payoff mortgage vs investing

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date payoff mortgage vs investing P.Schuman 11-15-2006  Re: payoff mortgage vs investing po.ning 11-15-2006  Re: payoff mortgage vs investing jIM 11-15-2006  Re: payoff mortgage vs investing joetaxpayer 11-15-2006  Re: payoff mortgage vs investing rick++ 11-15-2006  Re: payoff mortgage vs investing joetaxpayer 11-15-2006  Re: payoff mortgage vs investing speednxs 11-18-2006  Re: payoff mortgage vs investing P.Schuman 11-19-2006  Re: payoff mortgage vs investing joetaxpayer 11-19-2006   Re: payoff mortgage vs investing Todd H. 11-15-2006
Posted by P.Schuman on November 15, 2006, 3:18 pm ok - here's another little financial planning gem from within the extended family... Currently have a house worth maybe $200+ with a $100k mortgage @ 8.25% from 1992 and the balance is about $85k. So... what would be the prudent path ? #1 - They never refi'd - so could go that way at 6%... #2 - They could sell some of their stocks/funds and payoff the house. #3 - Combo ? comments & observations ? Posted by on November 15, 2006, 4:11 pm P.Schuman wrote: > ok - here's another little financial planning gem > from within the extended family... > > Currently have a house worth maybe $200+ > with a $100k mortgage @ 8.25% from 1992 > and the balance is about $85k. > > So... what would be the prudent path ? > > #1 - They never refi'd - so could go that way at 6%... > #2 - They could sell some of their stocks/funds and payoff the house. > #3 - Combo ? > > comments & observations ? There is no reason to refi if they are going to pay it off. So #3 is out. Otherwise not enough information. E.g. age? Income? etc. etc. Posted by jIM on November 15, 2006, 4:11 pm P.Schuman wrote: > ok - here's another little financial planning gem > from within the extended family... > > Currently have a house worth maybe $200+ > with a $100k mortgage @ 8.25% from 1992 > and the balance is about $85k. > > So... what would be the prudent path ? > > #1 - They never refi'd - so could go that way at 6%... > #2 - They could sell some of their stocks/funds and payoff the house. > #3 - Combo ? > > comments & observations ? Paying off house is one aspect of a big picture. What other debt exists (credit card, car, retail)? How long until retirement? How long does family plan to live in house? How many BR in house? How many kids? When will kids be moving out? How much is saved for retirement? what type of accounts (Roth, 401k, traditional IRA, taxable....)? #1 could be done regardless of answers to above question. The question might be refinance to 15 year or 30 year... depends on other answers. Posted by joetaxpayer on November 15, 2006, 4:22 pm P.Schuman wrote: > Currently have a house worth maybe $200+ > with a $100k mortgage @ 8.25% from 1992 > and the balance is about $85k. > > So... what would be the prudent path ? > > #1 - They never refi'd - so could go that way at 6%... > #2 - They could sell some of their stocks/funds and payoff the house. > #3 - Combo ? This is a recurring topic. The first question is this; do they have enough itemized expenses to pass the standard deduction, without the mortgage? If not, the mortgage is costing them closer to the interest rate than the mort rate X (1-tax rate) that we look at. Selling off one's savings to pay off the mortgage may be the way to go, if they wont have high taxes to pay on the gains, are committed to taking the payment they don't have to make and saving the money in a well diversified portfolio. But they have proven their lack of financial savvy by being in this mortgage in the first place. I bought in '96, and am on my 4th mortgage, lowering the rate or reducing the term each time on a no-cost basis. The last deal left us at 5.24% 15 year term. 3% adds up to some money even on a $100K mortgage. At the very least, they should refi down to 15 yrs. JOE Posted by rick++ on November 15, 2006, 6:22 pm > The first question is this; do they have enough itemized expenses to > pass the standard deduction, without the mortgage? 16 years into 30 and the interest starts shrinking rapidly. Similar Threads Posted Investing v/s paying off mortgage November 14, 2008, 4:51 pm Investing versus paying off Mortgage March 30, 2007, 3:02 pm Payoff Loan June 21, 2007, 10:23 am Investing Better September 12, 2007, 3:44 pm beggining investing January 15, 2007, 7:18 pm Investing advice March 30, 2007, 4:12 pm investing advice February 24, 2007, 4:43 am investing in Yuan? March 5, 2007, 4:59 am Investing in Prosper August 13, 2007, 5:07 am Question about re-investing returns... November 26, 2006, 5:35 pm