Poll:Do you Own your home outright?

[Cayman]

No debt for years and RE owned outright..... but with current fixed income options, I wouldn't mind a bunch of mortgage debt at 2% and a corresponding amount invested in CDs and Treasuries. Kudos to all who are in that position and earning that spread.

 

[Koolau]

We've owned (except for a "swing" loan for a few months.)



I've made the case here that it would likely have been better for us to rent our place! Likely rent: $2500. Current value (Guessing) $650K to $700K and we have to pay $900/month HOA dues.



Other than the substantial appreciation we are seeing on our "investment," rent likely would have been better - but YMMV.

 

[Teacher Terry]

When I was married our house was paid for. When I got divorced 2 years ago and bought a condo I took a 85k mortgage because the interest rate was 2.67%. I also took a 30 year mortgage which I won’t live to pay off.

 

[donheff]

I guess action speaks louder than words on this subject.

 

[O2Bfree]

Have owned outright since 2007. We bought about half of what we could have afforded, so it was easy to pay off quickly and that helped ensure we could RE. Also, we didn't need no big fancy house—1500 sq ft with plenty of parking and a view has been just fine.

 

[NW-Bound]

I was able to do it, it wasn't hard. The rules are weird though, and I jumped through some hoops unnecessarily, that I could have avoided if I had been better prepared.

#1 - Ask them - what is the minimum I need to qualify? Then only provide enough documentation to support that. I had submitted docs on everything (they assume most people need everything they own to qualify), and then they just ask questions about those accounts (got messy with some joint, some in DW trust, some in my trust - and that doesn't align with eh 'entity' taking out the mortgage)and you need to respond now that it's on record, but I wouldn't even need the funds from that account to qualify anyhow.

I guess there is no #2 - I told you it wasn't hard!

In the end, all I needed to do was to document an account with something like 2.5 years worth of payments, and show that I set up automatic withdrawals from that account to my checking account that would meet their 'income' requirement, and I think show one actual transfer (which I transferred back the next week!). The fact that it wasn't 'income', but just moving money from one account to the other didn't matter. They need to check a box.

But that was when rates were 3.0%, not such a deal now.

-ERD50

OK. It was just an intellectual exercise for me, to carry mortgages to have more money to put in the market.

However, as I added in my post, I was never 100% invested, and always had more cash on hand than I could get by remortgaging. I could have just plowed some cash into the market, which I did not do.

But I recall some posters lamented the difficulty in obtaining a mortgage. I don't think they were cashing out to invest, but simply to buy a new home while selling the existing one.

In any event, I have done reasonably well not being 100% invested, so I do not really miss anything (though I could have more and more, darn it! ).

 

[NanoSour]

Retired 10 year ago and I'm #2. Here are the numbers for my arbitrage.


235,000 30 year mortgage 8/2013 at 4.125%, monthly payment of $1099.43


Have CAGR of 7.02% for past 10 years making the $235K equal to



$235K * (1.0702)^10 = $463,145 - $235,000 = $228,145 gain


$228,145 - (1099*120 payments) = $96,265/10 years = $9,626/year or $802/month


Pays all my fixed expenses (Electric/Gas/Phone/Cable/Water/Trash/Insurance)


Every bit counts. What would I do differently? Re-Finance!!!

 

[athena53]

Odds are I’ll never have a paid off home. At 2.75%, there’s no incentive for me to pay off the mortgage. It’s big enough where I can itemize, which saves me in taxes.

So I guess I don’t “own” my home, but that’s ok with me.

I'm in a similar situation. 3% fixed, 7 years to go on a 15-year mortgage, balance is $51,000. With CDs at 5% it seems silly to pay it off.

 

[slowsaver]

We paid of the balance on the mortage ($120kish?) in the winter of 2008/9, when the economy was collapsing. I have no idea what the interest rate was, but savings weren't making anything, and no one was going to throw cash into the market at that point.

Amazing - this is exactly the same thing we did at the same time! In hindsight, it would have been better to buy stocks in 2009, but it sure didn't feel like a good idea at the time. I don't regret not having a mortgage though.

 

[clifp]

I was able to do it, it wasn't hard. The rules are weird though, and I jumped through some hoops unnecessarily, that I could have avoided if I had been better prepared.

#1 - Ask them - what is the minimum I need to qualify? Then only provide enough documentation to support that. I had submitted docs on everything (they assume most people need everything they own to qualify), and then they just ask questions about those accounts (got messy with some joint, some in DW trust, some in my trust - and that doesn't align with eh 'entity' taking out the mortgage)and you need to respond now that it's on record, but I wouldn't even need the funds from that account to qualify anyhow.


-ERD50

Asset-based mortgages are more complicated if for no other reasons, than that most banks and mortgage brokers haven't done many/any and so the process takes longer. By the time I did my 3rd one, it was pretty straightforward.

