Re: How to be Setup for Life ?
 

I don't see the upside to paying down a fixed rate mortgage a little at a time. Beyond the psychological comfort of seeing your principal number decline monthly there is no decrease in monthly payment and you are losing some of your inflation hedge. I think a better way to do it is to set up a separate account to receive these extra payments, that way the cash is available to you in case of emergency. If you never need it and the balance grows to a solid number, then you could pay down the principal and refinance for a lower monthly payment.

Re: How to be Setup for Life ?
 

[ QUOTE ]
I don't see the upside to paying down a fixed rate mortgage a little at a time. Beyond the psychological comfort of seeing your principal number decline monthly there is no decrease in monthly payment and you are losing some of your inflation hedge. I think a better way to do it is to set up a separate account to receive these extra payments, that way the cash is available to you in case of emergency. If you never need it and the balance grows to a solid number, then you could pay down the principal and refinance for a lower monthly payment.

[/ QUOTE ]

I don't know of any liquid account that pays at a rate to match what I am paying in interest on unpaid principle. I think it's not possible to find one, either.

Why isn't that savings the upside?

eastbay

Re: How to be Setup for Life ?
 

Because any pre payments on a fixed note are applied to the back end of the note and do not better your situation today. What you are doing is using todays dollars to pay a debt not due for 5,10,15 maybe 20 years out when the inflation adjusted buying power of that same money will be considerably less. Even at savings account interest you are doing better than pre paying monthly. Either you earn the interest or give the money to the bank for them to profit on.

Re: How to be Setup for Life ?
 

Has anyone ever heard someone say "Damn, I sure wish I didn't pay off that house", or "Man I wish I had a mortgage" ?

Re: How to be Setup for Life ?
 

Your mortgage interest eats away most of this advantage.

Re: How to be Setup for Life ?
 

[ QUOTE ]
Has anyone ever heard someone say "Damn, I sure wish I didn't pay off that house", or "Man I wish I had a mortgage" ?

[/ QUOTE ]

Re: How to be Setup for Life ?
 

yes

That's why they created reverse mortgages. I'm not saying its wise, but there are folks out there with paid for houses and no nest eggs.

Re: How to be Setup for Life ?
 

[ QUOTE ]
Has anyone ever heard someone say "Damn, I sure wish I didn't pay off that house", or "Man I wish I had a mortgage" ?

[/ QUOTE ]

nh sir.

Re: How to be Setup for Life ?
 

I'd focus on buying more real estate-- you are good at it.

Why not repeat what works for you?

Why not take the cash you have to pay off the 2 houses and look for another "special situation" real estate purchase.

Then as soon as you can leverage that one 100% by taking out your equity to pay off the other 2.

Then all the debt is on one (income) property (use a LLC to isolate it) and you own the other 2 outright.

You have real estate knowledge why not leverage it. You already know what you are doing-- repeat the pattern.

Re: How to be Setup for Life ?
 

[ QUOTE ]
I think your points are valid, and it comes down to an individual's goals and proclivities.

FWIW, I also choose to pay down my mortgage at the fastest pace I can, rather than try to invest that money elsewhere, and pretty much for the same reasons you mentioned.

eastbay

[/ QUOTE ]

Agreed. I'm a big proponent of paying the mortgage off. I always look at it like this...if you had a house paid for free and clear, would you borrow against it at 5% to invest in the stock market? I wouldn't, and I doubt most people would. But that's in effect what you're doing if you keep a mortgage.

And Tax break, Shmax break. Why do I want to pay 10K in interest to save 3K in taxes? I'll let Uncle Same have his 3K and I'll pocket the other 7K. Thanks.