Whose paying off mortgage?

[DocRafiki]

Good point, C.Ann. I do worry about things like that (or losing my job) and feel very ill at ease not owning anything. I just got the first car loan I've ever gotten, and I don't like NOT owning it downright. Yes, I could have "afforded" (by some people's definition) a $40K car, but instead I bought a $10K car and could have it paid off within the year if I weren't saving for this down payment. It feels so good to have a big cushion in case of emergencies, but some cushions will never be big enough for some emergencies.

I guess I'm sensitive about this subject because I see on a weekly basis people who DON'T live below their means and don't have the funds when it is literally a life and death situation.

And this is in a neighborhood that looks upper-middle-class by all appearances, average $250K house, when you can buy an older (but same size) house in the less trendy neighborhood down the road for $150K.

 

[KimRaye]

We got a home equity line of credit so that we COULD payoff the 7-1/4%, 30 yr 1st mortgage. It's a 15 year, I think but, it's an interest only payment. We DO NOT only pay the interest of course. We keep making a minimum payment of the same amount that the 1st mortgage was but, we add on lots of money to that also. And, because it's a line, we have a cushion for any emergency or unexpected bill that may come up. We're currently looking to get a new roof and new windows so, the line is much better (at 3.5%) than, financing each and every seperate expense, imo.

 

[C.Ann]

Originally posted by DocRafiki
Good point, C.Ann. I do worry about things like that (or losing my job) and feel very ill at ease not owning anything. I just got the first car loan I've ever gotten, and I don't like NOT owning it downright. Yes, I could have "afforded" (by some people's definition) a $40K car, but instead I bought a $10K car and could have it paid off within the year if I weren't saving for this down payment. It feels so good to have a big cushion in case of emergencies, but some cushions will never be big enough for some emergencies.

I guess I'm sensitive about this subject because I see on a weekly basis people who DON'T live below their means and don't have the funds when it is literally a life and death situation.

And this is in a neighborhood that looks upper-middle-class by all appearances, average $250K house, when you can buy an older (but same size) house in the less trendy neighborhood down the road for $150K.

-----------------------------------

Hmmmm....didn't you say you weren't "good" about this money stuff? Sounds like you're making good choices to me!

Don't even get me going on the cost of automobiles.. LOL.. I've NEVER bought a brand new car and NEVER will - BUT - that's because many years ago I found THE MOST HONEST AND RELIABLE used car dealer that has ever graced the face of this earth! Cars are in excellent condition - always very low mileage - and his guarantees go WAY above and beyond what is necessary.. I spend a few thousand (the MOST I ever spent is the $6000 for the van I have now) and I run these vehicles FOREVER.. Even with repairs (which are never anything terribly serious - more of a routine nature that can and would happen with a newer vehicle) I end up spending thousands of dollars less than someone who buys a brand new car.. Of course YOU don't have access to MY guy up here - LOL - so I think in your circumstances your choice was a good one..

As for homes, what people often don't take into consideration is that many of the older homes were built MUCH sturdier - with MUCH better materials than the homes that they slap up in a few weeks nowadays.. My SIL is in the contruction field and worked in home construction prior to his current job and was appalled at the cheap materials that are used in these big, fancy houses.. Often what you think you see and what you actually GET are two entirely different things..

Keep making those good choices and before long you WILL have a car and a home that you can proudly call your "own"...

 

[stemikger]

Here is my two cents:

1. Pay off that mortgage (in today's climate it is the safest investment you can make). After all you can't live in a stock certificate.

2. If you have a 401K at work PUT IN THE MAX. Before long you will be a millionaire.

3. Buy a home you could afford and stay there. Evaluate what you really need. Don't be house poor. There are more things to life than a house.

Live debt free. Life has many challanges to it don't let debt be an extra stress. If you have all your major debts paid off you could take more time to smell the roses and enjoy the life you were meant to live.

I'm 40 years old and if all goes well will have my mortgage paid off in 5 years and will celebrate by making a trip to Disney in style.

I am a fan of personal finance books and I just read a good one called Automatic Millionaire. It's a great book for anyone looking for a better financial life.

P.S. Stay away from those Credit Cards.


Going in August and I can't wait!!!!!

 

[robsmom]

[ Our plan is to upgrade from our 3800 sq. ft. starter home when it gets closer to paying off. Actually, we started so big because we got the right deal at the right time. We make jokes all the time about this being our starter home. Heck, it doesn't have a garage. My real house will have one. [/B][/QUOTE]


lol - i hope that 3800 includes a basement!

seriously - we were lucky to get a really nice house as out "starter house". we lived in my DH's condo when we first got married so I guess technically it is not our first house but it is to me. We bought in 97 and refinanced last year. When we did the refi we cut down to 15 years. I think we add $25 / month to the payment and got rid of 9 years on the loan. If we pay on schedule we will be done a year after DS graduates from HS but we will probably pay off early and be done before he goest to college.

 

[Antonia]

We just paid off the mortgage on our first house - we've been here 20 years. My mother has always urged us to buy a big, new house. but I knew I was going to enjoy living in a paid for house. Plus we like our house and over the years have done things to improve it. We also have a large wooded lot with a space for a vegetable garden. Over the twenty years our house and yard have gotten to be just the way we like it. This is our first month with NO house payment. so now I'll get to see how it feels.

 

[believe]

Everytime we refinance it is for low interest and less years. We want out of debt as soon as possible, especially since we don't have any credit card debt.

 

[JESW]

We paid off early - got a good deal when we sold our first house. We had no mortgage for a while until we bought the townhouse for my parents (it's in an over-55 community). So now we are paying that off but we won't pay it off early - we still have 28 years on the mortgage.

