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Old 04-04-2012, 07:10 PM   #21
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Good point
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Old 04-04-2012, 08:25 PM   #22
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If Social Security and Medicare ever become means tested -- and the test is based on income rather than assets -- you might be better off with a paid off house if paying the mortgage requires taking taxable distributions from IRA's or 401k's.
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Old 04-04-2012, 08:31 PM   #23
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If Social Security and Medicare ever become means tested -- and the test is based on income rather than assets -- you might be better off with a paid off house if paying the mortgage requires taking taxable distributions from IRA's or 401k's.
To a lesser degree that's already true today in that needing the extra income to service the mortgage can also kick you into a higher tax bracket and make more of your SS subject to taxation.
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Old 04-06-2012, 09:30 AM   #24
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One thing about the $600 you won't be spending on a mortgage is that the $600/mo you save is equivalent to earning $600/mo tax-free. The 3.75% after tax it is like earning 5.2% on the money you used to pay off the mortgage and it's risk-free.
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Old 04-08-2012, 11:38 AM   #25
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Disclosure: I just paid my house off last month, that being said ..... When I was looking at this, I viewed the paid off house less as and investment per se, more of a way to help ensure against job loss. Technically, you can look at a paid off mortgage as a bond and adjust your asset allocation accordingly. If you do this, you recover some of the "lost" potential gains. The other side of the coin is to look at a mortgage as a leveraged investment, with the attendent up side and down

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Old 04-20-2012, 09:11 PM   #26
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Feeling of Freedom can't be beat!

We paid off our mortgage($1500/M) last month. The interest rate was 4.25%. It was my wife's idea to pay off the mortgage and initially I was against paying if off early, but now that it is paid off it is a big relief and feels nice to have no mortgage payment. We intend to invest $1500/m(extra money) to grow our nest egg at a faster rate. In my opinion, with no debt we can be more aggressive in investing with the extra investment and hopefully achieve our dream of early retirement (we are 53 years old).

IMHO, the feeling of freedom is worth it. Best Wishes to you!
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Old 04-20-2012, 09:41 PM   #27
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We paid off our home about 3-4 years ago. The feeling is wonderful. NO debt!
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Debt Free feels great!
Old 04-20-2012, 10:53 PM   #28
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Debt Free feels great!

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We paid off our home about 3-4 years ago. The feeling is wonderful. NO debt!
You bet!
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Old 04-21-2012, 10:09 AM   #29
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Next year, I will have enough cash to pay off my mortgage if I want to. I have decided not to. The reason why is I dont trust myself to pay back the money. I am on a good retirement budget and am comfortable, but Im afraid I would expand my budget because the house payment is gone and not repay my depleted funds in a timely manner. So to me it is more of a discipline issue than investment issue because I live on a nice pension, and do not have much of an investment portfolio.
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Old 04-21-2012, 05:08 PM   #30
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Paid it off last Thursday. With the mortgage gone, DW and I can survive on just our pensions and not NEED to draw from our portfolio. But since we plan to travel, we will probably draw a bit to pay for gas lol.

It feels good!
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Old 04-21-2012, 05:35 PM   #31
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Man, I was just thinking I should refi again at 3.375%.
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Old 04-21-2012, 07:14 PM   #32
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Paid it off last Thursday. With the mortgage gone, DW and I can survive on just our pensions and not NEED to draw from our portfolio. But since we plan to travel, we will probably draw a bit to pay for gas lol.

It feels good!
I paid mine off last Thursday as well. It added to my confidence going into early retirement to know that my biggest monthly commitment was eliminated, even though logically a 3.75% interest rate for another 29 years was appealing. I was supervised at how relieved I felt to eliminate the debt.
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Old 04-21-2012, 08:14 PM   #33
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Paid it off last Thursday. With the mortgage gone, DW and I can survive on just our pensions and not NEED to draw from our portfolio.
Didn't you draw from your portfolio to pay it off? Or did you hold up a liquor store?

