Anonymous
02/27/2023 12:28
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
Paying a mortgage means paying interest. Why pay interest if you don't have to? Pretty simple.
Anonymous
02/27/2023 11:36
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:I’ve never met anyone with a paid off house that regretted doing it.
I regret prepaying my mortgage…
Then go out and get another mortgage - very simple.
Exactly. Open a heloc.
Yeah, tap your equity at 6-7% APR just so you have the comfort of knowing your house is still owned by the bank. Brilliant financial planning.
Obviously getting a mortgage involves transaction costs and HELOCs are often at a higher rate than the prevailing mortgage/refinance so you'd have to assess the numbers (as always in personal finance). I think the point people were making is that if you have a mortgage of below 3% (which most homeowners these days do), prepaying doesn't make sense in the current interest rate environment where you can earn 4.5% in savings accounts, 5% in CDs etc.
Anonymous
02/27/2023 10:40
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:I’ve never met anyone with a paid off house that regretted doing it.
I regret prepaying my mortgage…
Then go out and get another mortgage - very simple.
Exactly. Open a heloc.
Yeah, tap your equity at 6-7% APR just so you have the comfort of knowing your house is still owned by the bank. Brilliant financial planning.
Anonymous
02/27/2023 10:32
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:Anonymous wrote:Anonymous wrote:I’ve never met anyone with a paid off house that regretted doing it.
I regret prepaying my mortgage…
Then go out and get another mortgage - very simple.
Exactly. Open a heloc.
Anonymous
02/27/2023 09:56
Subject: Re:If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:It makes sense to pay off the mortgage before retirement if you know you won't be able to afford the mortgage payments in retirement.
Or --if you have a low interest mortgage-- you can take all the money that would go to pre-paying retirement and put it in an investment that is dedicated to paying off the mortgage in retirement.
Anonymous
02/26/2023 21:29
Subject: Re:If paying off your mortgage is dumb, why do so many rich people do it?
It makes sense to pay off the mortgage before retirement if you know you won't be able to afford the mortgage payments in retirement.
Anonymous
02/26/2023 20:46
Subject: Re:If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:My early retirement plan includes not having a mortgage. The mortgage will be paid in about a year!
I can’t imagine regretting not having that expense, which is the biggest monthly expense we have. We will save more for retirement and spend some on home repairs and travel.
Same here. We are about three years away from early retirement and paying off the mortgage is in our near-term goal. We continue to max 401ks and fund 529s (above $150k each). The house and another piece of paid-off real estate make up about 20% of our NW.
Anonymous
02/26/2023 20:42
Subject: Re:If paying off your mortgage is dumb, why do so many rich people do it?
*credit risk free, mind your duration risk (though being short a mortgage is a wonderful non mark to market duration hedge)
Anonymous
02/26/2023 20:40
Subject: Re:If paying off your mortgage is dumb, why do so many rich people do it?
There are liquid risk free (or nearly so) bonds that pay more than legacy mortgages (which statistically most mortgage borrowers have).
When people talk about “investments can tank” or “I don’t want all my money in the stock market”, it kills me because it’s as if muni’s, CD’s, I-bonds, treasuries, IG corporates, CLO AAA, etc don’t exist. Go forth and lend, collect tasty coupons from the borrowers of America!
Liquidity has value. If you’re so rich and liquid, say house asset value = <20% of NW, it probably doesn’t matter but if you’re a typical mass affluent with a couple milsky’s and thinking about paying off that sexy long legged 2 3/4% 28 year amortizing inflation hedging borrower friendly almost free mortgage, don’t do it!
When people talk about “investments can tank” or “I don’t want all my money in the stock market”, it kills me because it’s as if muni’s, CD’s, I-bonds, treasuries, IG corporates, CLO AAA, etc don’t exist. Go forth and lend, collect tasty coupons from the borrowers of America!
Liquidity has value. If you’re so rich and liquid, say house asset value = <20% of NW, it probably doesn’t matter but if you’re a typical mass affluent with a couple milsky’s and thinking about paying off that sexy long legged 2 3/4% 28 year amortizing inflation hedging borrower friendly almost free mortgage, don’t do it!
Anonymous
02/26/2023 17:07
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
The only debt I have is my mortgage which is $1800/mth and has a balance of less than $150K. Might as well pay it off.
Anonymous
02/26/2023 16:03
Subject: Re:If paying off your mortgage is dumb, why do so many rich people do it?
My early retirement plan includes not having a mortgage. The mortgage will be paid in about a year!
I can’t imagine regretting not having that expense, which is the biggest monthly expense we have. We will save more for retirement and spend some on home repairs and travel.
I can’t imagine regretting not having that expense, which is the biggest monthly expense we have. We will save more for retirement and spend some on home repairs and travel.
Anonymous
02/26/2023 15:49
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:Anonymous wrote:I’ve never met anyone with a paid off house that regretted doing it.
I regret prepaying my mortgage…
Then go out and get another mortgage - very simple.
Anonymous
02/26/2023 15:39
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:I’ve never met anyone with a paid off house that regretted doing it.
I regret prepaying my mortgage…
Anonymous
02/26/2023 13:13
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
Anonymous wrote:I’ve never met anyone with a paid off house that regretted doing it.
I have met someone who purchased a house with cash and regretted doing it.
Anonymous
02/26/2023 13:03
Subject: If paying off your mortgage is dumb, why do so many rich people do it?
I’ve never met anyone with a paid off house that regretted doing it.