paying off my parent's mortgage..help needed - Page 5

mmbt0ne · #41 08-22-2005, 01:51 AM

Many of its opponents refer to the estate tax as the "death tax" and have called for its abolition. Since 2003, the top rate has dropped from 50% by one percent per year; it is scheduled to drop to 45% in 2009, thence to 0% in 2010, but as of 2005, if no further changes in the law are enacted, the tax will be reimposed at a top rate of 50% in 2011. It is, however, expected that Congress will enact legislation to change this in the intervening period.

brick · #42 08-22-2005, 01:58 AM

[ QUOTE ]

her intestest rate is 6.5%, do you still think its better to pay monthly and invest, or to pay it off as a whole.

[/ QUOTE ]

Just pay it off. That long term loan idea is brilliant.

bone77 · #43 08-22-2005, 02:30 AM

actually there are a few different loan options, 30 year fixed, short term arms, interest only etc. so depending on which you choose, the interest may be fixed, fixed for 2-5 years and then become adjustable or you can pay all interest on your mortgage payment and not touch the principle amount. this probably just confused it more or didn't make sense but it's late, at least i tried.

tony

mmcd · #44 08-22-2005, 10:22 AM

In 2010, the Estate Tax disappears (along with the stepped-up basis that goes along with it). Even if an estate has substantial low-basis assets, it will still be better off getting hit with the capital gains taxes provided it's substantially above the 3.5mil '09 exclusion amount. The bill that abolishes the estate tax expires in 2011, so it will be coming back then (with a 2001-level exclusion amount) unless Congress acts in the mean time.

CCass · #45 08-22-2005, 10:57 AM

Read the book. I think you will find it interesting. It is about monetary wealth. The book defines a millionaire as a household (husband and wife) with a NET WORTH of over 1 million dollars. Surprisingly, quite a few of the millionaires in this country don't make a high salary, many earn less than 100K a year. A doctor that earns 600K a year, but spends 550K isn't wealthy in my opinion.

CCass · #46 08-22-2005, 11:04 AM

[ QUOTE ]
Paying it off now is far better than paying it off over time. Your mother will sleep better in a house that is paid for.

nonsense. i doubt his mother sits up at night worrying about the state of her mortgage. as a matter of fact, i am sure she worries about her son's future more. taking 50k and paying off a 'good' loan will cost him the chance to invest that money and reap the benefits of compound interest.

despite the reasons already mentioned, here are a few more points in favor of owning a mortgae on a home:

most are fixed rate, yet inflation usually gives us a raise. so whilst your per year earnings increase year after year, the loan payments dont.

the fact that while the bank holds a note on the house, the owner is the one reaping the benefits of the land/property growing in value.

tax benefits

etc...........

personally, i hope to never fully pay off my home (when i buy one). the economics of america today suggest a mortgage is a powerful thing to have.

Also, the truly wealthy people in america don't have debt (or very much debt). Read a book called "The Millionaire Next Door".

I have read that book. It was a few years ago, but if I recall correctly it was mostly based on how some families in America were very frugal and as a result became modestly wealthy. most of what they constantly preached were spending within your means and saving/investing lots of money. the advice given in the book, was loose but basically common sense. dont carry 'bad debt' (credit cards, vehicles etc). a mortgage is an entirely different beast.

[/ QUOTE ]

You and I may just have to agree to disagree. Ask yourself a question. If you lived in a house that was paid for, would you go borrow monay against it to invest? I would not.

Sifmole · #47 08-22-2005, 01:50 PM

[ QUOTE ]

You and I may just have to agree to disagree. Ask yourself a question. If you lived in a house that was paid for, would you go borrow monay against it to invest? I would not.

[/ QUOTE ]

And so you have a couple hundred to several hundreds of thousands of dollars doing absolutely nothing for you. Brilliant! Hoarding does not make money. Working hour after hour does not make you wealthy. Finding ways to allow your money to make money makes you wealthy.

ibstudly1 · #48 08-22-2005, 02:09 PM

Invest that money in annuity as a gift for your mom. set it up as a monthly payout for a specified amount. this will let you draw interest and still pay off the morgage.

mmcd · #49 08-22-2005, 04:30 PM

And so you have a couple hundred to several hundreds of thousands of dollars doing absolutely nothing for you. Brilliant!

Real estate appreciates. The money you have tied up in it is not doing nothing. If you buy a house for 500k tomorrow, do you think 500k is all it will sell for 15 years from now? Brilliant!

TheWorstPlayer · #50 08-22-2005, 04:38 PM

[ QUOTE ]
And so you have a couple hundred to several hundreds of thousands of dollars doing absolutely nothing for you. Brilliant!

Real estate appreciates. The money you have tied up in it is not doing nothing. If you buy a house for 500k tomorrow, do you think 500k is all it will sell for 15 years from now? Brilliant!

[/ QUOTE ]
The rate of appreciation is not effected by the size of any potential mortgage. The returns generated from other financial investments are directly proportional to the amount of capital invested. So your house will go up in value AND you will get the returns on any stock/bond/real estate/etc purchases you make with the money from the mortgage AND you will deduct your mortgage payments from your taxable income. The US gov't gives FREE MONEY to house owners in this country. By not taking out a mortgage you are saying 'no thank you'.