That's the American Dream, to always owe money to a bank!!! I remember my first boss had recently taken that management position and along with it got a huge bump in pay. He was amazed at the tax hit he took that first year, and his financial adviser convinced him to buy a new house to get the interest tax breaks since his current house was paid off. Amazingly, he did it!! It defied logic to me for a guy who planned to retire in 4 years to sell his old house (this was in 2005 at the peak of housing prices) and then buy a larger house just to pay less income taxes, but in some twisted way he justified it.
I can't understand any semblance of logic in doing that, I am very wary of financial advisers. If they were as good at what they do as they claim, why don't they take their own money and turn it into the big bucks they claim they can get for you. They wouldn't have to work anymore.
People are very bright some times. Pay 80 cent on the dollar for a 20 cent tax break. Put the 80 cents in your pocket and pay the 20 cents in taxes. Interest is wasted money
My folks had a house built and at the closing tried to pay cash. Here's a paraphrase of the conversation at the original closing Closing agency: Umm, No, you have to have a mortgage. Parents: Um, there's enough cash there to pay the developer right? CA: Yes, there's enough Parents: then what's the problem CA: You have to have a mortgage Parents: Why? CA: Um, um, um, because we've never closed a house without one before The closing didn't happen at that time because the CA didn't know what the heck to do. Finally, they figured it out and closed at a later date. fortunately my folks hadn't sold their other house yet (the one I grew up in), so they weren't homeless during the ordeal
It is simple the close off amount quoted by their mortgage system when processed as a normal payment will close the loan and all escrow accounts that is what all loan systems do, now the account will hit the closed suspect report but all of them wind up there at some point,no big deal. (Former loan system programmer here , also handled deposit, and trust systems(among others)).
Depending on interest rates, your tax situation and what you can make on investments it can make sense to use the banks money, pay the interest, get the tax right off and get a higher return on investments. Each case is unique. That being said I hate having any debt!!
About 11 years now without a mortgage. Paid off the original 15 year note in 13-1/2 years. No cc debt, no car loans, we help the kids with some student loan debt. At my age (61 almost) I don't want any debt!! Gary
try selling a spec house with no mortgage on it.. at closing attorney called town to verify there was no liens.. took half an hour.. great time to relax and chat... have a coffee... funny part was the attorney had charged for a title search..300 dollars.. buyer demanded it be removed.. because buyer stated how did you perform a title search and not determine liens!! so I paid you to do it you passed it off to an assistant and charged me full price and are questioning their work! so he was refunded that $ and used it for private title insurance! Just as an FYI title insurance to protect buyer is always a good idea.. in case property issues arise!
This has been an interesting thread. Up here, if you have a mortgage there is no way you can claim the interest on your income tax unless it is for a building used in your business. That said, it is a good feeling knowing that your house is all paid for. Now to get the vehicles paid for before I retire.
This topic came up in another thread years ago possibly somewhere else. I recall running some calculations on a house that say may have been purchased for ~50-60k in the 1980's and assumed it was sold 3-4 times or refinanced by an owner along the way. Of course the home appreciated in value at each sale and I used historical interest rates. The Interest paid over the life of the home was nearly 15x its original purchase/construction price by year 30 with 3-4 owners
Different tax laws up north. It's really a boondoggle cut out by the Realtor&Mortgage lobbyists in DC to keep people in their mortgage or bigger/newer homes as ironpony pointed out above.
Yup, I have had this same argument with numerous people over the years...I learned how to "win" this one every time. Tell 'em "I'll make you a much better deal than the banks/goobermint, you pay me a dollar and I'll give you 50 cents back instead of 20 cents like them!"
It is odd how some people view their finances. A friend of mine had a car lot (junkers) and the people that would balk at a $100.00 monthly payment didn't have a problem when he came back and told them he could get it down to $25.00 per week(sometimes $30.00). A man actually told me that "It doesn't cost anymore to go first class, it just makes the payments a little longer". Just can't see beyond the payments.
While we are on the topic of money. Thinking of moving some of my wifes 401k out of one of her accounts to a lower risk one in her 401k before the stock markets drop. Good idea or bad? It is currently tiered in 3 or 4 accounts. Gary
If I knew that I would wait till the last day! Just got a bad feeling as it has had a pretty good run. I should actually look on how she is allocated in her portfolio. Gary
Gary.. first I personally disagree with the stay diversified principle.. but that's me... my logic is this... its all advisors tell you to do ... but one of the best investors of our lifetime is Warren Buffet and that is exact opposite what he does.. if your risk tolerance tells you for you right now is too risky.. then lower your risk!
I defintely don't think she is over extended on her risk. Was just thinking about taking some of the cream off the top. Gary
