Comments on: To Prepay Your Mortgage or Not? http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/ Rebalance before it's too late Tue, 07 Feb 2012 03:16:47 +0000 hourly 1 http://wordpress.org/?v=3.1.2 By: Joe http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-39092 Joe Sun, 24 Oct 2010 01:10:03 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-39092 it's ironic that people always think of things like this *after* their investments have dropped in value. That precisely the time you should invest more (assuming proper diversification, of course), yet so many cash out. Your hypothetical person would be better off taking some money while stocks are going gang busters and paying down the mortgage then. Maybe that's hindsight, but the other misleading thing is that paying off the house now will help them if they lose their income. Couldn't they also just use their funds to pay the mortgage in the event of that lay off, but only after it happens? Two things stand out in that scenario: 1. If they never get laid off, their investments continue to grow. 2. If they do get laid off, they might owe less in taxes when they cash out their investments, due to less overall income. it’s ironic that people always think of things like this *after* their investments have dropped in value. That precisely the time you should invest more (assuming proper diversification, of course), yet so many cash out. Your hypothetical person would be better off taking some money while stocks are going gang busters and paying down the mortgage then.

Maybe that’s hindsight, but the other misleading thing is that paying off the house now will help them if they lose their income. Couldn’t they also just use their funds to pay the mortgage in the event of that lay off, but only after it happens? Two things stand out in that scenario:

1. If they never get laid off, their investments continue to grow.
2. If they do get laid off, they might owe less in taxes when they cash out their investments, due to less overall income.
Joe´s last blog ..Living on a Single Income- 7 Years and CountingMy ComLuv Profile

]]> By: James Mucci@Michigan refinancing http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-4401 James Mucci@Michigan refinancing Sat, 03 Apr 2010 11:48:05 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-4401 I am torn becuase you are correct in that the numbers tell the story, that someone who is in that scenario, should keep the mortgage, however I believe if they are near retirement, it may make more sense to pay off the mortgage. The psychological effects and freedom that comes from the security of knowing that your home is free and clear is one that may halp some people enjoy their retirement. On the other hand, if someone has a large protfolio and 60,000 is only a very small percentage of it, then the numebers and the returns from the markets may make more sense. Or if they are just starting out and have many year until retirement, then they probaly should keep the mortgage and the investments. Depends on their retirement goals and their appetite for risk. .-= James Mucci@Michigan refinancing´s last blog ..<a href="http://michiganmortgageadvisor.com/michigan-refinancing-stages-of-the-loan-process/" rel="nofollow">Michigan Refinancing – Stages of the Loan Process</a> =-. I am torn becuase you are correct in that the numbers tell the story, that someone who is in that scenario, should keep the mortgage, however I believe if they are near retirement, it may make more sense to pay off the mortgage. The psychological effects and freedom that comes from the security of knowing that your home is free and clear is one that may halp some people enjoy their retirement. On the other hand, if someone has a large protfolio and 60,000 is only a very small percentage of it, then the numebers and the returns from the markets may make more sense.

Or if they are just starting out and have many year until retirement, then they probaly should keep the mortgage and the investments.

Depends on their retirement goals and their appetite for risk.
James Mucci@Michigan refinancing´s last blog ..Michigan Refinancing – Stages of the Loan Process My ComLuv Profile

]]> By: Penny Stocks http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-2025 Penny Stocks Tue, 27 Oct 2009 19:54:54 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-2025 Great info here, nice site I will be checking out the other articles you have and linking back to your site. Great info here, nice site I will be checking out the other articles you have and linking back to your site.

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]]> By: Personal Finance Fantasy Baseball League 2009 | Free From Broke http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1880 Personal Finance Fantasy Baseball League 2009 | Free From Broke Fri, 09 Oct 2009 15:44:52 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1880 [...] Seventh Place – My Life ROI: To Prepay Your Mortgage or Not [...]

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]]> By: Yellowstone Trip Weekly Round Up http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1426 Yellowstone Trip Weekly Round Up Mon, 17 Aug 2009 04:49:49 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1426 [...] To Prepay Mortage or Not at My Life ROI. [...]

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]]> By: Roger http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1416 Roger Fri, 14 Aug 2009 09:02:58 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1416 I'm inclined to agree with you. It seems as if this couple is running for the hills based on the fear that they might end up unemployed. This isn't certain, unless they are both in risky occupations or already have their jobs on the chopping block, and drastically altering their financial plans to accommodate such a bad situation seems like a bad plan. If they do pay off their mortgage and then DON'T get fired, they'll have to put much more money away to rebuild their funds. Instead, the better move would seem to be (a) making sure they have an adequate (6-12 month) emergency fund (b) attempting to pay down some of the principle (as per your suggestion, MLR), and (c) only considering selling their investment when they've actually lost their jobs and have nearly exhausted the emergency fund. But then, that's just my view on it. .-= Roger´s last blog ..<a href="http://feedproxy.google.com/~r/theamateurfinancier/cFiv/~3/ekWY_JrtnL4/" rel="nofollow">Determining Your Ideal Asset Allocation</a> =-. I’m inclined to agree with you. It seems as if this couple is running for the hills based on the fear that they might end up unemployed. This isn’t certain, unless they are both in risky occupations or already have their jobs on the chopping block, and drastically altering their financial plans to accommodate such a bad situation seems like a bad plan. If they do pay off their mortgage and then DON’T get fired, they’ll have to put much more money away to rebuild their funds.

Instead, the better move would seem to be (a) making sure they have an adequate (6-12 month) emergency fund (b) attempting to pay down some of the principle (as per your suggestion, MLR), and (c) only considering selling their investment when they’ve actually lost their jobs and have nearly exhausted the emergency fund. But then, that’s just my view on it.
Roger´s last blog ..Determining Your Ideal Asset Allocation My ComLuv Profile

]]> By: MyLifeROI http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1395 MyLifeROI Tue, 11 Aug 2009 16:24:14 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1395 @DoneToZen, Good example, that is one I hadn't thought of. I guess in your example you have a good point.. if you lose your job the town is going under anyways, so why not have a larger e-fund? Good thinking, and you are the perfect example of why everyone needs to evaluate their situation differently. @DoneToZen,

Good example, that is one I hadn’t thought of.

I guess in your example you have a good point.. if you lose your job the town is going under anyways, so why not have a larger e-fund?

Good thinking, and you are the perfect example of why everyone needs to evaluate their situation differently.

]]> By: MyLifeROI http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1394 MyLifeROI Tue, 11 Aug 2009 16:23:03 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1394 @MoneyEnergy, It's definitely a challenge to ignore the psychological effects. But, I think, in the end... that should be your ultimate goal. If you make the wrong decision because your brain feels better about it, you are taking your debt shackles off and putting some emotion shackles on ;) @MoneyEnergy,

It’s definitely a challenge to ignore the psychological effects. But, I think, in the end… that should be your ultimate goal.

If you make the wrong decision because your brain feels better about it, you are taking your debt shackles off and putting some emotion shackles on ;)

]]> By: MyLifeROI http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1387 MyLifeROI Mon, 10 Aug 2009 18:00:32 +0000 http://www.myliferoi.com/2009/08/to-prepay-your-mortgage-or-not/#comment-1387 @The Dividend Guy, 100% agree. If someone chooses the psychologic win of conquering their debt, I can only hope they take those mortgage payments and funnel them into investments. Otherwise, they are just setting setting themselves up to be behind a few steps. @The Dividend Guy,

100% agree. If someone chooses the psychologic win of conquering their debt, I can only hope they take those mortgage payments and funnel them into investments. Otherwise, they are just setting setting themselves up to be behind a few steps.

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