Anonymous
09/18/2018 00:02
Subject: Why not pay down the mortgage?
Anonymous wrote:Anonymous wrote:Two reasons:
1) You can make more if you invest the mortgage proceeds long term in a total stock index fund. You say you like CDs and are risk-averse. In that case, this does not apply to you. (Your risk aversion is a mistake, I suspect.)
2) Liquidity. You have a bundle of cash, or money in an index fund you can get to if needed. If you have a paid off house and things go to hell and you have no income, you are stuck. You will not get the money out of that house with a new mortgage. (If 62 or older you might qualify for a reverse mortgage but there are downsides with that.
If hints “go to hell”, someone that owns their home outright is in a great situation compared to someone making payments that just got laid off.
well yes, but someone with 200k in the bank is in a great situation compared to someone with 10k in the bank.
Anonymous
09/17/2018 23:53
Subject: Why not pay down the mortgage?
Anonymous wrote:Two reasons:
1) You can make more if you invest the mortgage proceeds long term in a total stock index fund. You say you like CDs and are risk-averse. In that case, this does not apply to you. (Your risk aversion is a mistake, I suspect.)
2) Liquidity. You have a bundle of cash, or money in an index fund you can get to if needed. If you have a paid off house and things go to hell and you have no income, you are stuck. You will not get the money out of that house with a new mortgage. (If 62 or older you might qualify for a reverse mortgage but there are downsides with that.
If hints “go to hell”, someone that owns their home outright is in a great situation compared to someone making payments that just got laid off.
Anonymous
09/17/2018 21:03
Subject: Why not pay down the mortgage?
Two reasons:
1) You can make more if you invest the mortgage proceeds long term in a total stock index fund. You say you like CDs and are risk-averse. In that case, this does not apply to you. (Your risk aversion is a mistake, I suspect.)
2) Liquidity. You have a bundle of cash, or money in an index fund you can get to if needed. If you have a paid off house and things go to hell and you have no income, you are stuck. You will not get the money out of that house with a new mortgage. (If 62 or older you might qualify for a reverse mortgage but there are downsides with that.
1) You can make more if you invest the mortgage proceeds long term in a total stock index fund. You say you like CDs and are risk-averse. In that case, this does not apply to you. (Your risk aversion is a mistake, I suspect.)
2) Liquidity. You have a bundle of cash, or money in an index fund you can get to if needed. If you have a paid off house and things go to hell and you have no income, you are stuck. You will not get the money out of that house with a new mortgage. (If 62 or older you might qualify for a reverse mortgage but there are downsides with that.
Anonymous
09/17/2018 12:54
Subject: Re:Why not pay down the mortgage?
Anonymous wrote:It really comes down to the after tax return. If you can get an after tax return of 5-6% investing the $700,000 you will be better off not paying off the mortgage. But 5-6% after tax is pretty high in the current market.
Another consideration is your real estate market. If it's flat and you pay off the mortgage you will have a large amount of your net worth tied up in a no appreciation asset. If you are in a hot market that's a different story.
It's very comforting to have no debt but it may not be the best way to build net worth.
This is why we decided to aggressively pay off in big chunks - our house has appreciated by over $200k since we bought it 4 years ago.