How about another Mortgage based thread

[stemikger]

Due to the popularity of my last thread about how much is your mortgage, I thought I'd try another.

I am at a point where I want to pay-off my mortgage wthin 5 - 7 years. If everything goes according to plan, I should be able to do this.

How many of you are trying to accomplish this:

And if so, do you ever think how you are going to celebtrate when you send in your last payment.

Here are my plans for celebrating when the last payment is made:

I will go in the backyard with my wife and daughter and do a symbolic mortgage burning ceremony.

Then we will head off to Disney World and stay at the Yacht and Beach Club and spend whatever we want.

How about you does anyone have a frantasy celebtration they would like to share.

 

[disneysteve]

We currently have 22 years remaining if we pay as scheduled. I figure we can realistically do it in 10. We have a small home equity loan that we need to get rid of first. I plan to have that gone by end of 2007 or early 2008 and then start attacking the mortgage.

What will we do to celebrate? Well, considering we've gotten where we are by being frugal and responsible, somehow I don't see us going out and blowing money somewhere. We'll probably take a nice trip, a cruise maybe. Of course, if that 10 year time line is right, that will be just in time for DD to go off to college, so that would be perfect as DW and I could get away just the two of us.

 

[T. Lynn]

Ours will be paid in 12 years, which is the same year that DD would graduate high school. I'd like to have it paid sooner and once I get the HELOC paid off, I will tackle my mortgage as well.

As for celebrating, I already typed up a poem that I'll use to give to DH. Once I'm closer, I'll have to fix parts of the poem of course. I think then we'll take a trip to celebrate...

 

[fac]

I am a minority.
I have a 5 years left of a 10 years loan. Until a couple of months ago, my plan was to buy another house after I pay off this one, on the other hand, we used to keep 2 houses untill 2003. I think I miss the deduction. LOL I even started to plan for the last 2 years of payment when the interest will be low. I always feel comfortable to borrow if I can make more money and I like to make money. I guess I won't celebrate.

A few days ago, I discussed with DH on becoming a stay-at-home mom and his plan was to pay off the house which I strongly objected as our mortgage is less than 5%.

 

[crisi]

We went out to dinner tonight to celebrate. That will be it. The mortgage payoff is really a celebration of my 40th birthday (which isn't for another four months, but I was making my husband nervous). We are crusing DCL for my 40th in October.

 

[bellarella]

Paying off my mortgage is one of the last priorities I have. I really don't want to tie up that amount of cash in one spot. Real Estate is not a very liquid asset. Interest rates are volitle. For anyone who is locked into a low interest mortgage, I would look a long time at where the rest of your money is before I would pay off a mortgage ahead of schedule. Heck, I make more in interest from an ING account than I would save by paying down my mortgage. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

 

[T. Lynn]

I know that in my case, last year I wasn't able to claim my mortgage interest on my taxes anymore. Between my interest, property taxes, etc., it's not enough to itemize.

It's still a tough call about paying it off early. As long as it's paid by the year it's suppose to (DD graduates), I'll be happy.

 

[DVC Sadie]

Paying off my mortgage is one of the last priorities I have. I really don't want to tie up that amount of cash in one spot. Real Estate is not a very liquid asset. Interest rates are volitle. For anyone who is locked into a low interest mortgage, I would look a long time at where the rest of your money is before I would pay off a mortgage ahead of schedule. Heck, I make more in interest from an ING account than I would save by paying down my mortgage. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

ITA. Good post.

I don't see us as ever being totally mortgage free. We usually buy another house before our mortgage is paid off and rent out the previous house. By renting out the previous house it allows the renters to pay off our mortgage while investing the rest in stocks, mutual funds and more real estate.

 

[disneysteve]

For anyone who is locked into a low interest mortgage, I would look a long time at where the rest of your money is before I would pay off a mortgage ahead of schedule. Heck, I make more in interest from an ING account than I would save by paying down my mortgage. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

I certainly can't argue with this. Paying off a mortgage early should happen only AFTER all your other financial ducks are lined up. You should have no higher interest debt, be maxing out your retirement plan, have a comfortable emergency fund and be current on all other obligations. At that point, prepaying the mortgage may make sense.

I could earn more elsewhere - absolutely. But I'm okay with giving up some potential earnings to get the guaranteed savings from paying down first the home equity loan and then the mortgage. We have no other debts at all and I'd like to be debt free by the time DD goes to college. That would also free up current income to help pay college costs.

