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22 replies
  1. Harry Langley
    Harry Langley says:

    I just downsized like you stated. My home was paid off, I paid cash for the new smaller home in another State using a Home equity loan from the home we were preparing to sell.. I believe this is commonly referred as a bridge loan. It worked very well in my case. I think I ended up making 3 payments before the old house closed. The fact that my home was paid off made this an easy and less costly process. I think it cost me like $4K in closing costs and 3 months of interest on the loan.
    I'm convinced that paying off your Mortgage early is the way to go. The piece of mind knowing the house belongs to you and your County is a great thing.

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  2. ddellwo
    ddellwo says:

    Tend to agree on rolling into retirement with a paid off mortgage – while you MIGHT do better carrying a mortgage and investing the balance, you MIGHT also not. To me, the peace of mind of owning your primary residence free and clear (and the reduced cash flow that goes along with it) has an intrinsic value that you can’t necessarily put directly into dollars and cents. Now if I could only pick up my current home (perfect size and floor plan for growing older) and move it about 225 miles north to outside the Fort Worth area I’d be all set…..🥴

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  3. wsgriffi
    wsgriffi says:

    We are planning to sell our house in April / May and take off in our RV. I was paying extra on my mortgage but stopped last year to build up my emergency (Cash bucket) The mortgage will be paid off when we sell and the equity will go into our cash bucket as well to help with return risk. I say this to say, I agree with you Josh to build up your liquid account to make it easier to down size later.

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  4. Richard Savage
    Richard Savage says:

    I don’t think enough has been written about how our current higher standard deduction changes the math on home ownership as a slam dunk investment for most folks. Most people no longer itemize mortgage interest because of the higher standard deduction. We over bought a big house in 95 due in part to the feds subsidizing our payments – especially in those early years when the payments were mostly interest. It made reasonable sense back then. Not now. I think we need to sell this house.

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  5. M. M.
    M. M. says:

    i have always done a side account & invest – instead if plowing every penny into mortgage. i engineer my income to get back all i pay in mortgage interest in tax refund. between 401K HSA – option to take part of compensation in stock or cash (i opt for stock…risky – ish i know)…
    i figured that i may want to sell the house – and if i pay it off – then it will increase my cap gains….
    i guess the house is worth a little more than 1M … why hand over the 100K i still owe – to then get taxed on it as cap gains if i sell next year…
    anyway – who knows if i will sell it or not.. i just cannot decide – — indecisive…. i am probably being both cheap & stupid… i get decision fatigue … i feel like i need a Phd in $$ strategy in order to properly plan my current & future finances to not be a tax casualty…
    i know these are problems of privilege & 1at world problems – for sure – – so i will just shut up now…
    your videos – are very informative & help a lot – so KUDOS !!!
    much prosperity to you !!!

    Reply
  6. Thomas M59
    Thomas M59 says:

    When buying a house you are taking the risk that for 30 years you will have a stable income or will be able to sale and not lose your equity if anything bad happens,. extra principle payments do not add to your safety. For this reason I made a standard payment for 13 years and saved the rest. When I had the cash I paid the house off in full at 13 years so I could retire. I looked at it as a 1500 a month annuity. The regular house payment plus the amount I saved every month for 13 years.

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  7. Scott Falkner
    Scott Falkner says:

    Wait until you see your unoccupied insurance rate if the mortgaged house sits vacant after 6 months. Expect it to triple, you better use two different companies and hope neither finds out about the 2 properties. No you can't claim one person is occupying one place and another the other. I built my current home before selling the one i was living in due to my wife and I's income we qualified for a second mortgage. After 6 months I sold for 10k under market just to avoid the vacated insurance rate. I will never get myself in this situation again forcasting a real estate market.

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  8. Airborne Misfit
    Airborne Misfit says:

    I was paying $ 2750 a month for my home and I Got Laid Off. It was late 1989 and my tech stocks were worth more than I owed. So I got out of the market and paid off my home and that greatly eased my mind as to waiting to find a job I wanted. When I was called back to work, I repurchased the stocks.

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  9. Alberto Santa Barbara County CA
    Alberto Santa Barbara County CA says:

    Real life case. We downsized and rented our older house which net us about $1000 after PITI. Reason was that 20 years ago houses cost were less and the old house mortgage was less than the current rental market in California.

    Now lets move to the downsized portion. We bought a townhome in Santa Barbara for which we put 20% down. At the time real estate market was down and we bought at 90s prices. Lucky for sure.

    At this moment, we are buying a house in Amarillo Texas as a second home for which we qualified for the loan no problem because the prices of houses there are about a third in comparison to California. Our son and his family are going to live there an pay PITI, any other expenses, and pay us back monthly for the 20% downpayment and other costs. In that market, the rents are twice the mortgage and most people can't afford the downpayment. Therefore, for about the same amount of money he was renting, he now owns a house and can buy back from us at cost at any time.

    Here is an example of a 4 year retiree that has deferred SS and qualified for a loan in his pension and rental house income. How about those apples? It is all doable.

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  10. Billy Brown
    Billy Brown says:

    I paid off my first mortgage and have a line of credit equal to a 1/3 of the house value. No where near using it but it’s there if I need it. I’m not as concerned about “owing” the bank because even if paid off I still “owe” property taxes and most likely insurance.

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  11. Chester Chambers
    Chester Chambers says:

    I have always agreed with this approach. Many people will say not to do it because you pay the capital gains tax when you liquidate. However, I am eventually going to have to pay that either way so I am comfortable with this approach.

    Reply
  12. Saurav Gupta
    Saurav Gupta says:

    Josh…I could be wrong here but there are 2 different scenarios here I think. I am definitely willing to hear ideas/advice/criticism from you and others on this. 1) you are starting out investing that $500 for the first time or you are new to investing and 2) you have some investments for a few years now (doesn't have to be seriously substantial). I agree with you 100% in scenario 1. But for the 2nd scenario, I would really evaluate the pros/cons of throwing an extra $100-$200 bucks towards the mortgage and the rest towards the investment. If I can get my hand on to a spare $100-$200 (by cutting cords etc.) I will throw that towards the investment to make up for it. The reason being…after some time being in the market, our DCA contribution amounts become less (depends) compared to what the existing investment account returns and that might just offset it…also new contributions take some time to start compounding. If you are already paying an extra $200 anyway towards the mortgage @ 3.5% (30 years) and it takes $200 more to lower it to 3% (15 years) that might be yet another consideration worth evaluating (if you can manage the extra cashflow) if you are in scenario 2. That way you will rack up equity much faster and maybe can leverage it for good debts?…. Had to edit: Could we have a higher driving seat for Pablo, Josh?

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