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Thinking of paying off mortage instead of investing in mkt (1 Viewer)

T

Tiger Fan

Footballguy
Relevant details:

30 y/o...married, no kids (but trying)
Will be building a house this year and I'm about 95% confident that I can have it paid off in 4 years
I will have at least 6 mos of expenses in liquid cash for emergencies
Doing this would likely move all free cash towards the house (i.e. no savings for years)
The route I would be taking is a 30year mtg and just paying extra towards the principal as much as possible...this way, if anything unexpected pops up, we're still fine....just delays payoff accordingly
I currently max out both myself and wifes Roth IRA while maxing out my company's ESSP
Small chance I can pull it off in 5 years while still maxing out our Roth IRA's each year
Both of our cars will last throughout these 5 years (knock on wood)
Only other debt I have is about ~$37k in student loans @ 1.9% (currently have this covered in a high yield checking earning 5.25%)Traditionally, I am always in the camp of "If you think the mkt will earn more than your real int rate, then keep it in the mkt"....however the thought of being debt free at 35 intrigues the hell out of me. I would have the house I plan on living in for the rest of my life and just the general freedom is probably very tough to put a value on....especially since I'm sure there will be another economic cycle before I retire.

Talk me in/out of this. I want to hear all sides!

 
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Pay it off. You will never know how wonderful it is to have no mortgage until you do it. The peace of mind you get is well worth the few dollars more you "might" have earned by investing.

 
Tiger Fan said:
mlavwilson said:
I would attempt to get your house paid off. I have been laughed at for the past 10 years for placing most of my extra $$ into my house, well 9 1/2 of the past 10 years :hey:

http://www.amazon.com/Debt-Free-Living-Lar...t/dp/0802442323
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Is that book similar to Dave Ramsey's? I've read Clark Howard & Ramsey before, but not Burkett.
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Ramsey is considered by some to be Burkett's successor. I have not read Ramsey, but hear they are similar.
 
Congratulations, man. Great situation to be in.

Just from my novice perspective, you lose tax credits from mortgage interest when you go that route. On the other hand, you'll have the freedom of having no mortgage and only having to worry about taxes, utilities, and expenses. You'll also have the house to use for a vacation home or investment property loan.

I'd pay it off. Anything to get closer and closer to stress free living is okay with me.

 
kutta said:
Pay it off. You will never know how wonderful it is to have no mortgage until you do it. The peace of mind you get is well worth the few dollars more you "might" have earned by investing.
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:hophead: Financially it's not a good idea because you both lose the interest tax deduction and your implicit returns are likely to be lower, however, you have to balance that against the intangible factors like peace of mind.
 
Tiger Fan said:
Relevant details:

30 y/o...married, no kids (but trying)
Will be building a house this year and I'm about 95% confident that I can have it paid off in 4 years
I will have at least 6 mos of expenses in liquid cash for emergencies
Doing this would likely move all free cash towards the house (i.e. no savings for years)
The route I would be taking is a 30year mtg and just paying extra towards the principal as much as possible...this way, if anything unexpected pops up, we're still fine....just delays payoff accordingly
I currently max out both myself and wifes Roth IRA while maxing out my company's ESSP
Small chance I can pull it off in 5 years while still maxing out our Roth IRA's each year
Both of our cars will last throughout these 5 years (knock on wood)
Only other debt I have is about ~$37k in student loans @ 1.9% (currently have this covered in a high yield checking earning 5.25%)Traditionally, I am always in the camp of "If you think the mkt will earn more than your real int rate, then keep it in the mkt"....however the thought of being debt free at 35 intrigues the hell out of me. I would have the house I plan on living in for the rest of my life and just the general freedom is probably very tough to put a value on....especially since I'm sure there will be another economic cycle before I retire.

Talk me in/out of this. I want to hear all sides!
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Since everyone is saying do it, I'll play devil's advocate.How secure are your jobs? What is your current mortgage rate (can we assume 5% or so)?

With the current mortgage deduction you are probably paying a real 3% or so on your mortgage (assuming 5%). This is important. Let's look at why it would be better to place this money in a laddered CD structure or high interest savings:

- Your money isn't tied up in an illiquid investment. If a real emergency comes up (medical, job, etc. that eclipses your 6 month savings) you have liquid savings to live off of. You can't eat your kitchen countertops.