As ERD says sometimes less is more. My mortgage broker explained, "no you really don't want to report the rentals that you co-own with somebody through an LLC, and your partner also owes you money." They'll just ask you more questions and demand more paperwork. All that matter is your IRAs are much larger than the loan, and you'll say that you'll withdraw more than the payments.

 

[Koolau]

Asset-based mortgages are more complicated if for no other reasons, than that most banks and mortgage brokers haven't done many/any and so the process takes longer. By the time I did my 3rd one, it was pretty straightforward.

As ERD says sometimes less is more. My mortgage broker explained, "no you really don't want to report the rentals that you co-own with somebody through an LLC, and your partner also owes you money." They'll just ask you more questions and demand more paperwork. All that matter is your IRAs are much larger than the loan, and you'll say that you'll withdraw more than the payments.

With a really straight forward mortgage last time - they kept asking questions. Once the paper is sold - the questions start all over again.

 

[Ronstar]

Yes, own home outright.

Had a construction loan to build the house in 1993/1994. Converted to a mortgage after I finished the house. Then paid off the mortgage about 8-9 years later.

 

[2017ish]

We are in the number 2 category. Refinanced to a 15 year, 2.75% loan just before we retired. I was thinking about paying it off, but DW said "You're nuts, that interest rate is nothing."

First substantive thing she chose to control on our finances (other than making the vast majority of our money), and she made the right call in our circumstances. (And yes, the payment is small: so far, 6-8% of our variable retirement spending.)

 

[JohnRM]

Paint the door?

I think I read somewhere that you are supposed to paint your front door red when you pay off your house? We didn't do that, it's on my endless list of home tasks. Renting in a nice high-rise like George Jefferson is looking better and better.

 

[GaryInCO]

I'm basically retired, though I occasionally take on a consulting / training gig to keep my brain active and add to the retirement coffers.

Ex-DW and I paid off the house 20-25 yrs ago, but then we put a mortgage on it to buy a rental property. Several years later she dumped me. I ended up with our house and the mortgage. That was about 12 yrs ago. Since then I've loved living in this beautiful lakefront location, the house has doubled in value, and I have a sizeable mortgage at 2.75%. But I have most of my money in Tbills currently returning about 5.5% so the mortgage is making a profit.

My rental property (bought after we split) has returned about 5% net income per year and appreciated about 8% per year. The rental income (and the rent from a basement apartment in my house) covers my mortgage and my Tesla loan (3.24%). Social Security covers food, utilities, fun, etc. I have enough cash to pay off the mortgage, but at 2.75% why would I do that? If the rental becomes a headache, I can sell it and pay off my house. Or more likely sell it and NOT pay off the 2.75% loan.

 

[rayvt]

Would anyone on here pay off my 2.25% 30 year fixed rate mortgage with 28 years left? Peace of mind is ok, but not with the current fixed income spread. It's free money. I have more than enough to pay it off, but won't.

Ditto. Paying 2.5% on the mortgage and earning 5%-5.25% in CDs & Treasuries.

House will finally be paid off when I'm 103.

 

[SDHiker]

We have not paid off our home, but we could. We invest the money we have in assets instead. We might die with a mortgage, but it works for us. We're about seven years into a 30 year mortgage @3.5%. Our assets are earning way more than that.

 

[swabby01]

Been retired five years, paid house off ten years ago.

Know I could have leveraged the equity if I hadn't paid it off but grew up where my parents and grandparents all paid off as early as possible and then "relaxed"' when they finally retired.

Not sure how much I could have grown the equity but my wife and I are quite happy with house being free and clear and we have enough to live out our lives in this house and do everything else such as traveling and enjoying things without any financial concerns. Was lucky to work for a company that provided and excellent pension

 

[FLJim]

Just turned 75. DW is almost 74. Own 2 homes - paid cash for both (lots of leverage in negotiating price!) Don't like debt and why have it? SALT limits deductions so free and clear works best for us.

 

[meleana]

We own our little retirement home outright, which we purchased 12/2019, and we paid off our previous home of 32 years in 2004. That home was initially purchased in 1987. We are 67 and 69 years old.

 

[martyp]

When I retired in 2011 I had three years remaining on our mortgage.

 

[Happy30]

Retired and own 2 homes that are completely paid off! It is a great feeling!

 

[COcheesehead]

I think I read somewhere that you are supposed to paint your front door red when you pay off your house? We didn't do that, it's on my endless list of home tasks. Renting in a nice high-rise like George Jefferson is looking better and better.

Just don’t put white rocks in the front yard.

 

[bluelight]

Paid off my house in 2012. Purchased new house cash 2016. Retired 2019.

 

[Badger19]

Debt free for 8 years with 2 homes. Sold one at retirement 3 years ago. Used proceeds to preserve retirement accounts and do massive Roth conversions. Building new home next year and will sell current property but need $400k more. Preserving Roths. Taxes are untenable with pension income for IRA distribution that large. Will take out construction loan and convert to mortgage after that. Seems silly, but avoiding the 35% fed tax bracket (plus 7.65 state tax) and leaving IRAs mostly invested seems the best overall option.