Should They Pay Off the Mortgage?

[GreenSky]

The best advice is for them to seek out someone that actually understands investments and retirement planning.

Taking a "poll" on this forum is less than prudent.

Rick

 

[Guest]

Disagree about asking for help/opinion here. There have been lots of good ideas shared here by those WILLING to help and who HAVE the requisite background to offer sound opinion.

Of course, there are also lots of people on this board who are not here to help... they are here to rule.

As the kids say "It is what it is." (And obviously it's not what it's not!)

 

[Newby]

3-choices as I see it

1. Pay off the mortgage. Good choice. especially if you have good credit because you can borrow against your house anytime if you ever need to.
2. Keep mortgage but put the money you WOULD have paid it off with in a fixed account that gains more than the interest on the mortgage. Good also but ONLY if you are financially trustworthy.
3. Keep mortgage and INVEST the money. I would NEVER do that. Some people will buy flipper houses with it. Some will invest in the market or gold. Some will trust a "financial adviser's" recommendation. I wouldn't sleep at night putting my home at risk when it could have been paid off.

 

[xrac]

3-choices as I see it

1. Pay off the mortgage. Good choice. especially if you have good credit because you can borrow against your house anytime if you ever need to.
2. Keep mortgage but put the money you WOULD have paid it off with in a fixed account that gains more than the interest on the mortgage. Good also but ONLY if you are financially trustworthy.
3. Keep mortgage and INVEST the money. I would NEVER do that. Some people will buy flipper houses with it. Some will invest in the market or gold. Some will trust a "financial adviser's" recommendation. I wouldn't sleep at night putting my home at risk when it could have been paid off.

Have you ever read Missed Fortune?

 

[Newby]

Have you ever read Missed Fortune?

No. But isn't it based on whole life insurance?

 

[xrac]

No. But isn't it based on whole life insurance?

Yes! But it also discusses how lack of liquidity can be a trap. In certain situations it can be difficult to borrow money against the equity in a property. If you are retired and have a fixed income one of the things the bankl wants to know is how are you going to pay it back. One of the advantages of WL is access to cash.,

 

[padthaiforlunch]

Part in bold not always true. Bank stopped lending against homeowner equity in 2008. Took one man two years to find a bank that would give him a heloc. He was retired and the house (paid off) was his primary asset.

1. Pay off the mortgage. Good choice. especially if you have good credit because you can borrow against your house anytime if you ever need to.

 

[Newby]

Part in bold not always true. Bank stopped lending against homeowner equity in 2008. Took one man two years to find a bank that would give him a heloc. He was retired and the house (paid off) was his primary asset.

You're telling me if you have good credit the bank still won't loan money with a house as collateral. They will loan against a car but not a house?

I find this very hard to believe.

 

[xrac]

In the current lending environment it is almost impossible to get a commercial loan on anything even though you have a large amount of equity. The banks only want to lend on "owner occupied" property. I could see a person with a lot of commercial real estate but not much liquidity having real problems if they need to raise cash.

 

[scagnt83]

You're telling me if you have good credit the bank still won't loan money with a house as collateral. They will loan against a car but not a house?

I find this very hard to believe.

Even collateralized loans are hard to get these days, especially for retirees with a fixed income.

I have had two clients get denied for collateralized loans in the last two years.

One was a HELOC on a fully paid off house for a retiree, the other was a $15k 4 year auto loan backed by a $16k CD...


Think if you were a bank:
How quickly are houses selling these days? (I live in one of the best RE markets in the country, houses sit around for at least 3 or 4 months, if not longer)

Are those that are selling going for what the seller asks?

How sure would you be that you could sell that house in a reasonable amount of time and at the value you need to?

If it was your personal $ being loaned out, I bet you would be a bit more conservatively minded about the situation.




Loans are NEVER guaranteed! Even with collateral. To rely on them to survive on is foolish.

Cash is always cash, no matter what; not cash is.... well, not cash!!