- Over time you will do significantly better by holding this money in a liquid form. Right now both mortgage rates and savings rates are low. By holding in a current savings account you are about breaking even right now. Even if you were losing a bit I'd argue having the money in a liquid form is much superior. However, and this is the important part, your mortgage rate is fixed. Interest (and, thus, savings) rates will be going back up. They simply have to at some point - the Fed is currently at just about zero, and that ain't gonna last. Over the next twenty years you could be drawing a *lot* more interest income and still have that nice interest deduction.

- Oh, and who thinks we are going to stay in deflation forever? (Not me.) Property values keeping up with inflation is hit or miss. At least cash in savings will typically at least keep up with inflation.

- I'd argue that having the ability to pay off your mortgage is just as nice as having it paid off. And if you both lost your jobs it sure would be nice to have that 100k sitting there, wouldn't it?

And note I never said anything about the markets. For this money you want FDIC insured safety - this is short term money and should be treated as such.

I see no reason to pay off a house, particularly not in an environment where you can lock in such low rates.

 
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Tiger Fan said:
Only other debt I have is about ~$37k in student loans @ 1.9% (currently have this covered in a high yield checking earning 5.25%)
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What do you mean by "have this covered"? I understand that the interest rate is higher than the loan rate, but how does that mean that you've got it covered?BTW, I'd love to be in your financial situation.
 
Sand said:
Tiger Fan said:
Relevant details:

30 y/o...married, no kids (but trying)
Will be building a house this year and I'm about 95% confident that I can have it paid off in 4 years
I will have at least 6 mos of expenses in liquid cash for emergencies
Doing this would likely move all free cash towards the house (i.e. no savings for years)
The route I would be taking is a 30year mtg and just paying extra towards the principal as much as possible...this way, if anything unexpected pops up, we're still fine....just delays payoff accordingly
I currently max out both myself and wifes Roth IRA while maxing out my company's ESSP
Small chance I can pull it off in 5 years while still maxing out our Roth IRA's each year
Both of our cars will last throughout these 5 years (knock on wood)
Only other debt I have is about ~$37k in student loans @ 1.9% (currently have this covered in a high yield checking earning 5.25%)Traditionally, I am always in the camp of "If you think the mkt will earn more than your real int rate, then keep it in the mkt"....however the thought of being debt free at 35 intrigues the hell out of me. I would have the house I plan on living in for the rest of my life and just the general freedom is probably very tough to put a value on....especially since I'm sure there will be another economic cycle before I retire.

Talk me in/out of this. I want to hear all sides!
Click to expand...
Since everyone is saying do it, I'll play devil's advocate.How secure are your jobs? What is your current mortgage rate (can we assume 5% or so)?

With the current mortgage deduction you are probably paying a real 3% or so on your mortgage (assuming 5%). This is important. Let's look at why it would be better to place this money in a laddered CD structure or high interest savings:

- Your money isn't tied up in an illiquid investment. If a real emergency comes up (medical, job, etc. that eclipses your 6 month savings) you have liquid savings to live off of. You can't eat your kitchen countertops.

- Over time you will do significantly better by holding this money in a liquid form. Right now both mortgage rates and savings rates are low. By holding in a current savings account you are about breaking even right now. Even if you were losing a bit I'd argue having the money in a liquid form is much superior. However, and this is the important part, your mortgage rate is fixed. Interest (and, thus, savings) rates will be going back up. They simply have to at some point - the Fed is currently at just about zero, and that ain't gonna last. Over the next twenty years you could be drawing a *lot* more interest income and still have that nice interest deduction.

- Oh, and who thinks we are going to stay in deflation forever? (Not me.) Property values keeping up with inflation is hit or miss. At least cash in savings will typically at least keep up with inflation.

- I'd argue that having the ability to pay off your mortgage is just as nice as having it paid off. And if you both lost your jobs it sure would be nice to have that 100k sitting there, wouldn't it?

And note I never said anything about the markets. For this money you want FDIC insured safety - this is short term money and should be treated as such.

