Are we better off paying Cash or getting a Mortgage ????
neigsby
8 years ago
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chisue
8 years agomaifleur01
8 years agoRelated Discussions
Better to pay cash or get loan to build custom home?
Comments (38)So it's May 2015 and I am just joining this conversation with the same plans to build with plenty of cash to do it without compromising our retirement and other investments. I have already gained some new insights by reading everyone's comments here so thank you! We also have our current house almost paid off which will be used to recoup some of our costs when it sells. And like several of you, we don't want to sell and move two times so we'll wait until new construction is near completion. But something just keeps nagging me about having some kind of safeguard in case something happens along the way. We know and trust our builder, but hey, anything can happen expectantly along the way. So I Googled Beth's original headline and came across another blog that revealed something very reassuring to me. Everyone knows about construction-to-permanent loans, but how about just taking out the initial construction loan and then paying it off in full at the end with no permanent loan? The lender assumes responsibility for getting an accurate appraisal, inspections, approvals for builder draws and final title. A 12-month construction loan would involve miniscule interest costs for the peace of mind in return. And what say you? An inquiring mind wants to know!...See Morepay off mortgage or retirement invest
Comments (13)>>If you decide to see a financial planner, avoid the ones who spam internet message boards with their services.Mona could not be speaking of Dave Donhoff, whose input I also enjoy and respect immensely. Dave is NOT a financial planner, nor does he pass himself off as one. He is, however, very knowledgeable in his field, which is mortgages and equity - how people handle their debt, in other words. The only true financial planners are Certified Financial Planners (CFP), who specialize in estate and financial planning, either through annual fees (percentage of investible portfolio) or hourly. They are registered and licensed. No stock broker or any kind of financial advisor who is not a CFP, has any true fiduciary responsibility when handling your money. Note I said handling, not advising. You can take advice from anyone, even me or Dave. But you don't want anybody EXCEPT someone with fiduciary (e.g., legal) responsibility, to be handling your money. Many people get confused and think financial planners are those guys who give "free" seminars and then try to railroad you into buying insurance you don't need or wild'n'wacky hedge funds. But people who are the "real deal" in the CFP world don't operate that way. It isn't worth their while - most of them have minimums of at least $250K for a client's portfolio. Those are liquid funds for investing, not your house equity or stock options. And many go even higher, to $1M+ needed in liquidity before you can become a client....See MorePay off mortgage or not?
Comments (25)Wow! Thanks for all the additional feedback. You've given me even more to think about, although it all seems a little bit clearer now. whode, you are definitely right that putting the money into principal makes it less accessible. Though we are generally very disciplined, there is a high chance that we would dip into a more accessible savings account, or perhaps not be as disciplined about putting the money away in the first place. By setting our mortgage minimum (the real mortgage payment + our self imposed principal payment) we don't seem to waver much if ever. I have to think that whether we pay off the mortgage ASAP, build up savings, or do a little of both, we are still heading in the right direction. I have so many friends who discuss why you shouldn't pay off your mortgage, but then they don't/can't save any money on the side so they really aren't getting ahead on any level, are they? Thanks again. Q...See MoreYe Olde Mortgage Pay-off topic
Comments (24)I have such a love hate relationship with the sorts of articles such as "Never pay off your Mortgage" etc. The benefit is that it gets people thinking, the bad thing is that it paints a narrow, ill conceived, rosy picture that doesn't hold up too well under scrutiny. Life is never so black or white. Several potential fallacies: #1. The assumption that everyone will have other debt in their life. #2. I'd like to find a bank that will give you a 95% 30FRM (as per his example) with out requiring an 80/15, or PMI, etc., all costs which he neglects to account for. #3. If his rosy fellow Ed is out of a job, he'll have no earned income. It's tough to make a deduction from that, so his "after taxes payment" will be readjusted back to original, meaning his $40K will last a much shorter time than this article (which also fails to account for basic costs of living beyond housing) accounts for. Fact is that if either of them are out of work for any amount of time, they're screwed. I'm not sure yet if we'll pay our mortgage of early or not. As per the article's example, our income has increased so that it's not the drain on us that it was 2 years ago. If we do prepay, we'll do it in a lump sum capacity after the point at which it is not longer a beneficial tax deduction to us. Right now we're investing the money that would go to extra payments. -meg...See Morebry911
8 years agolast modified: 8 years agochisue
8 years agoElmer J Fudd
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