 

[drakethib]

Paying off my mortgage is one of the last priorities I have. I really don't want to tie up that amount of cash in one spot. Real Estate is not a very liquid asset. Interest rates are volitle. For anyone who is locked into a low interest mortgage, I would look a long time at where the rest of your money is before I would pay off a mortgage ahead of schedule. Heck, I make more in interest from an ING account than I would save by paying down my mortgage. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

ITA.


I thought I was the only one who feels this way.

 

[NY Disney fan]

Paying off my mortgage is one of the last priorities I have. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

I couldn't have said it better myself. I'd rather fund a second retirement fund than pay off the mortgage. If I have anything left over then I'd pre-pay the house.

 

[fac]

I think it depends on each person's comfort level with debt. Was Donald Trump debt free when his children went to college?

In my case, I max out on 401k for many years, have a nice emergency fund and at such I would not consider paying off the mortgage because I know I have a large enough safety net.

 

[crisi]

For us, it was a cash flow deal. We could have $1500 a month going to our mortgage, or $1500 a month going to savings or somewhere else. I'm a cash flow fan. And our mortgage was an ARM. So we paid it off early. Its a guarenteed 6% return. I have other investments that do better, but I've had years where the 1.04% on the money market account beat nearly everything else, too.

We had a cash flow scare a few years ago when my husband was nearly laid off - and the stock market had crashed, so our investments weren't worth much. The lesson I took aways is that when it rains, it pours. I want my obligations to be as near zero as possible, since if we hit a rough patch, it may be a rough patch for more than just us.

 

[arminnie]

Paying off my mortgage is one of the last priorities I have. I really don't want to tie up that amount of cash in one spot. Real Estate is not a very liquid asset. Interest rates are volitle. For anyone who is locked into a low interest mortgage, I would look a long time at where the rest of your money is before I would pay off a mortgage ahead of schedule. Heck, I make more in interest from an ING account than I would save by paying down my mortgage. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

Another one who agrees with you. Everyone's situation is different though.

I took out a mortgage last year to buy a home in New Orleans 10 days before Katrina. Fortunately I was spared, but I was so glad to still have that money liquid rather than waiting on insurance like most here are doing. Those who have acccess to money now have been able to repair their homes much more quickly.

I sold a home in the San Francisco area and bought a little smaller place in New Orleans so I could have easily paid cash. If I decide I don't want a mortgage I will just pay it off.

 

[fac]

I agree each person's situation is different, but just my experience

We had a cash flow scare a few years ago when my husband was nearly laid off - and the stock market had crashed, so our investments weren't worth much. The lesson I took aways is that when it rains, it pours. I want my obligations to be as near zero as possible, since if we hit a rough patch, it may be a rough patch for more than just us.

I (or DH) can relate. DH was actually laid off. We had emergency fund, and he decided to take a break but found out it took longer to find a job later. My salary is much higher than his and we can easily live off my salary alone, but nonetheless it is a big cut. I think it is one reason he insists on paying off the mortgage if I do quit.

However, (not referring to you) I always to try convince him there is a difference between "feeling" good and actually good on the book, and we shouldn't make decision base on our emotion.

 

[stemikger]

Originally quoted by Bellerella
Paying off my mortgage is one of the last priorities I have. I really don't want to tie up that amount of cash in one spot. Real Estate is not a very liquid asset. Interest rates are volitle. For anyone who is locked into a low interest mortgage, I would look a long time at where the rest of your money is before I would pay off a mortgage ahead of schedule. Heck, I make more in interest from an ING account than I would save by paying down my mortgage. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

Wow,

I found out one thing with my last two threads. There are some really smart people on these boards.

I have been flip flopping with this issue myself. For those of you who know Dave Ramsey, I think I am going to stick to his 7 Baby steps. According to these steps, I am on number 6 which is "pay-off the house."

My wife convinced me that my emergency fund is enough. I just finished buiding up a 4 month reserve (which is 4 months of my salary) in I bonds. I max out my 401K, I send money towards my DD's college fund, so I think - I would feel good if I pay-off the mortgage.

I think it really is different for everyone else, I was trying to decide if I wanted to send this extra money to an additional IRA or just get rid of the mortgage, and after a lot of soul seraching I decided to attack the mortgage. In about 5 - 7 years when it is paid, I will send the extra to my IRA outside of work.

I would just feel better - without having it. But I do agree with Disneysteve, you should definitely have your other priorities in order before you get to this step.

I don't agree with everything Dave Ramsey says, but if it wasn't for him, I don't think I would have finished my fully-funded emergency fund so fast, so I think - I'll follow his advice on this one.

