Millionaires: do they pay off their mortgages? - Page 5

Ronstar · 01-11-2008, 04:16 AM

I built my house in 1995, used previous home equity and borrowed 115k and made regular payments and additional principal payments until i paid it off in 2000. Then saved everything and bought condo in 2002 in cash.

template · 01-11-2008, 05:25 AM

I paid off my mortgage long before becoming a millionaire. It was my only loan and I didn't like debts.

Meadbh · 01-11-2008, 08:15 AM

Home mortgage: purpose = acquire nice place to live. Paid it off in 18 months. NW neutral. Increased quality of life.

Rental property mortgage: purpose = leveraged investment. Just acquired one. Positive cash flow, NW up $100K.

Pete · 05-09-2008, 08:53 AM

The math all says to keep the mortgage. Your returns have historically been higher than the rates we pay for our mortgages.

Paying off your mortgage has psychological benefits though. I felt much more comfortable retiring early after I paid it off. Funny, I'm taking better care of the house now and picked up some extra insurance to protect it properly.

ls99 · 05-09-2008, 09:15 AM

No mortgage, no worry, retired.

willowbeezer · 05-09-2008, 11:34 AM

My NW is 2.3mm. 0.1mm mortgage remaining at 4.875 15yr fixed.

I have always paid extra against principle but have stopped and rationalized that I could earn more in CD's. So I locked in 100k in 6% 10yr CD in IRA account. However, my portfolio consists of 0.3mm more in fixed income / cash yielding much less than 4.875%.

So begun to think that on the margin, it would make economic sense to reduce the cash portion and retire the mortgage debt. The other arguement would be to reallocate the cash portion to equity (long term equity returns should be above 4.875 albeit at a higher risk profile)

Thoughts?

cute fuzzy bunny · 05-09-2008, 04:06 PM

Quote:

Originally Posted by Pete

The math all says to keep the mortgage.

My math doesnt say that at all. Perhaps you might learn a few different ways to look at things by reading the mortgage payoff FAQ's.

My math does wonder why someone registers as a new user and then starts resurrecting 6 month to 4 year old threads on mortgage payoffs.

bbbamI · 05-09-2008, 04:26 PM

Jose, perhaps?

Notmuchlonger · 05-09-2008, 04:29 PM

Quote:

Originally Posted by bbbamI

Jose, perhaps?

Cuervo?

cute fuzzy bunny · 05-09-2008, 05:21 PM

Can you see....

superdave · 05-15-2008, 12:15 PM

in Canada the math is way different. No ability to deduct any mortgage interest. Pay it off, get nest egg, retire early and live off the government . Hense the obsene taxes do not hurt anymore. Its true!

Meadbh · 05-17-2008, 05:09 PM

Quote:

Originally Posted by superdave

in Canada the math is way different. No ability to deduct any mortgage interest.

......unless it's an investment property.

The inability to deduct mortgage interest on one's principal residence probably has been a moderating influence on Canadians' use of home equity as a line of credit.

Quote:

Originally Posted by superdave

Hense the obsene taxes do not hurt anymore..

Luckily the taxes have been getting a little less obscene lately.

rogersteciak · 05-17-2008, 05:49 PM

I paid off my mortgage and my home equity line of credit. My math is simple:

Financial Freedom means Investment Income exceeds Living Expenses by a Margin of Safety.

Debt payments increase living expenses. By paying off the mortgage and HELOC loan, I needed less investment income to achieve financial freedom.

While it's true that one can do an arbitrage play (i.e., invest money at a 12% return while paying mortgage interest at a 6% rate), the downside to being leveraged is when Mr. Market becomes depressed. Debt payments continue regardless of what Mr. Market does. Less debt means more room to maneuver when times become tough.

cute fuzzy bunny · 05-17-2008, 08:31 PM

Ding a ding dingly ding!!!

