Paying down mortgage (loans, interest rate, property tax, foreclosure)

[Tampaite]

Considering the severe foreclosure crisis affecting our Tampa area, are people paying down their mortgage?. ..I can't find any other safe investment(please don't tell me stock market is safe..it maybe over a 20 or 30 yr time period)

Do we have folks in their 30s and 40s who are seriously trying to pay-off their mortgage and living debt-free?

[algia]

I think the %-age of people ABLE to do that is very very very small! especially with so many loosing jobs! I think people are more preoccupied keeping their jobs at this point or finding new ones.

I read a few articles the other day about people taking 40% to 50% pay cuts JUST to have a JOB!!! so unless people are winning the lottery right and left, I am not sure how that would be possible for the majority of people!

http://money.cnn.com/2009/01/01/news...cuts/index.htm

Unemployed workers accept pay cuts to find jobs - Jan. 1, 2009

[Dee74]

At this time I would be saving as much as possible and stay as liquid as you can. If you have savings you can weather a job loss or other crisis. Returns are not the name of the game right now solvency and preservation of capital is. You can always pay down principal a little at time and still get big bang for the buck. Good luck.

[annerk]

I was just reading an article that was saying that right now you are better off investing in a Roth IRA (heavy on bonds or CD based) in order to be more readily liquid should you need to be.

I'm still paying extra on my principle each month, but only a couple hundred dollars, not whacking at it by any means.

[checking out]

Why pay down the mortgage to live "debt free"? You'd be giving up tax benefits to do so. Of course lowering the mortgage to a comfortable level is another thing.

Get a safe deposit box and stack up $100 bills, forget about returns and inflation. Take solice in your liquidity and that you won't be forced to fight for your money when some greedy company winds up in receivership.

[Tampaite]

Originally Posted by checking out

Why pay down the mortgage to live "debt free"? You'd be giving up tax benefits to do so. Of course lowering the mortgage to a comfortable level is another thing.

If 'tax benefits' were that great, we all probably should get interest-only loans so we never ever pay off the loan.

I got laid off 3 months ago and the only thing weighing on my mind was the mortgage(had 3-4 months of savings in a CD so scraped thro' it)..easier living in an apt but once you lose your home, you lose everything you put into it(the downpayment and the equity gained(now, this is probably under-water))

I got extremely lucky in finding another job few weeks ago and now, am making every effort to see that I plan on living 'debt-free' so I would be ready for the next downturn.

Its good to have liquidity in this economy but once you have saved up for 3-6 months I believe the next step would be to paying off your debt(including lowering the mortgage to a comfortable level)

[TampaKaren]

I think if you have the ability to pay off debt, you should. The credit market is so over-rated.

[beachmouse]

We refinanced from a 30 year mortgage to a 15 year note in 2003. It was one of those blips when interest rates went low, and the increase in monthly mortgage payments was about $100. Last time I ran the numbers in June, we'd ended up something like $18K ahead by switching to the 15 year note instead of putting that extra money into the stock market/mutual fund. Given that the stock market has had a reasonably good summer, that spread isn't as big anymore, but the numbers still tilt in the mortgage paydown's favor over the six year period.

As for tax issues, we're in a low property tax part of the state, and we come out ahead by taking standard deduction instead of itemizing so that's not an issue for us.

We'll have the note paid off by our mid-40s if we don't move. And if we did have to move, we could price the house to go under contract quickly and still walk away with a lot of money in our pockets. (3-4 years of living expenses from the sale if we went bare bones. Prices up here haven't crashed like they have in the Peninsula) It's a nice feeling in this economic climate.

[floridalooking]

Originally Posted by Tampaite

Do we have folks in their 30s and 40s who are seriously trying to pay-off their mortgage and living debt-free?

Yes, there are a lot of people trying to do that and live debt free. There's a radio talk show that talks about living debt free, Dave Ramsey show, and I listen to him when I'm in the car and he's on. He's the one who spurred me into action with my bills a couple of years ago. We used to think nothing of charging things and just one of our credit cards was up to 8,000 with the rest being smaller. I took his advice and worked out a program to overpay the credit cards and for 1.5-2 years we lived paycheck to paycheck to pay off all the credit card debt. Then all of a sudden the bills were paid off and wow, our checking account looks pretty and the savings account is ok...not overly thrilling, but ok.
Now I'm trying to figure out whether to pay mostly cash for a house when we move to Tampa or what to pay down on it because of the market. On one hand, I want no mortgage or perhaps one that's 300 a month and on the other hand, sinking that kind of money into property right now concerns me a lot. We're 50 though and going to retire (with a steady income unless the gov't goes broke).
Realtors are telling me houses are selling like hotcakes in Tampa and to buy one with a HOA. I'm hearing from friends in the area that houses aren't selling quickly and DON'T go HOA. I personally feel like a HOA is giving up too many rights and I know how to find a neighborhood that's well kept by it's owners without paying someone to give me that pleasure without telling me what I can and can't do or what size my dog can be or how many dogs I can have.
Back to your question though...I wish I had a good answer. If this was a few years ago I would have said pay off the house but today I don't know what to do.

[floridabonds]

Yes, my husband and I have been paying down our 30-year mortgage. You can also look into converting to a 20 or 15 year mortgage. However you can figure out yourself (via spreadsheet) how to pay down your 30 year mortgage to make it 15 or 20 years. That way in case something happens income wise you can go back to paying your 30 year payment until your financial situation changes. Think about it - you really need to have that house paid off by the time you retire.