Is a mortgage really necessary?

[proud2BlibKansan]

First of all, please raise your glasses and join me in a toast because I paid off my house today! I am now mortgage free.

:woohoo:

My mother died in October and due to a long long story I don't want to go bore you all with, my house was in her name. In order to settle her estate, I had to use a chunk of the money she left me to pay off my mortgage. I did that today.

I hired a financial consultant to handle the rest of my inheritance. She is working hard to convince me that I really do need a mortgage. Yes, I understand the tax benefits but I can retire anytime I want after June so I am trying hard to limit my financial obligations.

I want to be debt free. I think that is a goal most people can never reach and I want to get there because I can. My income will be reduced if I retire. I want to have to worry about living expenses only, no debts. My financial consultant is trying to convince me that debt is good.

So what do you think, DU friends?

[nini]

1. You're savings will outweight the tax benefits

Enjoy your new found freedom and congratulations!

[proud2BlibKansan]

3. yes I am celebrating

I don't feel rich but I feel like I really own this house now. :)

[lizziegrace]

2. I can't see that debt is ever good

if you don't have to have it.

Why pay interest on a mortgage? For ever $1 you spend in interest you save 15-35 cents in taxes. So you've spent up to 85 cents to save 15. Doesn't make sense.

[proud2BlibKansan]

4. My financial consultant showed me yesterday

The difference between a 15 and 30 year mortgage on my house is $40,000 IN INTEREST. I about fainted.

[lizziegrace]

7. if you *must* get a mortgage for some reason

get a 15 year. If you get a 30, make at least one or two extra payments a year (indicate principal reduction) and your 30 year will be whittled down to about 18 years.

[proud2BlibKansan]

15. Will I still be alive in 18 years?

:scared:

[Writer]

5. Did your financial consultant give you any better a reason than...

the tax benefits?

[proud2BlibKansan]

9. We need to do some improvements on the house

We need siding. She said we could do that if we took out a mortgage. I am willing to do a home equity line of credit for that but I would rather not have a mortgage.

[Writer]

11. I would just get a small, manageable HELOC.

That you can finance affordably over as short a time as you can.

BTW: FINANCIAL PLANNERS CAN BE SHARKS! Especially if you're not paying any commission. They will look to sell you as many products as they can so they can make money off of points paid, etc. Do only what you need to do, and nothing more.

[proud2BlibKansan]

14. I really trust this woman

And yes, I made sure she would get a commission for the exact reasons you gave.

[GOPisEvil]

18. I think this is a good option, too.

The tax advantages of carrying a mortgage don't offset the advantages of having ZERO to pay for housing. Also, if you own the house clear and for some odd reason you really need to take advantage of the equity (major medical, etc) at least you have that option.

So, no, you don't NEED a mortgage.

[proud2BlibKansan]

21. That's what I was thinking

If I only carry a line of credit, it is there if I have an emergency. And if I don't access the line of credit, I don't have to make payments, right?

[GOPisEvil]

23. I believe you are correct.

As long as the ELOC is untapped, there are no payments to make. But, your financial advisor could answer that better. ;)

[Gormy Cuss]

27. Agree -- a HELOC may be a good idea

not a new primary mortgage.

We're paying off our house as fast as we can. We have a HELOC, zero balance. It's nice to have the option there should we need it for repairs or renovations.

[NMDemDist2]

6. i think you should pass on the mortgage and get a new financial advisor

instead

Congrats on being debt free but sorry about your mom

:hi:

[proud2BlibKansan]

13. My financial adviser is awesome

I met her through the peace movement here. We protest together.

She has also been in the business for over 30 years and has a great reputation. I checked her out carefully before I hired her.

Now that I have a little money to play with, one important principle for me is to always hire progressives and to invest it in progressive stocks, etc. She sat with me for 3 hours yesterday and put together an investment profile that includes no WalMart stock, no oil company stock, etc. Not every financial adviser here in red state hell is willing to do that.

So I am not going to fire her.

I just need to talk her into the no mortgage option.

