What to do after house is paid off

[Anonymous]

Anonymous wrote:1 million stuck in a house not working for us makes me worried.

Anonymous wrote:Don't take out a loan, but do invest the house payment going forward.
For kicks, calculate how much you would have if you had taken out 30 year loan and invested the extra money instead.

If you could get a loan at 2% against the value of your house, yes, there'd be a case for getting as big a loan as possible and buying index funds or some other investment (note there'd also be a case against doing so). But interest rates on (home equity) mortgages are much, much higher now, and at current rates there's really no scenario in which you're better off borrowing against your house to fund investments.

[Anonymous]

Anonymous wrote:1 million stuck in a house not working for us makes me worried.

Anonymous wrote:


So you’d rather have 800,000 mortgaged at 7% for the next 30 years? If you think you can beat a 7% return annually to offset a mortgage, go for it. It sounds like more effort than it’s worth.

[Anonymous]

Anonymous wrote:1 million stuck in a house not working for us makes me worried.

Anonymous wrote:Don't take out a loan, but do invest the house payment going forward.
For kicks, calculate how much you would have if you had taken out 30 year loan and invested the extra money instead.

This is an unusual take. You should already have money in the market working for you, and your house should be your sanctuary. That it's paid off gives you peace of mind. But, since this is your concern, once it's paid off, redirect the money you've been paying toward your mortgage into a broad market index fund like VTI. Problem solved, and contracts on almost owning your home!

[Anonymous]

Anonymous wrote:Stop thinking of your house as a money fund. It's where you live. Just put the extra money towards other investments.

This is good advice. Be happy in your home making memories. Don’t tie your happiness to a real estate market valuation of the house.

[Anonymous]

Anonymous wrote:1 million stuck in a house not working for us makes me worried.

Anonymous wrote:Don't take out a loan, but do invest the house payment going forward.
For kicks, calculate how much you would have if you had taken out 30 year loan and invested the extra money instead.

Why?

If you have a job loss (tons of people who thought it would never happen to them have seen it happen recently) or any other issue you have much lower expenses. Invest the extra money in the market and own your home.

[Anonymous]

I’m risk averse. We have a paid off house and wouldn’t dream of leveraging it for investments. We already invest with other money. Down the road in about 10-15 years we know we’re going to sell and downsize and will happily take our gains at that time.

[Anonymous]

Cash out refi or heloc and buy other properties to short or long term rent. Best decision we made but you really need to understand the target markets.

[Anonymous]

Anonymous wrote:I’m risk averse. We have a paid off house and wouldn’t dream of leveraging it for investments. We already invest with other money. Down the road in about 10-15 years we know we’re going to sell and downsize and will happily take our gains at that time.

I'm pretty comfortable with risk and feel the same way. I wouldn't dream of leveraging our home for investments, especially not at today's interest rates. That would just be dumb.

[Anonymous]

I just love knowing whatever financial mess comes up ..I have a place to live. Mortgage paid off, college paid for, saving a ton right now.

[Anonymous]

Rent out the basement. There! Now the house is working for you.

Let your kids live in that mcmansion for free. Now, the house is saving them the rent money.

Turn some rooms into AirBnB. Your house is working for you.

[Anonymous]

Save and invest in liquid investments.
Buy a farm.

[Anonymous]

You are nuts.
Invest your former mortgage payment.
Your house equity is a last resort cushion, sitting there as a safety net.

[Anonymous]

Anonymous wrote:1 million stuck in a house not working for us makes me worried.

Anonymous wrote:Don't take out a loan, but do invest the house payment going forward.
For kicks, calculate how much you would have if you had taken out 30 year loan and invested the extra money instead.

Take out a new mortgage. Even at 7%, you’re better off because the market returns 10%—and tech stocks even more.

Did I do the idiotic, max-leverage thing right??

[Anonymous]

Anonymous wrote:In 2 years we will have our house paid off. Its current market value is 1 million. We made a mistake of borrowing only for 15 years at a very low interest rate. Is it a good idea to use it to take out loan and buy investment properties? Otherwise it's sitting there doing nothing for us.

Don't risk your only house for investments. You might wind up with nothing when the housing market corrects itself.

[Anonymous]

Anonymous wrote:In 2 years we will have our house paid off. Its current market value is 1 million. We made a mistake of borrowing only for 15 years at a very low interest rate. Is it a good idea to use it to take out loan and buy investment properties? Otherwise it's sitting there doing nothing for us.

all loans are expensive these days. your payment will be higher than whatever rent you can command. We are mid 40s and had kids early. They are now odd to college/late high school. Being 45, we realized we are wayyy too heavy in 401k/Megs Roth/HSA and are dumping all extra disposable income into taxable brokerage. It’s the ONLY way we can retire in our 50s.

we do have rentals, but don’t really see those as sources of income. However even for those alll profits from those go into bitcoin and have been for a number of years. It’s started as a gamble that we just thought was crazy.