View Poll Results: Where do you stand with respect to net worth and mortgage payments?
Milliionaire making mortgage payments	99	25.52%
Non-millionaire making mortgage payments	88	22.68%
Non-millionaire with paid off home	41	10.57%
Milliionaire with paid off home	143	36.86%
Renter, live with parents, or other housing arrangements	17	4.38%
Voters: 388. You may not vote on this poll

01-11-2008, 05:25 AM	#82
template Recycles dryer sheets Join Date: Aug 2005 Posts: 140	I paid off my mortgage long before becoming a millionaire. It was my only loan and I didn't like debts. __________________ Retired in 2001 at age 49.

05-09-2008, 08:53 AM	#84
Pete Dryer sheet aficionado Join Date: May 2008 Posts: 45	Returns vs psychology The math all says to keep the mortgage. Your returns have historically been higher than the rates we pay for our mortgages. Paying off your mortgage has psychological benefits though. I felt much more comfortable retiring early after I paid it off. Funny, I'm taking better care of the house now and picked up some extra insurance to protect it properly.

05-09-2008, 09:15 AM	#85
ls99 Recycles dryer sheets Join Date: May 2008 Posts: 234	No mortgage, no worry, retired. __________________ There must be moderation in everything, including moderation.

05-09-2008, 04:26 PM	#88
bbbamI Thinks s/he gets paid by the post Join Date: Dec 2006 Location: Dallas Posts: 1,103	Jose, perhaps? __________________ Yeah, that's a pancake on my head....

01-11-2008, 04:16 AM	#81
Ronstar Recycles dryer sheets Join Date: Aug 2007 Posts: 396	I built my house in 1995, used previous home equity and borrowed 115k and made regular payments and additional principal payments until i paid it off in 2000. Then saved everything and bought condo in 2002 in cash.

01-11-2008, 08:15 AM	#83
Meadbh Thinks s/he gets paid by the post Join Date: Jul 2006 Posts: 1,337	Home mortgage: purpose = acquire nice place to live. Paid it off in 18 months. NW neutral. Increased quality of life. Rental property mortgage: purpose = leveraged investment. Just acquired one. Positive cash flow, NW up $100K.

05-09-2008, 11:34 AM	#86
willowbeezer Dryer sheet wannabe Join Date: May 2008 Location: Illinois Posts: 14	My NW is 2.3mm. 0.1mm mortgage remaining at 4.875 15yr fixed. I have always paid extra against principle but have stopped and rationalized that I could earn more in CD's. So I locked in 100k in 6% 10yr CD in IRA account. However, my portfolio consists of 0.3mm more in fixed income / cash yielding much less than 4.875%. So begun to think that on the margin, it would make economic sense to reduce the cash portion and retire the mortgage debt. The other arguement would be to reallocate the cash portion to equity (long term equity returns should be above 4.875 albeit at a higher risk profile) Thoughts?

05-09-2008, 05:21 PM	#90
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: z Posts: 20,250	Can you see.... __________________ Without censorship, things can get terribly confused in the public mind.

05-15-2008, 12:15 PM	#91
superdave Dryer sheet wannabe Join Date: Jun 2004 Posts: 11	in Canada.... in Canada the math is way different. No ability to deduct any mortgage interest. Pay it off, get nest egg, retire early and live off the government . Hense the obsene taxes do not hurt anymore. Its true!

05-17-2008, 05:49 PM	#93
rogersteciak Recycles dryer sheets Join Date: Apr 2006 Posts: 123	I paid off my mortgage and my home equity line of credit. My math is simple: Financial Freedom means Investment Income exceeds Living Expenses by a Margin of Safety. Debt payments increase living expenses. By paying off the mortgage and HELOC loan, I needed less investment income to achieve financial freedom. While it's true that one can do an arbitrage play (i.e., invest money at a 12% return while paying mortgage interest at a 6% rate), the downside to being leveraged is when Mr. Market becomes depressed. Debt payments continue regardless of what Mr. Market does. Less debt means more room to maneuver when times become tough.

05-17-2008, 08:31 PM	#94
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: z Posts: 20,250	Ding a ding dingly ding!!! __________________ Without censorship, things can get terribly confused in the public mind.

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