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Old 04-21-2012, 09:53 PM   #34
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Paid it off last Thursday.
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I paid mine off last Thursday as well.
What happened last Thursday? Did I miss some sort of anniversary or holiday or bulk-discount deal?
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Old 04-21-2012, 10:25 PM   #35
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What happened last Thursday? Did I miss some sort of anniversary or holiday or bulk-discount deal?
Didn't you get the memo? It was Pay Off The Mortgage Day!
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Old 04-22-2012, 10:16 AM   #36
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We paid ours off by first having a 15 yr mortgage and then near the end, we used a small inheritance to finish it earlier than expected. We didn't have to get into savings to do it.
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Old 05-02-2012, 02:27 AM   #37
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I have refinanced my mortgage last month and I'm down to $80k @ 3.375% for 15 years. My house appraised at $139k. The actual loan part of the payment is about $600 per month with taxes and insurance consisting of an additional $300 per month.

I read these stories about how it's such a great feeling not having to make the house payment every month, how it frees up income, etc. But does $600 per month really make that much of a difference? Taxes and insurance still cost $300 per month. You still have to pay the same utilities @ $200 per month.

$600 a month doesn't seem like a big weight to be taken off my shoulders. What am I missing here?
Young Saver,
It really depends on how comfortable you are with having debts in life. I'm personally don't agree with the idea of paying off mortgage early because I could use those extra cash to purchase another assets instead of let those extra cash sitting in one property. For example, I could re-fi $139k house and cash out. Let's keep 20% equity on the house which is $28.7k and I'll have $111.2k @ 3.75% for 30 years, monthly will be about $870. I can purchase another property with $20.3k extra cash from the refi, and rent it out for a $100-$200 positive cash flow every month. In the end, there will be not much difference in monthly expense because of the positive cash flow BUT leveraging power will be the big difference here. I will 2 properties that can increase in value instead of one, this makes money work for me. Also, I will get a tax deduction benefit (depreciation) from rental property. I understand that it's easy to find a rental property, it's a lot of work because we need to know the jobs growth n economy of one city unless we already know the neighborhood and we live there. It'll be a lot of work but I think it's worth it.
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Old 05-02-2012, 07:58 AM   #38
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Man, I was just thinking I should refi again at 3.375%.
I keep going back/forth with this in my head.

I just have to keep reminding myself that when we refinanced the last time (15 yr @ 4.625% ... 18 months ago), it would take 6.5-7 years in order to offset the cost of the refinancing. So, I'm stickin' with the current one until it's paid for if it kills me.
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Old 05-02-2012, 08:28 AM   #39
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I was mortgage free for awhile. We sold our house as I feared the bust was going to hit Houston in 2008. Houston got hit but it was more of a "glancing blow."

We've now bought a house and I took out a 30 yr 3.875% mortgage. The payment is around $1,000. I have a collection of small, non-COLA'd pensions that will amount to about $1,500/month. I figure that I can commit my fixed pension against the fixed mortgage and not have to worry very much about inflation reducing the value of my pension.

The peace of mind I got by not having a mortgage was not very great. I think I prefer having the extra couple hundred thou in my after-tax account. Without this cash, my assets are very heavily weighted towards IRA and 401k accounts. This after-tax cash will let me do a better job of tax rate balancing.
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Old 05-02-2012, 09:13 AM   #40
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I keep going back/forth with this in my head.

I just have to keep reminding myself that when we refinanced the last time (15 yr @ 4.25% ... 18 months ago), it would take 6.5-7 years in order to offset the cost of the refinancing. So, I'm stickin' with the current one until it's paid for if it kills me.
You may want to consider a no cost refinance where all of the cost is rolled into the interest rate... then you could get maybe a 3.625-3.875 but it won't cost anything or add anything to your balance. Essentially, all that happens is your rate drops another half a point or so.
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