Jill

 

[Bob Slydell]

Originally posted by DocRafiki
I've been looking into buying a home, and I'll definitely be getting a 30-yr mortgage.


Besides, if your interest rates are extremely low and you can invest at a higher rate, it would be foolish to pay your loans down rather than investing.

My student loan interest is around 4%. I'd rather put my extra money into my 401K than pay down my loans. (But for now I'm saving the extra for a down payment on a house.) I am clueless about money and am planning on seeing a financial planner before making any big decisions, but that just seems pretty straightforward.

(I'd appreciate any comments on the above plan from anyone who knows about such things.)

It's not a bad financial plan at all, actually (I'm assuming you're making at least minimum payments on the student loan, of course).

If you can get a good, low mortgage rate like Doc mentions, you would be more advantageous to keep the mortgage, pay the regular payments and put the excess you would normally put into your mortgage principal into other investments that will make more than 5% or so (most fairly safe bond or income mutual funds should make 5-6% at minimum).

Mortgage debt to me isn't necessarily "bad" debt. As other's have mentioned, you're getting tax benefits that you can't get from any other source and in a pinch, you've got the equity in your house that you can either take out in a home equity line, a second mortgage (worse case scenario) or even selling the home (worst case).

 

[ScarlettO]

We've only got a few years....but will downgrade to a villa or patio home or condo when the kids "leave the nest" in a few years.

My SIL took a second mortgage on her already old , "payed for" house to finance a huge debt two years ago. It's for 15 years , so when she is retirement age it will be payed off. Her DH lost his job in January,so now she has the risk of losing her home. I doubt I would take out a second mortgage.

 

[CamColt]

We bought our house 5 years ago with a 30 yr mortgage. Last summer we refinanced to a 15 yr. We should have it paid off by the time the kids are in college.
We used to have a home equity loan before we refinanced and I preferred to have our other debt there as opposed to credit cards because it was in 1 lump sum(so we could see how much it really was) and the interest was tax deductible. However, we are pretty much out of debt right now so no need for the home equity loan anymore.

 

[RayJay]

Glad to see I'm not alone, all these responses will keep us going, and best of luck to everyone working to be mortgage debt free.

Sometimes the road will twist and turn but the light at the end of the tunnel is there.

RayJay

 

[Galahad]

14 years to go here. Maybe sooner if we can. If I were buying rental properties or "investing" in real estate I'd probably keep the recommended debt load. But for our own home....it's our home. We want it paid for!

 

[cheyita]

I completely agree that you should try to be debt free. Our mortgage is paid, we don't keep credit card debt, and we have auto loans - but only at 0% and 0.9% financing. It is a huge relief to know that our home is safe in case of emergency.

BTW - someone else commented on this too...3800 sq ft is a starter home? I suppose it's a ranch with the basement coming into the equation - making it a nearly-2000 sq ft house. My last house was only 1180 sq ft, add in the basement and that's 2360. I consider that a starter.

 

[CEDmom]

DH refinanced about 12 years ago before we even met. Because the rate had dropped so much he was able to go from a 30 yr mortgage to a 15 year one and the mortgage payment only went up a few $ per month. We'll be paid off in about 4 years. We've been tempted to move to a bigger house but having the our small house paid off will give us so many options to plan for DH's retirement at the same time DD gets ready for college.

 

[RUDisney]

My "starter" house has 3,800 sq. ft. of living space. It was a double house that the previous owner turned into a single. It has a full attic that is unfinished (not in the equation), 1,700 sq. ft. on the first and second floor and 400 sq. ft. finished in the basement.

Like I said... we stepped into this "starter" at the right time. It was pure luck, as it cost the same as many homes that were less than 1/2 the size. Best part is that it was in move in condition.

The Lord was smiling on us when we found this house.

 

[mom2boys]

We are paying down our mortgage. Our payments aren't very much - a lot of people have larger car payments. Our house will be paid off one year before first DS hits college - or sooner. Our oldest is 10. We took a friend of his home a month ago who lives in a beautiful large house - not new but very impressive. DS commented just last night that Conner has a "huge" house. I explained that some people choose to spend their money on their house & some people choose to travel. DS agreed he'd rather go to Disney & other places than have a fancy house. That's my boy! He is already saving for his first house - said so at 7 when he recieved about $200 for First Communion. (Unfortunately his 8.5 yr old brother thinks I should drive him to the bank so he can take money out of his savings to buy Mighty Beans. )

 

[barbeml]

We refinanced at a much lower rate, but took higher monthly payments to knock 10 years off the mortgage. We own two houses (one we rent) and both will be mortgage-free in 9 years!

 

[Beastlover]

I love reading about all of you who are successes in the financial game!! We too are mort. pay-offers!! We bought in 1994, 15 yr mort./pay off in 13 yrs.(2007) We have been paying extra each pmt. to pay down the principal. Again, tons of people asking us why we still live here, why don't you move into a bigger house. We want to pay off the house....DH just got new job which puts $700 extra in each paycheck. Guess what? House will be paid off by the first of the year!! Once house is pd off, we are buying a second home....condo....IN ORLANDO!!!
Then......we can say...... WE'RE GOING TO DISNEYWORLD!!!!

 

[mom2boys]

my philosophy on that is I'd rather pay the government the 28 cents instead of the $1 to the bank, now I keep 72 cents of every interest dollar I would have paid the bank.

You are so right. You'd be amazed at how many people just don't get this. You are still paying the bank more in interest than you are "saving" on taxes.