Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Here's what I have to say about those "five major scenarios" in the article.
You are earning a better rate on your investments than you pay on your mortgage.
The average American home buyer doesn't have enough spare money to put into investments, other than maybe a 401(k). Investing in stocks or bonds can just as easily be a loss not a gain.
You would be paying off your mortgage with savings.
Depends on how much savings you have. I don't recommend zeroing out your savings. But if you can put extra money into savings and extra money into the mortgage payments, you can do both and get the house paid off early. If you are lucky enough to find yourself with a couple of hundred thousand in savings and under $100,000 left on the mortgage, pay the damned thing off.
You have other higher-interest debt.
Well, yeah, if you managed to get yourself into massive credit card debt at 15% interest and up, you've got bigger problems than paying off the mortgage.
You can qualify for a tax deduction by saving elsewhere.
The tax deduction. Everybody wants the tax deduction. Here's why the tax deduction is a load of crap.
Let's say for example your tax bracket is 25%. You pay $10,000 in mortgage interest. You deduct that from your income resulting in about $2500 less taxes.
Where did the $7500 go? Into the pockets of the mortgage company vultures.
Alternatively, your house is paid for. That $10,000 part of your income doesn't get spent on mortgage interest and you pay $2500 in tax on that income.
Where did the $7500 go? INTO YOUR POCKET.
Given a doable choice I want that $7500 in my pocket.
Naturally, if you have to have a mortgage then the tax deduction is helpful. But if you have a choice where would you prefer that $7500 go?
You're making an emotional rather than financial decision.
Bingo! Having a mortgage free house IS an emotional decision. All other things being equal there is no better feeling than knowing you don't have to make mortgage payments for the rest of your life..
You're forgetting that some people barely have four figures a month in retirement. Imagine someone who only has $2000 a month in retirement. Can they shell out $1600 a month in a mortgage payment? No. They should have paid off the home PRIOR to retiring so that the $2k a month can be used to add quality and enjoyment to their retirement.
Then where did they get the money to feed into the house without a mortgage?
It all boils down to they certainly could pay 1600 a month if they had a mortgage making 2000- 2500 elsewhere….
The affluent can pay cash or easily pay off a mortgage .
It is those who need their money working efficiently for them that will invest the money not tied up in the house , pay to use the banks money and keep the difference for themselves adding to what they can work with and live on each month .
No one would be pulling money out of their butt to pay a mortgage if they could pay that mortgage off..it means they have the money , could deploy that money elsewhere and then give the bank their due while keeping anything over for themselves
The majority are not affluent. So if they could afford a mortgage, have a plan to pay that sucker off, ASAP. Dirt is way more valuable to the little people than cash, in the long run.
The majority are not affluent. So if they could afford a mortgage, have a plan to pay that sucker off, ASAP. Dirt is way more valuable to the little people than cash, in the long run.
Meh …. Many retirees here are far from wealthy , but they know enough that if you borrow at 3% and make 6-8% they are way ahead….this does not have to do with wealth it has to with just making efficient use of others money so simple math enables them to benefit
You're forgetting that some people barely have four figures a month in retirement. Imagine someone who only has $2000 a month in retirement. Can they shell out $1600 a month in a mortgage payment? No. They should have paid off the home PRIOR to retiring so that the $2k a month can be used to add quality and enjoyment to their retirement.
You are forgetting that they can have $380,000 of 2021 money in their pocket or have no $1,600 a month payment. If you are 7-80 that cash could look real attractive.
They forget that it isn’t having the same balance with and without that mortgage ….they are missing the point that the money in their pocket is totally different with the mortgage as they didn’t spend their own on the house which obviously they had and now should still have
This discussion is getting tired and honestly, it may be a discussion for the affluent.
It's simple. If you have the financial means to permanently shell out four figures every month for the rest of your life, then have at it.
For other people, having to shell out four figures every month in their retirement would make them financially unstable and housing insecure. Investment returns are not a concern. Just living securely is the major concern. Having a paid off home is their best path to security in retirement.
So, find which category you're in and act accordingly.
Who says that a mortgage has to be for the rest of your life? Our 15 year mortgage we got in 2017 will be paid off in 2032.
Then where did they get the money to feed into the house without a mortgage?
It all boils down to they certainly could pay 1600 a month if they had a mortgage making 2000- 2500 elsewhere….
Huh? You know investments. How much principal does it take for someone to make that 2000-2500 a MONTH elsewhere? You are still assuming a certain amount of financial flexibility. You're also assuming people have six to seven figures just sitting around that they can invest.
You just can't seem to place yourself in the place of a low income senior who've spent most of their lives just getting by. Some folks are lucky enough to have that paid off home so that they won't have to live in a van.
If they used their own money instead of a mortgage then they would have the same money they borrowed if they took a mortgage and didn’t use theirs ….if they are getting even 6-8% they are hitting it out of the park Paying 3%
You are trying to twist this in a way that does not consider they have that money they didn’t need to use ….it is the same as they borrowed or owe.
This is very simple math …you borrow at 3% -4% , have the mortgage pay for the house , you earn 6-8% elsewhere . You pocket the spread .
Of course if you are going to take a mortgage and let the money you didn’t spend sit in a bank at zero then it isn’t worth it ….but even a balanced fund pre retirement can give you 6-8%
.
If you purchase your home when you are in your late 20s or early 30s, your home loan should be retired by the time you are ready to retire.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
