Comments on: Paying Off Your Mortgage

By: John

John — Sun, 07 Feb 2010 19:07:08 +0000

@Funny: Average return of Dow from 1900 - 2009 was 9.4%, and that includes the crash of '29 amongst several others. So 8% is a modest number. Source Compounded Annual Growth Rate of S&P 500 between 1871-2009 was 8.9% [Source]

By: Funny about Money

Funny about Money — Tue, 26 Jan 2010 01:50:03 +0000

Invest the money you wouldn’t pay toward principal at 8 percent? Where on earth are you getting 8 percent?

IMHO this reasoning is just wrong. On a $211,000 mortgage at 4.3% we’re paying something over $1200 a month toward a house we’re copurchasing. If we paid that off, the $1200/month that we would not have to pony up would represent a de facto return on investment. $1200 x 12 = $14,400, a 6 percent return. That’s significantly better than I can get in a moderately conservative investment right now, and it puts a roof over his head or rental income in our pockets. Then let’s say we take the freed-up $14,400 and invest that: wouldn’t that further increase our return on the $211,000 used to pay off the mortgage?

Additionally, if the real estate market ever returns to normal, one would add the 3 percent to 6 percent p/a increase in property value to the 6 percent return, creating a modestly respectable return on the $211,000 and getting out from under a crushing interest rip-off.

Real estate mortgages are rips, especially for those who are not wealthy enough to profit from the tax advantages, which are marginal at best for most of us.

I paid off the mortgage on the house I occupy years ago — thank god! If I’d been stuck with a mortgage payment when I was laid off and faced with the probability that I will never land another decently paying job, I would surely have lost my home. As it was, investing the large amounts of cash that otherwise would have been sucked up by P&I payments over the years left me with an adequate early retirement income, no urgency to search for a job greeting Walmart shoppers, and little likelihood that I will find myself sleeping under a freeway overpass.

For the average middle-class and working-class earner, it’s insane not to get out from under a mortgage at the earliest possible moment.

By: First Time Homeowners

First Time Homeowners — Fri, 04 Dec 2009 02:35:43 +0000

Thank you so much for this article. As very first time homeowners in Hawaii (a modest townhouse near Honolulu) we recently realized that most of our monthly payments are going to interest. It was astounding and really gave us pause. After closing on our home in May 2009 my spouse and I are considering putting it on the market by the end of 2010. Partly because we may very well move overseas to Southeast Asia. And partly because the amount of interest we’re paying and would have to pay over 30 years is mind boggling. So thank you for laying everything out and confirming the realities of home ownership and a mortgage.

By: Clint

Clint — Sat, 07 Nov 2009 11:38:06 +0000

As always, no one tells the full story. In your example above we talk about 6% vs 8% in terms of paying an additional $100 on a mortgage. What you FAIL to acknowledge, sir, is that (in the case of a $100,000 loan) the mortgage was shortened by nearly 9 years. Now let’s take the FULL mortgage payment (~$552) and invest THAT for the 8 years we saved off the mortgage.

The result is an astounding $88,000, PLUS the freedom of having no mortgage debt. To be fair, we must compare THAT number to your number with the CORRECT amount of years accounted for, which is 21. Your number is now $65,851.

You financial “geniuses” are steering THOUSANDS of people in the wrong direction with your forced ignorance of the facts of what you are saying.

By: JC

JC — Wed, 22 Apr 2009 23:41:44 +0000

Nice article.

By: Abbe Waldman

Abbe Waldman — Thu, 12 Feb 2009 19:23:34 +0000

As a realtor for over 26 years I found this to be a very well written article that really examines all sides regarding whether or not to pay off your mortgage. I would like to refer my clients to this article to read when they are weighing their options on this matter. With interest rates at an all time low, and the stock market so volatile it makes it a little tougher to make this important decision as to where to wisely put your money. I also think that ones age and long term financial goals, and what the real estate market is doing in your area has to be factored in as well. All reasons to contact a team of advisors before making your mind up as to what to do. Great article!

By: One Huge Carnival Of Leads To Making Money Online — Cheap Keywords

One Huge Carnival Of Leads To Making Money Online — Cheap Keywords — Sat, 27 Sep 2008 07:45:48 +0000

[...] Crenshaw presents Paying Off Your Mortgage – Will It Save You Money? posted at Truthful Lending dot Com, saying, “There’s been quite a bit of debate lately [...]

By: Empowering Women - Issue 15 | A Modern Goddess Online

Empowering Women - Issue 15 | A Modern Goddess Online — Sun, 27 Apr 2008 16:47:02 +0000

[...] up is John from Truthful Lending who offers a range of tips on paying off your mortgage. These are great for everyone, whether you live in the US or [...]