For those of you who don't know the "Baby Steps" here they are:

1. $1,000 to start an "Emergency Fund"
2. Pay off all debt using the "Debt Snowball"
3. 3 to 6 months of expenses in savings
4. Invest 15% of income into Roth IRA's and pre-tax retirement
5. College Funding
6. Pay-off home early
7. Building Wealth & Give (Mutal Funds/Real Estate)

 

[jenr812]

Wow,

I found out one thing with my last two threads. There are some really smart people on these boards.

I have been flip flopping with this issue myself. For those of you who know Dave Ramsey, I think I am going to stick to his 7 Baby steps. According to these steps, I am on number 6 which is "pay-off the house."

My wife convinced me that my emergency fund is enough. I just finished buiding up a 4 month reserve (which is 4 months of my salary) in I bonds. I max out my 401K, I send money towards my DD's college fund, so I think - I would feel good if I pay-off the mortgage.

I think it really is different for everyone else, I was trying to decide if I wanted to send this extra money to an additional IRA or just get rid of the mortgage, and after a lot of soul seraching I decided to attack the mortgage. In about 5 - 7 years when it is paid, I will send the extra to my IRA outside of work.

I would just feel better - without having it. But I do agree with Disneysteve, you should definitely have your other priorities in order before you get to this step.

I don't agree with everything Dave Ramsey says, but if it wasn't for him, I don't think I would have finished my fully-funded emergency fund so fast, so I think - I'll follow his advice on this one.

For those of you who don't know the "Baby Steps" here they are:

1. $1,000 to start an "Emergency Fund"
2. Pay off all debt using the "Debt Snowball"
3. 3 to 6 months of expenses in savings
4. Invest 15% of income into Roth IRA's and pre-tax retirement
5. College Funding
6. Pay-off home early
7. Building Wealth & Give (Mutal Funds/Real Estate)

We're still on our debt snowball (just finished the 13 week financial peace university last Sunday), but this is our plan as well.

 

[crisi]

I flip flopped around on it a lot myself. I actually considered remortgaging when rates were around 4%, because I knew I could use that money to make more money pretty easily. When I ran the numbers, the "safe" investments weren't worth the efforts, and throwing my house into the stock market not worth the risk. I'm half an accountant by training (going back to school and basically a college Senior as far as my accounting degree goes), so I was pretty sure I knew what the differential was. But note that the degree is Accounting, not Finance - I'm fiscally conservative by nature. We also have some tax complications,

When I look at my whole portfolio, its actually quite risky. A lot of our assets aren't assets at all, options in both my company and my husbands. So we are a potential Enron family.....the 401ks and IRAs and kids college funds are invested much more conservatively, but owning the house outright provides some balance against options.

I also have a husband who likes to spend, while I'm pretty frugal. Money left "unallocated" for me isn't a great thing, because he starts dreaming up places to spend it. This allocated assets into something pretty non-liquid.

You have to look at your whole picture. For us, we are a two income family in industries known to have downturns. Minimizing the expenses we need to make each month insulates us from the downturn. Its both a quantitative and qualitative decision.

 

[MrsPete]

Paying off my mortgage is one of the last priorities I have. I really don't want to tie up that amount of cash in one spot. Real Estate is not a very liquid asset. Interest rates are volitle. For anyone who is locked into a low interest mortgage, I would look a long time at where the rest of your money is before I would pay off a mortgage ahead of schedule. Heck, I make more in interest from an ING account than I would save by paying down my mortgage. While paying off a mortgage might feel good, it's important to realize that you are pretty much locking up that money and throwing away the key, so you just need to be sure that you have other assets that can act as a safety net.

For anything other than a house, I'd agree that it'd be foolish to have so much money tied up in one place; however, a house is a unique kind of investment: you both USE IT and PROFIT from it.

My 401K money is genuinely is "tied up" -- I get no benefit from it today; at most, I could borrow against it. However, my house dollars are not really "tied up" because I'm USING that investment every day, all day.

It does feel great to live in a paid-for house -- both emotionally and financially. Money in other investments could disappear (think Enron); my house is not likely to disappear anytime soon. Even if I someday sell my house for the same price I paid (not likely, given its prime location), I would still "win" financially because I would've lived there "for free" all those years.

So I cannot agree. A primary-residence is an investment category all to itself, and it's difficult to compare it to stocks, pension plans, or any other investment.

 

[mickeyfan2]

You have to look at your whole picture. For us, we are a two income family in industries known to have downturns. Minimizing the expenses we need to make each month insulates us from the downturn. Its both a quantitative and qualitative decision.

This is us too. So paying off the house made sense for us. I do see the point of making more money elsewhere, but if both DH and I became unemployed at the same time(this has happened), not having a mortgage helps.