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I am doing the same thing, but I rather pay off what I owe, principle on my mortgage, than invest in a volatile stock market.
You may want to research it a bit more online.....
MNelan, You are one of few property owners who is smarter than the average consumer... I love this methodology... Go buy the book or audio book of Douglas R. Andrew, Missed Fortune 101. It's about taking the equity in your home, which is tax deductible and putting that into a separate investment vehicle to earn more money than you are paying in interest, and at the same time being able to use the tax write-off. I have had this argument with so many people it's not even funny! Most people want to pay there mortgage off asap - WRONG ANSWER. Mortgage it to 80% LTV on a interest only loan.
Question: Say you loose your job and now you've fallen behind in mortgage payments. Which one of these scenarios is Mr. Banker likely to foreclose on first?
Scenario A: House worth 500K, 100K mortgage on house
Scenario B: House worth 500K, 400K IO mortgage
- Scenario A is correct. Scenario A thought that they were doing the right thing by paying down there mortgage all these years, they use the money they save from there mortgage payment for everyday expences. Scenario B took there money and invested it wisely. Who came out on top???
Lender rating
Since January 2009
Darren,
Do you work for Amerisave of Ameriquest?
As long as they make their payments neither gets forclosed on!
Andrew, Have you ever read Missed Fortune 101? Obviously you did not read the question properly, for you being in the business 15 years you sure didin't have a lot to say in response except for trying to discredit my professional experience. I'm trying to applaud a borrower for thinking "outside the box" for once. How about I send you the audio book so you can do some listening, mabey you will learn something.
These forms were built to have professionals help consumers with questions and for professionals to talk LIKE PROFESSIONALS amongst one and other. Obviously you seem to want to discredit me in this topic and in another one. You can disagree with me all day, however if you would like to discredit me and talk out of your butt, give me a call or shoot me an email and we can talk outside of the public realm. When I disagreed with you did I try bashing your credentials??? Let's be civil here now....
if more is better, than even more is even better! mortgage it to 125% and use negative amortization loans! Free money baby!!!! (sarcasm reduced, no way I'm turning it off now!)
Dumbazz.
Lender rating
Since January 2009
Mnelan.
I can get you 3% on a 15 yr fixed. I think you are getting ripped off for 4.75% .
Tom, I`d be interested in discussing that 3% with you a little futher, email, Do not want to highjack MNelan`s train of thought.
MNelan04
If you think your house (the one you live in) is an "investment" you start getting into trouble. If you think that if your lucky your house will, on average, increase in value approx 0.4 to 0.5% per year over inflation over a 30 year period, your probably right. To me, that's not an investment, as both stocks and bonds have significantly higher returns than this.
The question you need to ask is do you want to own your house without a mortgage sooner rather than later. Would you rather forgo other investments and or consumption in favor of having the roof over your head paid off sooner.
If you ask yourself that simple question I think you will find the answer easily within. Either way, its your choice
Regards
Both are good.... paying off the house is by far a safer bet. Darren suggests a more risky investment that can provide a higher return, BUT you can also lose money. Paying off your mortgage reduces you paying interest. Once your paid off, then you can invest all you want without having to worry about losing the roof over your head if things go bad. An untapped HELOC will fix any rainy months from a lost job. Darren, your obviously a risk taker.
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Trading in my 30 yr fixed for a 15 yr fixed or using the money elsewhere?
MNelan04
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I'm in a great position now to refinance my 30 yr fixed rate at 6.25 % for a 15 yr. fixed at 4.75%. I don't anticipate having a problem with the higher payments, so it seems like the perfect time for a refi. However, with the real estate market's recent drops (particularly in my area) is it smarter to sink my money into the stock market for a long term investment, (while I can get in cheap,) than to buy more into a house which may or may not gain in value. I plan on owning this house for 3 to 5 more years and I've figured in that in 3 years I will regain all the fees and also save an extra $10,000 in interest on top of that. So here's my question--no one can tell the future, but what's your best guess as to whether it is smarter to re-invest in short to mid term real estate or long term mutual funds?
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