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View Poll Results: Why do have or dont have a mortgage
More invested money working for me 30 24.19%
I have an income to pay the mortgage 26 20.97%
Fixed income investments are paying lousy 6 4.84%
Reduced withdrawal rate 7 5.65%
If we have a big downturn, I wont have to pay a big mortgage bill every month 12 9.68%
Have one to provide tax advantages 16 12.90%
Dont have one to provide tax advantages 4 3.23%
Property owners are crazy 0 0%
I couldnt have bought a house without one 23 18.55%
Voters: 124. You may not vote on this poll

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Re: Reason for holding a mortgage...or not
Old 02-19-2006, 02:26 AM   #21
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Re: Reason for holding a mortgage...or not

Easy answer. If my stocks drop 50%, I dont have to take 12-25K+ a year out of that depleted portfolio to pay a mortgage every month. And if they drop 90% I can earn enough money at the quick-e mart to buy food and pay the utilities

my sentiments exactly...its easier to plan investments and maybe even go a little more aggressive with no debt try to p/u the point or 2 spread between what you can earn on investments vs the mortgage rate at this point of our lives isnt worth it..i can probley do better not having debt and going say 60/40 stock instead of 50/50

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Re: Reason for holding a mortgage...or not
Old 02-19-2006, 08:20 AM   #22
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Re: Reason for holding a mortgage...or not

That risk adjustment is a piece I think a lot of people miss. And it can go either can move to an 80/20 and take the risk because you arent tapping the portfolio as hard...or you could go to a 35/65 or 25/75 and be really conservative, and trade high terminal portfolio size for low current volatility...because you dont need to tap the portfolio as hard.

In fact, according to firecalc, a retiree with no mortgage and a 75/25 portfolio mix can retire earlier and with less money than someone with a mortgage and accordingly larger portfolio with a 50/50 portfolio.

The decision fits nicely in a fishbowl, but you're really shortchanging yourself if you dont take all the implications into account.

Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Re: Reason for holding a mortgage...or not
Old 02-20-2006, 06:51 AM   #23
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Re: Reason for holding a mortgage...or not

I just now signed onto this forum, so this is my first post. I am recently retired (56) and my wife will pull the plug in about 3 years. When she retires, my intent has been to pay off our two mortgages for peace of mind (an extra $30K expenses with declining tax advantages that I don't have to worry about in a downturn). But having spent two days reading forums and SWR sites I am wondering about ITIPS. Instead of paying off $450K in mortgages by cashing in mutual funds in taxable accounts, should I move the same amount into ITIPS in a 401K? I haven't done the calculations yet, but, after the tax breaks from the interest payments at least in the first ten years) wouldn't I be able to assure the mortgage payoff and diversify my portfolio at the same time?

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Re: Reason for holding a mortgage...or not
Old 02-21-2006, 09:49 AM   #24
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Re: Reason for holding a mortgage...or not

Originally Posted by kumquat
I'm probably a minority here but being Canadian there are no tax advantages to having a mortgage... make that few. We can't deduct mortgage interest unless we borrow to invest. I seem to have enough investments relative to the value of our house that the risk of rising rates, falling RE values aren't wort it.

Besides, I like being debt free!
Bingo - it must be nice to get a tax deduction for interest in the states. I guess on the positive side of things real estate is much more affordable here in Canada versus most places in the States. The home that I purchased for 200,000 CDN a few years ago would have been in the 750,000 range in California.
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Re: Reason for holding a mortgage...or not
Old 02-21-2006, 03:42 PM   #25
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Re: Reason for holding a mortgage...or not

But you're probably making up the difference paying for heat?

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