The mortgage interest deduction alone is a silly objection. To determine whether to pay the mortgage off early you should estimate and compare two numbers:
A = the amount you save by paying it off early.
B = the amount you get by investing the extra payments instead. The answer will depend on individual circumstances, not on what multi-millionaires think.
- Lev
Horse Hockey!" As Ramsey says, only his "broke financial advisers" teaches that.
First, no mater what we think of these multi-millionaires and billionaires, they are where they are, because of some sound financial planning. If we want to become wealthy to, then we need to follow their examples. So, yes I want to know what they think.
John Cummuta says, On a typical monthly mortgage payment, 90% or more of the payment is interest each month. While the loan company made you feel like you were getting a 5% or 6% mortgage, you're actually paying 90%+ of your money toward interest each month. It would only be 5% or 6% if you paid the entire balance off the first year.
Many of my readers, listen to Dave Ramsey and frankly baby step number 6 says point blank, Pay off home early.
Inevitably, someone will ask you why you don’t just make the minimum payments on your mortgage and invest that extra money instead. After all, if you’ve got a 6.25 percent mortgage, and can earn 8 percent in the stock market, isn’t this a wise trade-off?
No! On a typical monthly mortgage payment, 95 percent or more of the payment is interest each month. While the mortgage company made you feel as if you were getting a 6 or 7 percent mortgage, you’re actually paying 92 to 98 percent of your money toward interest each month. (It would only be 6 or 7 percent if you paid the entire balance off the first year.) Look at any amortization schedule. You’ll see that the loan is front-loaded with interest so that the bank can turn a profit quickly.
The other reason paying off your mortgage is a good idea is that paying off debt gives you a guaranteed return on investment equal to the debt’s interest rate, so you must only compare paying off your mortgage loan with investments that would also guarantee their return.
Stocks, bonds, mutual funds, real estate investments, precious metals, and almost all types of securities DO NOT guarantee rates of return. So let’s look at what type of investments DO guarantee their returns. The safest investments that guarantee their returns are U.S. Treasury bonds, and the bond market will always pay less than current mortgage interest rates cost.
Second, whatever you invest in, you will have to pay capital gains tax on. So depending on mortgage interest rates, you better earn at least 12 to 13 percent to even think about this strategy.
The fact is that prepaying any mortgages on your personal residence--along with your investment properties--will always give you a higher return than any comparable, guaranteed-return investment!
- Trump University
Personally, I want to build wealth and because of that I will listen to these financial advisers, and yes even these multi-millionaires and billionaires. I have already paid off my mortgage, and I soon expect to have my car paid off (early). Then I will never, ever borrow again to buy a car.
Once, I am debt free, I will begin making the efforts to make improvements and repairs to this home that I have been putting off. Like maybe central air.
---
go ahead share your thoughts with me now. Do you agree? Do you disagree? I want to hear your thoughts.
-----
follow me on Twitter
No comments:
Post a Comment