I see no reason to pay off a house, particularly not in an environment where you can lock in such low rates.
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It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.

 
goldenchild said:
Tiger Fan said:
Only other debt I have is about ~$37k in student loans @ 1.9% (currently have this covered in a high yield checking earning 5.25%)
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What do you mean by "have this covered"? I understand that the interest rate is higher than the loan rate, but how does that mean that you've got it covered?BTW, I'd love to be in your financial situation.
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I mean that I can pay this off in cash right now if I needed to
 
It's a partical and conservative approach. You might be leaving money on the table. However, based on your post you seem a little hesitant and risk adverse. If you don't want to worry about stuff, this is probably the best route for you.

If I am wrong about your risk tolerance, there are other strategies you could take.

 
Sand said:
Since everyone is saying do it, I'll play devil's advocate.
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Thanks for playing devil's advocate...exactly what I'm looking for.
How secure are your jobs? What is your current mortgage rate (can we assume 5% or so)?
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I've got no indication that I need to be worried (knock on wood). Currently don't have a mtg b/c we are going to be building. I would assume they'll be around 5%.
With the current mortgage deduction you are probably paying a real 3% or so on your mortgage (assuming 5%). This is important. Let's look at why it would be better to place this money in a laddered CD structure or high interest savings:
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Are there that many high interest savings accounts out there that are paying over 3%? The high interest checking I currently have is paying 5.25 but has a $25k max (which I've done)
- Your money isn't tied up in an illiquid investment. If a real emergency comes up (medical, job, etc. that eclipses your 6 month savings) you have liquid savings to live off of. You can't eat your kitchen countertops.- Over time you will do significantly better by holding this money in a liquid form. Right now both mortgage rates and savings rates are low. By holding in a current savings account you are about breaking even right now. Even if you were losing a bit I'd argue having the money in a liquid form is much superior. However, and this is the important part, your mortgage rate is fixed. Interest (and, thus, savings) rates will be going back up. They simply have to at some point - the Fed is currently at just about zero, and that ain't gonna last. Over the next twenty years you could be drawing a *lot* more interest income and still have that nice interest deduction.- Oh, and who thinks we are going to stay in deflation forever? (Not me.) Property values keeping up with inflation is hit or miss. At least cash in savings will typically at least keep up with inflation.
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very interesting points here. Assuming my real int rate is 3%, do you think i can sustain a high interest savings account at or around 3% that is truely liquid? Bankrate is showing a 6 month CD at 1.69%.
- I'd argue that having the ability to pay off your mortgage is just as nice as having it paid off. And if you both lost your jobs it sure would be nice to have that 100k sitting there, wouldn't it?
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Again, interesting point...but at the end of the day, wouldn't the difference in actual $ saved/lost be the savings int rate vs. what a HELOC rate would be? I understand that the HELOC would be higher, but this would truely come into play only if I absolutley needed the $$ above and beyond my 6 months savings.
And note I never said anything about the markets. For this money you want FDIC insured safety - this is short term money and should be treated as such.I see no reason to pay off a house, particularly not in an environment where you can lock in such low rates.
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Thanks for the post....good points to ponder and exactly the types of challenges I was looking for :shrug:
 
Tiger Fan said:
Relevant details:

30 y/o...married, no kids (but trying)
Will be building a house this year and I'm about 95% confident that I can have it paid off in 4 years
I will have at least 6 mos of expenses in liquid cash for emergencies
Doing this would likely move all free cash towards the house (i.e. no savings for years)
The route I would be taking is a 30year mtg and just paying extra towards the principal as much as possible...this way, if anything unexpected pops up, we're still fine....just delays payoff accordingly
I currently max out both myself and wifes Roth IRA while maxing out my company's ESSP
Small chance I can pull it off in 5 years while still maxing out our Roth IRA's each year
Both of our cars will last throughout these 5 years (knock on wood)
Only other debt I have is about ~$37k in student loans @ 1.9% (currently have this covered in a high yield checking earning 5.25%)Traditionally, I am always in the camp of "If you think the mkt will earn more than your real int rate, then keep it in the mkt"....however the thought of being debt free at 35 intrigues the hell out of me. I would have the house I plan on living in for the rest of my life and just the general freedom is probably very tough to put a value on....especially since I'm sure there will be another economic cycle before I retire.