[flvegan]

8. Depends what you do with the money.

The tax write off is good, but it really depends how the good v bad weighs out in having this other debt.

[Bunny]

10. Debt is bad. If you have a paid off mortgage, for gawd's sake

let it be. I cannot foresee ever being able to retire debt free, so from my perspective I would be thrilled to not have a mortgage payment to meet every month.

[proud2BlibKansan]

16. That is exactly what I was thinking!

[NC_Nurse]

12. Sounds good to me.

I vote to pay off the mortgage. You can always take an equity line out if you need it.

[China_cat]

17. Unless you have enough deductions to itemize

you can't use mortgage interest as a deduction. Sounds like you'd be stuck with 15 or 30 years of payments with no benefit at all.

[proud2BlibKansan]

19. We itemize

but still end up paying too much every year.

[crispini]

20. You know, I've heard the same thing.

It's good to have a mortgage for tax reasons. When they explain the logic to you, it does make sense. You should take the X thousand dollars you would have used paying off that mortgage, and put it in some other revenue creating instrument, like a bond investment, or something, making sure that the interest you get from the investment would be MORE than the interest you are spending on the mortgage.

Logical, logical, indeed. But I can completely understand and appreciate your desire to be debt free. I share it myself.

[some guy]

22. CONGRATULATIONS!

:woohoo:

fire your financial advisor. :D

At least, that's what I would do, I hate having debt. The only debt I have is my mortgage though, so it's at least somewhat tolerable.


edit: (sorry) I'm am sorry for your loss :hug:

[BensMom]

24. Whoo wheee!

That just must be an incredible feeling.

I do know loan rates will be coming down starting in January - people are planning their home improvments...home shows etc.

Also siding should qualify for an energy loan. Federal money at 5%.

Check with your energy office - here it is a State agency. Not many banks offer or know about energy loans because they don't make diddly. Good for the people - bad for the banks

[pitohui]

25. your "advisor" is an ass

congrats on paying off your house by the way, it's a good feeling and it's just good sense, the small tax benefit of a mortgage does not make up for the fact of having that big monthly bill to worry about every month in retirement

having read further i see you made a key mistake in hiring this woman -- you are letting personal irrelevant matters get in the way of making a sound financial decision -- you don't hire a financial advisor because you like her or because you agree w. her politics, you hire her because she is looking out for your financially

as the other poster said, she is telling you to spend $1 to save 15 cents in tax, that is not the advice of someone who is looking out for you


i'm sure she is a very fine person when she is at home but you are not buying a friend (or you shouldn't be buying a friend)

would you hire a brain surgeon that you met at a protest who agreed w. your progressive ideas or would you hire the brain surgeon with the best reputation and training for your situation regardless of their politics? well, if you are at retirement age, you are about as likely to be able to replace lost money as you are to replace lost brain, so you should take your financial advisor equally as seriously

[maveric]

26. You'll pay a hell of a lot more in interest than taxes.

More money in your pocket.

[Broken_Hero]

28. Congrats on paying it off

and getting rid of that debt...my wife and I are still fighting out mortgage...we are close to 3yrs in our home. I can't wait until the damn bugger is paid off...

Again, congrats :toast:

[Generic Brad]

29. No, no, no, no, and no!

You need a mortgage a lot less than your financial adviser needs a commission. If you have an opportunity to be debt free, then you can do what most of us can only dream of accomplishing.

Within four years I plan to have my mortgage paid off so that I can actually save significant sums of money for the first time in my life. If I carry additional debt I will never get ahead of the game.

[Nicole]

30. No

I'm mortgage free & it's the best feeling in the world. Paying off the mortgage, and all other credit, has me feeling more secure than the tax deduction would. Plus who knows what the future holds? There may come a day when mortgage interest is no longer tax deductible anyway.

I put the money I used to spend on the mortgage into a savings acct. for household expenses. I just remodeled my kitchen from that account, I didn't have to use a HELOC. My goal is stay debt free unless I'm sick or starving.

[Rosemary2205]

31. Fire the idiot financial consultant.

And do what you darn well know is right.

wow. Where did you find that nutball??