paying off my parent's mortgage..help needed

[KaneKungFu123]

its currently at 50k left on their mortgage. Can i jsut write them a check for 50k or will this incur 'gift tax'? please help.

[jakethebake]

Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

[KaneKungFu123]

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Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

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the thing is that my mom is simple folk and i want to help her out financially, but she isnt really crazy about anyhting, and really loves her 450/wk daycare job.

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.

obviously, she is for the latter, being simple folk.

[sublime]

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.

the stock market has returned 10% annually (on average) since the 30's. by paying off the entire 50k, you restrcit yourself from investing that 50k (oppurtunity cost) while it doesnt probably matter to you right now, it should. one of the best ways to build wealth is to have your money working for you, and not the other way around.

honestly, a mortgage is one of the best things to have. the old school thinking that mortgages needed to be paid off come from the long dark days ago when a bank could call in the note on your house at will. fortunatly there are laws that protect against this now (making a mortgage a risk free loan).

there are other advanteges, but since that wasnt your original question, ill leave it to you to look into it further.

[bwana devil]

[ 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.

the stock market has returned 10% annually (on average) since the 30's. by paying off the entire 50k, you restrcit yourself from investing that 50k (oppurtunity cost) while it doesnt probably matter to you right now, it should. one of the best ways to build wealth is to have your money working for you, and not the other way around.

honestly, a mortgage is one of the best things to have. the old school thinking that mortgages needed to be paid off come from the long dark days ago when a bank could call in the note on your house at will. fortunatly there are laws that protect against this now (making a mortgage a risk free loan).

there are other advanteges, but since that wasnt your original question, ill leave it to you to look into it further.

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if you ever look at at how a mortgage is paid off (you can use the mortgage calculator at bankrate.com) you know that on the back end of the loan you're primarily paying the principal w/ little interest. the bank front loads all the interest in the early years. so that 6.5% interest rate was really paid for in the early years.

[MrMon]

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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.

the stock market has returned 10% annually (on average) since the 30's. by paying off the entire 50k, you restrcit yourself from investing that 50k (oppurtunity cost) while it doesnt probably matter to you right now, it should. one of the best ways to build wealth is to have your money working for you, and not the other way around.

honestly, a mortgage is one of the best things to have. the old school thinking that mortgages needed to be paid off come from the long dark days ago when a bank could call in the note on your house at will. fortunatly there are laws that protect against this now (making a mortgage a risk free loan).

there are other advanteges, but since that wasnt your original question, ill leave it to you to look into it further.

[/ QUOTE ]

if you ever look at at how a mortgage is paid off (you can use the mortgage calculator at bankrate.com) you know that on the back end of the loan you're primarily paying the principal w/ little interest. the bank front loads all the interest in the early years. so that 6.5% interest rate was really paid for in the early years.

[/ QUOTE ]

I'm not sure what you mean by this, but it's an incorrect sentiment. This home loan continues to accumulate interest on the remaining principal at an annual rate of 6.5% throughout it's entire life. You seem to be referring to the old car loans (which may still exist) that front loaded the interest payments, so that if they ever repossessed your car, you had little equity. Those made no sense to pay off early.

[jakethebake]

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the thing is that my mom is simple folk and i want to help her out financially, but she isnt really crazy about anyhting, and really loves her 450/wk daycare job.

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.

obviously, she is for the latter, being simple folk.

[/ QUOTE ]

Ah. I understand. Peace of mind for the folks is probably worth the incremental opportunity cost.

[brick]

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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.


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

[sublime]

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Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

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[mikeyvegas]

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Just pay it off as the bills come due. If it's been refinanced anytime in the last 10 years the rate is so low, you'll do better keeping the money and investing it elsewhere.

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