Talk me in/out of this. I want to hear all sides!
Click to expand...
I paid my house off 4 years ago. We love the area we live in, all of our family is near, we have no plans of moving so it made sense. Plus our mortgage was 1800.00 a month so now I have around 23K a year in income left over to invest or whatever.The best thing for me was "peace of mind" I know no matter how bad things get we still have a nice home free and clear.

 
Why not the best of both. Take half the extra money and put towards house and invest the other half. It will help u dollar cost average into the market and you will pay off your house a lot faster.

 
Pay off the mortgage?

I didn't think people even made monthly payments anymore. Isn't that what we were bailed out from?

:shrug:

 
Bankerguy said:
It's a partical and conservative approach. You might be leaving money on the table. However, based on your post you seem a little hesitant and risk adverse. If you don't want to worry about stuff, this is probably the best route for you. If I am wrong about your risk tolerance, there are other strategies you could take.
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Not exactly risk averse, as I've been putting a bunch into the market since I've been working...just thinking of a different type of approach. Agree that if you're only comparing hard #s that I would be leaving $ on the table. There is a price to the peace of mind though (and potentially having the wife quit work, etc.)
 
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KGB said:
Why not the best of both. Take half the extra money and put towards house and invest the other half. It will help u dollar cost average into the market and you will pay off your house a lot faster.
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This is definitely still an option I am considering.
 
Arguement for Paying it off. All the market formulas don't factor in Beta.

Paid off house with 6 months living expenses and 37K in reserve for student loan= Peace of mind

With numbers like you have, I doubt that any decision will alter you ability to retire early or do what you like. Peace of mind has my vote.

 
kutta said:
It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.
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I can almost guarantee that rates on your LOC in the future are going to be higher than they are now. Not to mention the fees involved. He can lock in a spectacular rate NOW. If he goes 15 year fixed (which is what I'd do if I were him) it gets that much better.In this day and age, liquid cash has a much higher peace of mind factor than the paid off illiquid asset. IMHO, of course.
 
kutta said:
It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.
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Until they cut or cancel your equity line.
 
That is a toughie. I'm on record as being a "Pay Off Your Mortgage" guy, so I think I'll stick in that camp.

I paid my own mortgage off early in 2008. (Bought the house in 2000.) It was a pretty inexpensive home, but still, it's mine now. No car debt and no mortgage and no CC debt and no other debt. It feels pretty darned good. I can work as a greeter and get by, if need be. Holding onto my job as long as I can. But I'm not looking into the abyss if my employer folds this week. Peace of mind.

BTW, where is this 5.25% checking account hosted? I might want em some of that. (All I get currently is free checks.)

 
High Yield Rewards Checking Accounts I opened one locally last month that was at 4.75% APR.

Edit: Went down to 4.25% APR starting March 1st. This has happened to a lot of these checking accounts over the last few months, as you'd expect.

 
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TF> what do you do for a living that you can pay off a new construction in 4-5 years?

DO YOU HAVE ANY JOB OPENINGS?

 
Dragons said:
kutta said:
It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.
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Until they cut or cancel your equity line.
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No debt and house free and clear. If they cancel that equity line then the country is bankrupt anyway.
 
Sand said:
kutta said:
It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.
Click to expand...
I can almost guarantee that rates on your LOC in the future are going to be higher than they are now. Not to mention the fees involved. He can lock in a spectacular rate NOW. If he goes 15 year fixed (which is what I'd do if I were him) it gets that much better.In this day and age, liquid cash has a much higher peace of mind factor than the paid off illiquid asset. IMHO, of course.
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We probably define "peace of mind" a bit differently. The few dollars in fees and even a higher interest rate on the LOC really are inconsequential when factored into the entire "peace of mind" equation.
 
mr. furley said:
TF> what do you do for a living that you can pay off a new construction in 4-5 years?DO YOU HAVE ANY JOB OPENINGS?
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Wife/I have pretty good middle class jobs (not "HEY LOOK AT ME" $ by any means), but a majority of this is coming from money we made off of selling our house and getting extremely lucky on a real estate deal. We wouldn't be in this situation if it weren't for that.
 
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If you pay it off, I'd take a look at my insurances to make sure your house is not an asset that someone could potentially take away from you via lawsuit, etc. In the event of some happening, let them target an Umbrella policy or something. They are pretty cheap from what I understand.

