Burning the mortgage

[wingriderprincess]

My dh and I are getting close to paying off our house and others are telling us it's not a smart move because the taxes will eat us alive. I've been so excited to get this close and now I'm getting worried. How would we be money ahead to refinance, invest that money but still have monthly payments? It makes no sense to me. :confused:

Karlene

[Kathy]

Ahh! I look forward to the day when the mortgage payment is gone. I'm impressed! I agree with you. Refinancing and exchanging that for payments doesn't make sense to me.

I think you are in good shape. Of course, I'm not a financial advisor but what a thrill to be mortgage free!

[YellowRoseTex]

:celebrate Karlene, it is an awesome feeling! We burned ours a few months ago. I am so happy for you! :bliss:

I think the tax issue is not really what many think it is. I remember when dh and I bought our first house. Everyone was so excited, said we would reap so many tax benefits. We never saw them. Most years we do not really have enough to itemize so the tax bennies are lost.

Oh, and you will still have to pay taxes on your property. That does not go away, and if you qualify, those taxes will still be tax deductible. Only your monthly principal and interest payment will go away. Your property taxes should not change just because you paid off the property.

IMHO you should go for it and pay off that debt.

[YellowRoseTex]

P.S. I would set aside money each month for the property taxes. Make payments to yourself and put them in a savings account. When the property tax bill comes due, the money will be there and you will have made some interest.

[mezzo soprano]

Well, I must be "rolling in the dough" because I've got a first mortgage AND a second mortgage.... :rolleyes:

Your home is likely to be the biggest investment you'll ever make. What freedom there is in knowing that one day, when you sell it, you'll be able to keep the lion's share of the proceeds!

Sure, you get some tax benefits by having a mortgage payment. However, you often "borrow trouble" by putting a short-term purchase (credit card debt, car loan) on a long-term payment plan. Think about it... most car loans now are 48-72 months. Why put that short-term debt out on 15-30 years worth of payments, especially when you'll need (or want) a new car in 5-7 years? You'll just dig yourself in a hole... slowly, but you'll still dig yourself in.

A mortgage, IMHO, makes sense if you're purchasing the home, or doing major remodeling, or if you're making a sound investment in something else (like an additional downpayment on an investment property or vacation home).

My advice: set up an automatic debit for your house payment amount to go to your savings account (or an investment account of some sort) the month your mortgage is paid off. You'll be amazed at how fast your savings balance grows!

Sorry this is so long. As you can gather by my name, I do have a passion for this particular subject! :roflol:

[wingriderprincess]

:hi5: Now I'm excited! Putting that monthly payment into some sort of savings will be more fun then giving it to the bank... oops, sorry MJ. You'll have to get your bread and butter from someone else :)

[mezzo soprano]

Hey -- I love people who save with us! How do you think we get the $$ to lend out to other people? :lol: Although there are lots of other ways you can earn more (like investment folks)... it's still always a good idea to have some of a nest egg in the bank, so it's easily accessible. You'd be surprised how many of those money market funds make you wait 5-15 days before you can get your own money.

Good luck with burning the mortgage! You won't regret it.

[Ms Big Butt]

Hi Karlene:

A good place to get info on investments, all kinds, in plain english (with some humor thrown in) is www.fool.com :)

I am a big fan of DRiP investing, which is buying stock in a company, directly from that company (no broker fees), and all dividends are automatically reinvested. We throw some $$ regularly at our DRiPs in Intel, Johnson & Johnson, and Coca-Cola.

Congrats to you on getting that mortage monkey off your back :)

[clogaholic]

((( Karlene ))) Good for you!

my DH and I burned our mortage several years ago and it felt GREAT! We just put aside the money monthly for the property taxes.
We have even managed to save a little extra for vacations etc.
:bliss::bliss::bliss:

[pednurse]

Wow! What an accomplishment! I remember when my parents paid off their house while I was in high school. We had a cake to celebrate the event. I am looking forward to the day my DH & I get to do the same......only 17 more years to go! ;)

[Marian Paroo]

I don't know about taxes, etc., but when I was growing up in the States, and here too, the idea was to pay off the mortgage as soon as you can, the earlier the better.

Peace of mind is worth a lot.

My favorite financial advisor who writes books and appears on American teleivison (can I say her name here?) also is very strong on that.

[Kathy]

Is that Suzy Orman? She's great!

[Marian Paroo]

Is that Suzy Orman? She's great!


Yes, she is.

She gives good solid advice.

[magandab]

We paid off our house after 16 years, by cashing in two life insurance policies we had. We bought the insurance both to insure that neither would lose the house if the other died, and as a retirement investment. Well, they didn't grow as promised, but they did provide enough to pay off the mortgage. We figured they did exactly what we intended; we won't lose the house and neither of us had to die!

We will never refinance or take money out of the house. We are slowly doing some fixing up, as we can afford it, which is lots faster without the monthly payment. There is such satisfaction in knowing that no matter what happens, we will always have our place to live!

[PositivelyMental]

I think you rock! Hubby and I are working on becoming debt free except for the house and I am jazzed about that. Once the big kahuna (the house) is paid for ... wow I might do something really fun to celebrate!

Give yourself a big pat on the back!!!