our 1st house and last and purchased at the ripe young age of 37. Not concerned w/ it being an investment vehicle...it's home and will be for the next 20-25 yrs until we decide it's time to down size.
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Old 12-21-2008, 02:11 AM
 
1 posts, read 2,077 times
Reputation: 10
Can anyone tell me... If a person can claim ownership, once they have paid house taxes for almost 8 yrs and if so.. Where can I get more advice on? My aunt died, left no wills. Some other family member, had my deceased aunt name removed who adopted me, and they put their own name on the deed? My problem is I have been the only one to pay the house taxes and took care of the house. Do I have any rights ???
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Old 12-21-2008, 09:01 AM
 
Location: South Dakota
733 posts, read 4,358,606 times
Reputation: 718
Quote:
Originally Posted by Sanaa3 View Post
Can anyone tell me... If a person can claim ownership, once they have paid house taxes for almost 8 yrs and if so.. Where can I get more advice on? My aunt died, left no wills. Some other family member, had my deceased aunt name removed who adopted me, and they put their own name on the deed? My problem is I have been the only one to pay the house taxes and took care of the house. Do I have any rights ???
Depends on the state. And many jurisdictions also require some kind of "color of title" in addition to merely paying the taxes. You need to talk to a lawyer. Spend the money for a consultation. If you don't know what's wrong with you physically you'd see a doctor. If you don't know what's going on with a legal issue, see a lawyer.
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Old 12-21-2008, 09:39 AM
 
Location: NOVA
4,521 posts, read 5,557,170 times
Reputation: 1939
Quote:
Originally Posted by Sanaa3 View Post
Can anyone tell me... If a person can claim ownership, once they have paid house taxes for almost 8 yrs and if so.. Where can I get more advice on? My aunt died, left no wills. Some other family member, had my deceased aunt name removed who adopted me, and they put their own name on the deed? My problem is I have been the only one to pay the house taxes and took care of the house. Do I have any rights ???
First, great example of hijacking a thread.

Second, when your aunt died, especially without a will, the remaining family should have hired a probate attorney to 'resolve' who gets what in her estate. The ownership of the house (deed) can't remove/add names with a pen and whiteout - it is a legal document.

Best advice is to sit down for an hour with a real estate attorney.
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