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Old 07-23-2021, 03:21 PM   #161
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Originally Posted by GTFan View Post
But again, under that logic why stop there? Refi to the hilt, get as big of a margin loan against your portfolio as you can, etc etc etc. Interest rates are cheap, borrow to the hilt and max those gains! The math works!

Yes the math works given history, I already said that. But a mortgage is just arbitrage like anything else, assuming you invest the unspent/loaned money - you have to take on whatever risk you're comfortable with.
You answered your own question ("you have to take on whatever risk you're comfortable with").

I do plan to refi to the hilt. And I will be comfortable with that level of risk, because it isn't a huge % of my portfolio.

Margin rates are not so cheap, and are not fixed, so no, I'm not going to do that - not the same thing at all.

You seem to keep wanting to find a hole in this logic (and stretching scenarios, like with margin, to try to fit your view). If after all the discussions on this forum and others on this topic, if there was a hole in it, it would be obvious by now.

Yes, it's not guaranteed, that is understood, but it's not a flaw of the logic. It is, as you say, a risk I'm comfortable with. Historically (for 20 and 30 year periods), it has always paid off at these mortgage rates. Let me stress that - always. On average quite handsomely, and sometimes very significantly. Even the worst 20 year period provided a nice boost. Clearly, the future can be different from the past, there's the risk.

If you aren't comfortable with those odds, don't take them, it's fine with me. But I think it's a stretch to try to paint them as something scary for someone going in with their eyes open and keeping the mortgage to a reasonable % of total portfolio.

-ERD50
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Old 07-23-2021, 09:15 PM   #162
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Originally Posted by GTFan View Post
But again, under that logic why stop there? Refi to the hilt, get as big of a margin loan against your portfolio as you can, etc etc etc. Interest rates are cheap, borrow to the hilt and max those gains! The math works!

Yes the math works given history, I already said that. But a mortgage is just arbitrage like anything else, assuming you invest the unspent/loaned money - you have to take on whatever risk you're comfortable with.
Yes, indeed! I have even thought of doing this. Of course, the mortgage interest is no longer tax-deductible. That probably matters little, post, TCJA, but should be borne in mind.
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Old 07-24-2021, 06:22 AM   #163
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Margin rates are not so cheap, and are not fixed, so no, I'm not going to do that - not the same thing at all.
And primarily, margin is callable at the whim of the lender. A mortgage is fixed rate, the required monthly payment does not change, and it cannot be called.

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Historically (for 20 and 30 year periods), it has always paid off at these mortgage rates. Let me stress that - always. On average quite handsomely, and sometimes very significantly. Even the worst 20 year period provided a nice boost.
The average and median returns for all rolling 20 year periods for the S&P 500, 1950 to 2017, was 10.6%. The worst 20 year period was 6.3%. That period began 7/1959.

The historical odds are way in your favor for carrying a mortgage.
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Old 07-24-2021, 12:32 PM   #164
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Originally Posted by ERD50 View Post
You answered your own question ("you have to take on whatever risk you're comfortable with").

I do plan to refi to the hilt. And I will be comfortable with that level of risk, because it isn't a huge % of my portfolio.

Margin rates are not so cheap, and are not fixed, so no, I'm not going to do that - not the same thing at all.

You seem to keep wanting to find a hole in this logic (and stretching scenarios, like with margin, to try to fit your view). If after all the discussions on this forum and others on this topic, if there was a hole in it, it would be obvious by now.

Yes, it's not guaranteed, that is understood, but it's not a flaw of the logic. It is, as you say, a risk I'm comfortable with. Historically (for 20 and 30 year periods), it has always paid off at these mortgage rates. Let me stress that - always. On average quite handsomely, and sometimes very significantly. Even the worst 20 year period provided a nice boost. Clearly, the future can be different from the past, there's the risk.

If you aren't comfortable with those odds, don't take them, it's fine with me. But I think it's a stretch to try to paint them as something scary for someone going in with their eyes open and keeping the mortgage to a reasonable % of total portfolio.

-ERD50
You're absolutely correct, the most rational thing to do, especially at today's mortgage rates, is to keep the mortgage intact and watch it decline to a lower proportion of net worth. Especially starting at a low proportion already! Yes, there is a chance element, but I'm with you, I will take it! I intend to do the same as you.When we step out of the house, we're taking chances anyway. Everyday.

But most here have used "what you're comfortable with" to justify being mortgage free. Rationality and emotionality are irreconcilable. No point trying to argue or convince.

I have no issues remaining a partial owner of the roof over our head until our passing. With gratitude to the lender to allow this! And the largesse from the fed promoting home ownership
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Old 07-24-2021, 04:53 PM   #165
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Quote:
Originally Posted by ERD50 View Post
You answered your own question ("you have to take on whatever risk you're comfortable with").

I do plan to refi to the hilt. And I will be comfortable with that level of risk, because it isn't a huge % of my portfolio.

Margin rates are not so cheap, and are not fixed, so no, I'm not going to do that - not the same thing at all.

You seem to keep wanting to find a hole in this logic (and stretching scenarios, like with margin, to try to fit your view). If after all the discussions on this forum and others on this topic, if there was a hole in it, it would be obvious by now.

Yes, it's not guaranteed, that is understood, but it's not a flaw of the logic. It is, as you say, a risk I'm comfortable with. Historically (for 20 and 30 year periods), it has always paid off at these mortgage rates. Let me stress that - always. On average quite handsomely, and sometimes very significantly. Even the worst 20 year period provided a nice boost. Clearly, the future can be different from the past, there's the risk.

If you aren't comfortable with those odds, don't take them, it's fine with me. But I think it's a stretch to try to paint them as something scary for someone going in with their eyes open and keeping the mortgage to a reasonable % of total portfolio.

-ERD50
This is the graph that motivates me to keep my 30 year 2.25% fixed rate mortgage. I think it is very low risk that the nominal return on my 55/45 portfolio will drop below 2.25% average over the next 30 years. Heck, the 10 year break even rate is 2.35%, so I am actually making money on my mortgage since the NPV is less than the balance due. Very low risk, IMHO.
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Old 07-26-2021, 09:32 AM   #166
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One reason you MIGHT pay off your mortgage is to avoid the ACA subsidy cliff. By paying off your mortgage you lower you cash flow need. Need two years removes the cliff, so could be good time to plan. But who knows what the rules for subsidy repayment may be after that.
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