 
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My property taxes are so high that I can't fathom any peace of mind associated with paying off the mortgage. Whether I'm paying the bank or the county, I still owe someone some $.

 
Do you have a lot of other deductions? If mortgage interest, property taxes, and state taxes are your only deductions, they might not be that much greater than the standard deduction. Just another thing to consider.

 
Unlucky said:
Do you have a lot of other deductions? If mortgage interest, property taxes, and state taxes are your only deductions, they might not be that much greater than the standard deduction. Just another thing to consider.
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This is a good point, one often missed or ignored in these discussions.
 
Sand said:
kutta said:
It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.
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I can almost guarantee that rates on your LOC in the future are going to be higher than they are now. Not to mention the fees involved. He can lock in a spectacular rate NOW. If he goes 15 year fixed (which is what I'd do if I were him) it gets that much better.In this day and age, liquid cash has a much higher peace of mind factor than the paid off illiquid asset. IMHO, of course.
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We're doing fixed rate helocs on folks like kutta (good credit unencumbered property or very small balances) at 5.5 and 10 years. Most home equity lines have a 10 year fixed rate. You can lock 5.85 for 15 years. Also many people with adjustable rate helocs are converting to fixed for a small fee. Others are sitting on sub 4% adjustables with rates so low. And any access to the very easy liquidity carries the interest rate tax benefits. :bag: I'm another vote for pay off the house. I'm just not excited about the financial aspects of building your own. I meant to comment in the other thread Tiger started on that, but he seems to have looked around enough to feel only building will satisfy him. Shame.
 
Chaos Commish said:
Sand said:
kutta said:
It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.

So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.
Click to expand...
I can almost guarantee that rates on your LOC in the future are going to be higher than they are now. Not to mention the fees involved. He can lock in a spectacular rate NOW. If he goes 15 year fixed (which is what I'd do if I were him) it gets that much better.In this day and age, liquid cash has a much higher peace of mind factor than the paid off illiquid asset. IMHO, of course.
Click to expand...
We're doing fixed rate helocs on folks like kutta (good credit unencumbered property or very small balances) at 5.5 and 10 years. Most home equity lines have a 10 year fixed rate. You can lock 5.85 for 15 years. Also many people with adjustable rate helocs are converting to fixed for a small fee. Others are sitting on sub 4% adjustables with rates so low. And any access to the very easy liquidity carries the interest rate tax benefits. :pickle: I'm another vote for pay off the house. I'm just not excited about the financial aspects of building your own. I meant to comment in the other thread Tiger started on that, but he seems to have looked around enough to feel only building will satisfy him. Shame.
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Can you expand on this? Legitimately curious. I'll take a PM if necessary.
 
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fo shizzle said:
Chaos Commish said:
Sand said:
kutta said:
It is very easy to have your mortgage paid off and have your money liquid. We have a line of credit on our house where we can draw up to $250K just by writing a check. That's pretty darn liquid. And at 4.5%, it's pretty tough to find a better short-term loan.

So if liquidity is your main concern, pay off the house and get a LOC that you can draw from if needed.
Click to expand...
I can almost guarantee that rates on your LOC in the future are going to be higher than they are now. Not to mention the fees involved. He can lock in a spectacular rate NOW. If he goes 15 year fixed (which is what I'd do if I were him) it gets that much better.In this day and age, liquid cash has a much higher peace of mind factor than the paid off illiquid asset. IMHO, of course.
Click to expand...
We're doing fixed rate helocs on folks like kutta (good credit unencumbered property or very small balances) at 5.5 and 10 years. Most home equity lines have a 10 year fixed rate. You can lock 5.85 for 15 years. Also many people with adjustable rate helocs are converting to fixed for a small fee. Others are sitting on sub 4% adjustables with rates so low. And any access to the very easy liquidity carries the interest rate tax benefits. :pickle: I'm another vote for pay off the house. I'm just not excited about the financial aspects of building your own. I meant to comment in the other thread Tiger started on that, but he seems to have looked around enough to feel only building will satisfy him. Shame.
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Can you expand on this? Legitimately curious. I'll take a PM if necessary.
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Please post...willing to listen (even though I have no other option - i own the empty land and have to build on it)
 
Jeeze.

