DrRoy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Paying off 4.25% debt looks better than getting 2% MM returns. Unless you anticipate needing a bunch of cash sometime soon.
+1. Even on an after tax basis it is better.
Paying off 4.25% debt looks better than getting 2% MM returns. Unless you anticipate needing a bunch of cash sometime soon.
So you are imagining some sort of future crisis where banks will foreclose on everyone.My grandparents lost their farms during the Great Depression when the banks closed their doors. If banks have any kind of crisis they will foreclose on everyone.
That being said, when I retired I had an outstanding mortgage. It was to an apartment building we lived in, that had a nice positive cash flow. I was confident that we were going to keep it filled with tenants and it was a 'good' risk.
... My grandparents lost their farms during the Great Depression when the banks closed their doors. If banks have any kind of crisis they will foreclose on everyone. .....
Just curious on how they will foreclose on mortgages that are current on payments ? ...
Grandparents? How about us?If I had a mortgage on my home before retiring, I would pay it off.
My grandparents lost their farms during the Great Depression when the banks closed their doors. If banks have any kind of crisis they will foreclose on everyone.
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Just curious on how they will foreclose on mortgages that are current on payments ?
... There are good arguments on the debt free side, but fear of foreclosure when you are current isn't one of them.
... What actually happened in my area of Arizona (a mortgage crisis hotspot) in 2009 was that some people who had a large mortgage fared the best of anyone financially. They strategically defaulted on a high % mortgage house after buying an equivalent house at a distressed price. Those of us with higher equity or paid off real estate never had an opportunity to default (not that I necessarily would consider it). There is an old saying "If you owe the bank a thousand dollars, they own you. If you owe the bank a million, you own them."
So you are imagining some sort of future crisis where banks will foreclose on everyone.
Yet you kept a mortgage anyway.
Seems contradictory to me. And there's no chance banks will "foreclose on everyone".
Grandparents? How about us?
2010 was a nasty year. Banks foreclosed without any sympathy at all. Saw it happen to my neighbor. Their vacate warning was so short (few days), they left 1/2 of their belongings in the house before it was shackled. Of course, my neighbor also played chicken with the bank for over a year It didn't have to happen that way. Still, it left shockwaves with us neighbors.
I loved the happy dance at the courthouse. The clerks at the courthouse gave us a few hip-hip hoorays too!
The 4.25% is definite. Stock returns etc. are maybe. Pay it off. Jmho.
The FDIC was created in 1933 to prevent bank runs like those seen during the Great Depression. Also, I do not agree that a bank can call your mortgage "at any time," assuming you're current on your payments.A bank can call in any loan at any time. They do not have to justify their actions to their depositors.
When they locked their doors they refused access to their customer's accounts, they effectively seized all deposited money.
Being current on servicing loans is hard to do 6 months after they have locked their doors and refused to allow access to your accounts.
And how long did the banks lock their doors in 2009?
If you have direct deposit, you kind of need access to your bank account before you can have any money.
A bank can call in any loan at any time. They do not have to justify their actions to their depositors.
When they locked their doors they refused access to their customer's accounts, they effectively seized all deposited money. ...
The FDIC was created in 1933 to prevent bank runs like those seen during the Great Depression. Also, I do not agree that a bank can call your mortgage "at any time," assuming you're current on your payments.
I am firmly in the "Keep the Mortgage" camp - normally. But in this case the OP identified the money he has available to pay off his 4.25% mortgage is currentlty only earning 2%.
Pay off the mortgage! You are losing money each month by keeping the mortgage.
Or........ restructure your investments so that the funds are earning more than 4.25%
The 4.25% is definite. Stock returns etc. are maybe. Pay it off. Jmho.
My heart says pay it off, but that might not be the best option. A few months ago, I sent 40k to my mortgage because my 5 year adjustable is going to reset to a higher rate next year - and I wanted to lower my balance.
But, this book I just read (by a financial planner), says "Do not pay off your mortgage"!
He says, once you send the money to your mortgage, you lose the financial flexibility - you loose access to that cash. And you can invest the money, and perhaps do much better than paying off the mortgage.
I may not have the "book learning" that others have or understand the fancy equations but from what I have seen they couldn't match my accomplishment from the same income. If they were all so smart then why are they still working?
You need to decide for yourself. As for me I don't always believe the "experts" or financial planners. I may not have the "book learning" that others have or understand the fancy equations but from what I have seen they couldn't match my accomplishment from the same income. If they were all so smart then why are they still working?