Do People Really Use Mortgage Insurance to Pay Off Their Mortgage

[jdeasy]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

Tax benefits or not - even if it's not the most financially savvy move, if I could pay off my house right now I would. Outside of property taxes there's not a better night's sleep than knowing you have a roof over your head.

In times of extreme financial crisis you could also take out a mortgage or sell it.

In the past, investing the money would have been a better options since returns exceeded your mortgage rate. Anyone want to tell me where to get 8% returns now?

I agree with this. If I could pay off my house today, I would do it. I'm sure it would not be the most prudent financial thing to do, but, it would be great piece of mind to be able to burn that mortgage. I would probably have one of those old fashioned mortgage burning parties.

 

[R. Paul Aguirre]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

I would just point how having $50,000, $100,000 or whatever amount in their checking account can either:

1. Pay off any outstanding credit card bills, car loans, etc., so the monthly expenses go down considerably.

2. If their mortgage payment is $1,500 per month, that $100,000 will pay the mortgage payment for 5 years allowing survivor plenty of time to sell the house and downsize, or to take the $100,000 and pay cash for a condo or small house and have no mortgage on the new property. (Just sell the current house)

My thoughts exactly

 

[Larry Tew]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

Tax benefits or not - even if it's not the most financially savvy move, if I could pay off my house right now if I could. Outside of property taxes there's not a better night's sleep than knowing you have a roof over your head.

In times of extreme financial crisis you could also take out a mortgage or sell it.

In the past, investing the money would have been a better options since returns exceeded your mortgage rate. Anyone want to tell me where to get 8% returns now?

Here's another way to look at it. In times of extreme financial crisis (say from unemployment or disabilty) you either walk or are rolled in a wheelchair into the lobby of your bank where you've been a great customer. You ask your personal banker about getting a mortgage and he says .

You don't need to get an 8% rate of return to justify keeping your money liquid and accessible versus paying down your mortgage as fast as possible. Assuming you qualify for the mortgage deduction, a 6% mortgage in a 30% bracket costs 4.2% net after taxes. Most people would say that products that would yield 4.2% long-term is within their risk tolerance.

I do not endorse home equity stripping or harvesting, but I can mathematically prove that big down payments, extra principle payments, and short mortgages are not the best strategy for anyone who qualifies for the mortgage deduction and would like to build their home equity in an alternate position that provides liquidity, access, and control versus in the walls of their house. This is how you can like a baby at night.

 

[djs]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

OUUUUU...if you take out a whole life half way through thay can cash it out and pay off the remaining mortgage.... training provided by METLIFE

Yeah, show me the math on this

Sure sounds good though!

 

[STIBROKER]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

go to work for MET....they have the software.....hahahahaha....

http://www.lifeinsurancehub.net/wholelifeinsurance.html


Mortgage Redemption And CancellationWhole life insurance can be used for mortgage redemption or mortgage cancellation. At some point the balance owed on the mortgage of a house, or any piece of property with a mortgage, will become equal to the cash value of the policy. The cash can be taken from the policy and used to pay off the mortgage.
These policies are usually specifically targeted to this specific event, even though any life policy with sufficient anticipated cash value can be used.

Yeah, show me the math on this

Sure sounds good though!

 

[VaDwayne]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

Why would you pay off the mortgage when it provides a tax deduction?

Terrible reason to have a mortgage. Pay out $ 2000 to get back $800 on your taxes. Pay you house off, give the 2000 to a charity and still have the same deduction.

 

[Crabcake Johnny]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

The answer is "pay off the house" wins.

 

[STIBROKER]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

Ask the Expert: Does mortgage insurance make sense? - Dec. 19, 2003

This offer -- typically by mail -- often comes from your lender or an insurance company affiliated with that lender.
This type of insurance is purely voluntary, however, so the question is, should you buy?
Generally, I'd say the answer is no.
It rarely makes sense to buy insurance for narrow reasons -- to insure against a specific disease or a single calamity or to provide funds to pay off a single liability, in this case your mortgage.
In the case of life insurance, for example, you're much better off analyzing your overall insurance need based on what kind of liabilities your spouse or other dependents would face and how much income they would have to replace if you were gone, and then buying enough insurance to meet that need.
Fact is, if you died tomorrow, your dependents would need to replace your income for a variety of reasons, not just to pay the mortgage.
Indeed, it might not even make sense to pay off the mortgage. Your spouse or other survivors might be better off continuing to pay the loan -- assuming that's possible -- and putting insurance proceeds to other purposes.
In other words, you should take your overall financial picture into account when buying life insurance.
And the way you should do that is to have a financial planner or life insurance agent perform what's known as a "needs analysis." You can also use any one of a number of insurance needs calculators online, including the calculators at The Life and Health Insurance Foundation for Education site and TIAA-Cref site.
Of course, that leaves the question of what type of insurance you should buy -- whole life, term, etc. -- and the issue of how to shop for the best price for a policy.

 

[Larry Tew]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

The answer is "pay off the house" wins.

Paying off the mortgage as fast as possible is an idea based on mortgage banking practices from the 20s and 30s when mortgages were callable with almost no notice. The idea has been perpetuated from a time when our grandparents worked for one company for 40 years and many times retired living in the same house they bought when they got married. This is the same kind of conventional wisdom that had Columbus sailing off the edge of the earth. When an idea is presented that doesn't fit inside a person's "box of knowledge", they have two choices. Dismiss it... or get a bigger box. I don't believe this is an always / never issue, and I don't think this is an issue that can be "won" based on counting up the yeas or nays in a forum thread. To each his own. Time for dinner.

 

[VaDwayne]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

PAY OFF THE HOUSE, I have 11 more years. Do you think I care about the tax deduction, NO? I am planning on retiring, with no house payment, no credit card payments, or any other payments except the normal bills and taxes, and I will be 57 years old. That is more important to me, than a tax deduction.