I'm 32 and live alone and it will probably take me at least 15 years to pay off my mortgage. It would be so amazing to not have one, I really look forward to that day (whenever it happens).

 
Personally I would do a blend. Pay it down to an amount where that debt is low enough where you could go a year (for example) without a job and having it be an issue.

Having some debt on it will give you some much needed tax breaks and the price on the paper is at historic lows.

Not paying it off in full will allow you to invest incremental dollars at the bottom of the market over time allow you to dollar cost average.

So instead of applying all dollars every month to extra principal paydowns, allocate some to stocks, funds, bonds, whatever.

Also, you may want to look into paying your mortgage every other week instead of once a month as that can accelerate principal paydowns without additional dollars towards it.

Regarding liquidity, I would bump that number from 6 months to closer to a year (or at least 9 months).

Knowing doing all of this is not "maximizing" returns on your capital, but there is something to be said for risk mitigation here which is smart.

Also, it is very unlikely you'll live in this house the rest of your life, but regardless, you will have put yourself in a position where you will have the leverage to decide when and how you move, if you ever choose to.

 
djcolts said:
Tiger Fan said:
djcolts said:
High Yield Rewards Checking Accounts I opened one locally last month that was at 4.75% APR.
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I'm assuming with all of these, you need to make a certain amount of transactions per month, no? So essentially, I'll have 4 different account that I have to make 12 or so different transacitons a month with?
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A lot of them are 10 per month, but yeah.
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I only write a few checks a month, but maybe if i move some of the lower-yield purchases from my cashback CC to one of these, it'd work. Gonna have a look at some, cuz I'm drawing 1% on savings currently.
 
Dragons said:
Unlucky said:
Do you have a lot of other deductions? If mortgage interest, property taxes, and state taxes are your only deductions, they might not be that much greater than the standard deduction. Just another thing to consider.
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This is a good point, one often missed or ignored in these discussions.
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Exactly. The financial press love talking about those wonderful deductions, but they don't apply to everybody. I don't have a lot of special circumstances, my house wasn't very expensive and my taxes are on the low side. I was only able to itemize for one year after I bought my house. After that, the standard deduction was a better deal.It's not uncommon for this to be the case.
 
bagger said:
Having some debt on it will give you some much needed tax breaks and the price on the paper is at historic lows.
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Thanks GB...can you elaborate on this? Any other tax breaks than the traditional deducting any interest pmts?
Not paying it off in full will allow you to invest incremental dollars at the bottom of the market over time allow you to dollar cost average. So instead of applying all dollars every month to extra principal paydowns, allocate some to stocks, funds, bonds, whatever.
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This is really my main concern about it all. The mkt is so low right now that I'd be missing out.
Also, you may want to look into paying your mortgage every other week instead of once a month as that can accelerate principal paydowns without additional dollars towards it.
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This seems like a no brainer no matter what I decide. Do all companies offer this? Do they charge a fee for it?
Regarding liquidity, I would bump that number from 6 months to closer to a year (or at least 9 months).
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Any specific reason here...or just mitigating risk?
Knowing doing all of this is not "maximizing" returns on your capital, but there is something to be said for risk mitigation here which is smart.
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:thumbup:
Also, it is very unlikely you'll live in this house the rest of your life, but regardless, you will have put yourself in a position where you will have the leverage to decide when and how you move, if you ever choose to.
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While you're probably right, I'm building this house like it's the last one I'll ever live in. I'm sure when my non-existent kids are all grown up and I can't walk up/down stairs any more I'll downgrade.
 
We paid our 30 year off in 12. It was a lot of struggling early on but well worth it now.

Do it if you can.

 
Topes said:
Dragons said:
Unlucky said:
Do you have a lot of other deductions? If mortgage interest, property taxes, and state taxes are your only deductions, they might not be that much greater than the standard deduction. Just another thing to consider.
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This is a good point, one often missed or ignored in these discussions.
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Exactly. The financial press love talking about those wonderful deductions, but they don't apply to everybody. I don't have a lot of special circumstances, my house wasn't very expensive and my taxes are on the low side. I was only able to itemize for one year after I bought my house. After that, the standard deduction was a better deal.It's not uncommon for this to be the case.
Click to expand...
Good point. Will make sure to talk to the acct before I make the decision as we do have a few unique circumstances.
 
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