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Old 10-10-2021, 07:47 AM   #201
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Nicely done. With that kind of activity I definitely have you in the more freedom group.
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Old 10-10-2021, 09:40 AM   #202
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Originally Posted by ncbill View Post
Nope...e.g. the rates at Interactive Brokers: Margin Rates

From posts over on Bogleheads others have managed to negotiate rates close to those at IB with other brokerages...much cheaper than the posted rates.
Late to the discussion, but isnít the catch here though that the rates arenít fixed? With some of the recent articles in wsj etc on living on margin loans, we looked into this, but the non fixed rate aspect concerned me. Also the hassle of moving money. Will have to look at the discussion on bogleheads and see where else people are negotiating these rates.
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Old 10-10-2021, 10:27 AM   #203
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Nicely done. With that kind of activity I definitely have you in the more freedom group.
I also use HELOC to make money in the stock market. If there is a 15% market correction in the S&P500 tomorrow, I am the kind of guy who would borrow $250,000 from my HELOC off my rental properties at 2-1/2% per year which is about 0.2% per month. If the S&P500 then recovers after 1 month, I will make $37,500 and pay back the HELOC and my interest cost is only $500 so my net profit is $37,000.

I do not borrow off my principle home. This is because if my gamble goes wrong, I may have to sell my house and move. However, if the HELOC is against one of my rental properties, I may have to sell that rental property so the tenant will have to move or rent from the new owner. My original point is that owning properties free and clear does NOT tie up your money.
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Old 10-10-2021, 04:03 PM   #204
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DH has a pension. We paid off our mortgage a long time ago. The rates were much higher then.

When we got the mortgage, I was handed an amortization sheet. I studied it, and saw by making additional payments early on, we would save a great deal in interest expense. The total to be paid to the bank, w/o additional payments, was multitudes of the original loan. So after funding my 401k; I made extra payments on the principal.

Conversely, I am not an investment maven; and had no knowledge of investments, asset allocations or otherwise, at the time we purchased the house. It seems that a number of posts include the assumption that the mortgagors will invest the funds not used to pay off the mortgage, wisely and profitably. Obviously, a number of forum members here have.

Antidotally, I have been aware of certain persons have (based upon information they have themselves provided) used that available money to buy extra toys (fancy cars, vacations, etc.) rather than to invest in the market.

As far as a sense of accomplishment or "euphoria" that's a personal thing - and the value of such can only be assessed by the particular person involved.

YMMV.
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Old 10-10-2021, 11:17 PM   #205
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My original point is that owning properties free and clear does NOT tie up your money.

I understand your point that there are borrowing options but paid off is a binary state. It is either paid off and your money is tied up to remain paid off.

Or

It is borrowed against and it is no longer paid off.

People who want a paid off home do not borrow against it.
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Old 10-11-2021, 01:21 AM   #206
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I understand your point that there are borrowing options but paid off is a binary state.

People who want a paid off home do not borrow against it.
That is their choice. But they are missing out on investment opportunities to increase their net worth.

Most people buy a starter home and sell their starter home to buy a bigger home. However, what I did is keep my starter home and rent it out. Eventually the tenant pays for the mortgage on the starter home and you end up with two houses that is free and clear instead of one.

I then have used the equity in the rental house to buy a third house and later invest in the stock market so my family is pretty well off. My daughter is going to college and I brought her a townhouse with 100% cash so she will never have to pay rent or a mortgage in her life. She is renting out two of her three bedrooms to two college students so she can invest her rental income in the stock market. Since she is still in her 20ís, her future look pretty good. A little sacrifice at the beginning generally pays off big time years later. Knowing how to use a HELOC for investment opportunities can dramatically improve your standard of living for yourself and your children. Like I statedÖthat is their choice on whether or not to use a HELOC for investment opportunities.
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Old 10-11-2021, 07:27 AM   #207
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I am fully in the camp of investing rather than paying off your home. So much so that I have bought (with loans) rental property for investment but never a home to live in.

HCOL areas typically have Ďcheapí rent compared to the cost of the building. Roughly 0.30% of the purchase price/month where I am.

Our out of state rentals operate at approx 1% of price/month so it does not make investment sense to tie up money in a personal home or even waste a good mortgage on a personal home compared to a rental.

