Reply to If paying off your mortgage is dumb, why do so many rich people do it?

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Reply to "If paying off your mortgage is dumb, why do so many rich people do it?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I have about $1 million in my retirement account, plus another $500,000 in Vanguard mutual funds, plus enough in 529s to pay for my kids' college.

My monthly principal and interest payment on my mortgage is $1,750, and I have a $428,000 balance.

And with those number,  I feel a lot more secure and free with $500,000 of liquid funds and a monthly mortgage bill of $1,750 than I would if I paid off my mortgage and had no monthly payment but only $80,000 of liquid investments[/quote]

What if your 500k dropped to 250k in a deep recession amid layoffs and you still owed 400k? [/quote]
[b]
If this happens I will deal with the situation.[/b] As long as I owe the $400k at an interest rate lower than what I can make with my $250k on the market, I’m fine because I know it’s the better position from a pure financial angle. I’m able to put emotions aside.

[/quote]

Can you care to elaborate how to the non-savvy folks who are paying off their mortgages ? IMHO this is the missing piece why folks pay off the mortgages as they dont how how to handle such scenarios 
[/quote]

DP: Um, with a bank account and ibonds earning more interest than my mortgage.  How are the folks paying off their mortgage going to handle a financial emergency if say you lose your job and need to move to get a new job but the housing market is currently terrible?  Liquid safe cash is safer than a paid-off mortgage.  The more the better.[/quote]

Once the mortgage is paid off, you have more cash, (The PI from the PITI), that you are automatically saving. It adds up quick and also please note that the monthly expenses are lower owing to the paid off house. In the event that you have to move, [b]you can always rent out the house that is paid in full.[/b] [/quote]

Have you ever been a landlord?[/quote]

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