But that is because I am coming from the money freedom and less security point of view

I fully respect that others want the security of a paid off home as a priority and accept less money freedom to achieve the goal.
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Old 10-11-2021, 08:03 AM   #208
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I havenít borrowed against the house to buy equities, and probably wouldnít, but we have used HELOCS and cash-out refinances to good effect many times to fix up our residences, make them more enjoyable and drive up their market values.
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Talked to 2 Retired Neighbors .. They didn't pay off mortgage, but both have pensions
Old 10-11-2021, 08:12 AM   #209
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Talked to 2 Retired Neighbors .. They didn't pay off mortgage, but both have pensions

All the HELOC talk makes me want to see what options I have now for buying Bitcoin with house money

Who is with me?
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Old 10-11-2021, 09:35 PM   #210
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Crickets...
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Old 10-11-2021, 10:08 PM   #211
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All the HELOC talk makes me want to see what options I have now for buying Bitcoin with house money

Who is with me?
Casino's aren't open in your state?
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Old 10-12-2021, 12:24 AM   #212
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Depends what the pension is also. Some people have a 5k-7k a month pension on this forum. If I had that I could have a mortgage and $0 saved for retirement. Everything would still be fine.
That’s me. I am retired and have a six figure pension and little in my 403b. My pension more than covers my expenses. I never worried about having a mortgage in retirement. I moved from California to Texas and I pay less in expenses plus no state income tax. I bought a new home in Texas with a 15 year 2.5% interest rate. It’s been great!

Because my pension covers all expenses, my wife’s 401k will be our inflation protector. For some, a pension can withstand a mortgage, it just depends on your specific situation.
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Old 10-12-2021, 12:36 AM   #213
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To the ones that have a mortgage in retirement, where are you taking the money from to pay the monthly payment? If you didn't have a mortgage, what would you be doing with that money you were spending on that payment?
Iíd be finding something fun to do with it like going to rodeos, traveling, and other fun stuff. Oh wait, Iím doing that already so Iíd probably just keep it in the bank.😀
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Old 10-15-2021, 06:09 PM   #214
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Thou doth protest too much. Even with your explanation above I still don't know what trading mortgages is... what you wrote make no sense at all and ERD50 was just seeking clarification.... not criticising.

Though now after reading ERD50's post I think I have an idea what you are talking about... but I had no idea from what you wrote.

So yes, please go pound sand to your heart's content.


Nice of you to speak up here. You still have some spunk!
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Old 10-15-2021, 10:14 PM   #215
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Nice of you to speak up here. You still have some spunk!
With over 30,000 posts, speaking up has never been an issue.
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Old 10-16-2021, 05:18 AM   #216
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+1
Cash is paying 0.5%, why would we pay 3% for mortgage. So we are in no debt in retirement camp.
It came in handy when moving out of California. We bought a new house with mortgage, planning to pay it off after selling our CA house. Lot less pressure that way.
Maybe a better question than "why would we pay 3% for a mortgage" is "why have your money in cash paying 0.5%"? My annual returns have averaged over 10%, going back to the 90s.
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Old 10-16-2021, 07:46 AM   #217
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Depends where you are in the mortgage. If you are well into it the interest has already been paid at beginning and now you are just paying principal.
Paid off our house in 2007 and retired last December at 61.5
Emotional financial decisions should not be made in my opinion. That's how people end up house or car poor. Always live within your means.
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Old 10-16-2021, 10:23 AM   #218
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Thatís me.

Because my pension covers all expenses, my wifeís 401k will be our inflation protector. For some, a pension can withstand a mortgage, it just depends on your specific situation.
Have you consider VCMDX as your inflation protector? VCMDX is commodity based, highly leveraged, that uses derivatives. I have over $200K invested in VCMDX because government is printing money like heck...which I believe is inflationary. The 1 yr returns are 48% so I am a happy camper. VCMDX is based on speculation that inflation will continue....so I will be ready to sell in a heartbeat if inflation starts to level off. May be better than depending on your wife's 401K as a hedge against inflation. Just a thought.
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Old 10-16-2021, 11:40 AM   #219
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Well, I got out of California munis and didn't renew CDs; because interest rates were going up. Oops that didn't work out. So here I am stuck with very low interest rate.
It is going to work out when we have a correction
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Old 10-16-2021, 11:44 AM   #220
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Maybe a better question than "why would we pay 3% for a mortgage" is "why have your money in cash paying 0.5%"? My annual returns have averaged over 10%, going back to the 90s.
BTW long term returns are great
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