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Posted: 2/23/2021 10:17:52 AM EDT
[#1]
Quote HistoryQuoted: Too many variables to answer definitively, age, health, financial situation etc. I would consider the option if I needed to buy another property or start/expand a business. This. Risk can reward or ruin. I don't take a ton of risk, but I like to balance it out. I probably won't pay off my home early, but I also wouldn't pull money from a mortgage free home to drop into the market. |
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Posted: 2/23/2021 10:20:49 AM EDT
[#2]
Quote HistoryQuoted: So you can guarantee better than 4% ? Quote HistoryQuoted: Quoted: I think the pay your house off culture here is silly. If you can't beat 4% a year with your money, I don't have anything nice to say. So you can guarantee better than 4% ? Define guarantee. I'd say yes over 20 years. In the same way a dollar is a "guarantee" of value. Something could happen that changes that, and something could happen that returns under 4%, and you can what if it to death. The fact is in the last 125 year neither of those things have happened. I think what people miss is should the US economy actually collapse the world's going with it. Hiccups like 2008 happen so plan for them and you'll be fine long term. |
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Posted: 2/23/2021 10:21:51 AM EDT
[#3]
Quote HistoryQuoted: A properly managed rental property will almost never give you problems. Properly managed rentals also require very little work to operate. I spend maybe 15 hours per year managing mine (currently have 3). Yes. That includes literally everything having to do with property management. Quote HistoryQuoted: Quoted: I watched the nightmare of the rental properties my parents owned, FUCK THAT HASSEL. A properly managed rental property will almost never give you problems. Properly managed rentals also require very little work to operate. I spend maybe 15 hours per year managing mine (currently have 3). Yes. That includes literally everything having to do with property management. My current rental is entirely hands off. It's a condo so exterior isn't my problem. It needs a "down to the studs" reno, so I could care less about what's going on inside.  Having rentals in the right place is key. Sadly we sold off our other one, but it was trouble free, as well. Once the market chills I'll buy another couple |
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Posted: 2/23/2021 10:24:29 AM EDT
[#4]
Quoted: Lots of threads lately about whether or not to pay a mortgage off early, but let's look at it another way. If your home was paid off, would you pull cash out of it (assuming you could do so at a low interest rate) to invest and/or upgrade your home/property, or do anything else with the cash? It's the cheapest money you can get currently. |
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Posted: 2/23/2021 10:28:03 AM EDT
[#5]
Quote HistoryQuoted: A poll of over 10,000 millionaires in this country says you’re wrong. Source? ETA read it. Not a big deal. Many many people my age (mid 30s) will be millionaires by the time they are 52, even accounting for inflation. 1 million isn't very impressive. Multi-million? Now you're on to something. |
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Posted: 2/23/2021 10:32:03 AM EDT
[#6]
Quote HistoryQuoted: I wouldn't gamble with my house. Unless turning assets into liabilities is like a thing for such a person I guess.  For fucks sake... invest SAVED or DEFERRED money. Not BORROWED money. |
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Posted: 2/23/2021 10:33:31 AM EDT
[#7]
Never. I invest the money I would have been making a house payment with.
Apparently, it seems a bunch of folks don't have the self control to do this. I considered taking out an equity line to buy an investment property, but then I sobered up. 
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Posted: 2/23/2021 10:39:43 AM EDT
[#8]
Quote HistoryQuoted: Never. I invest the money I would have been making a house payment with. Apparently, it seems a bunch of folks don't have the self control to do this. I considered taking out an equity line to buy an investment property, but then I sobered up. I agree, many dont have self control and waste money on dinners and drinks and smoking and having the newest vehicles. I live frugally, but I also can do basic math and have an understanding of my risk tolerance. Obviously, you make more money with 400k invested from the beginning than you do if you put 2,000/month into that investment. There is also more risk. It's a simple equation, but you have to know where on that risk curve you are comfortable, and what is appropriate risk tolerance based on the rest of your life. Neither is necessarily better or more correct, just different paths for different situations. |
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Posted: 2/23/2021 10:44:04 AM EDT
[#9]
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Posted: 2/23/2021 11:27:22 AM EDT
[#10]
My house isn't paid off. I just refinanced to cover the down payment on another house. My payment went up 80$ and I get more houses without using my own money. For everyone saying "save your money or don't buy it if you can't pay cash for it", do you think Trump saved his money to buy his first hotel? Heck no, thats retarded, the banks have all the money so use their money to get more assets. The more houses I buy now the more houses I will hopefully have paid off and have big passive income when I retire. There is always risk but if you dont take the risk you dont get the reward.
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Posted: 2/23/2021 11:42:14 AM EDT
[#11]
Quote HistoryQuoted: In some cases renting makes more sense than ownership. How much did you spend on taxes, insurance, upkeep and repairs during the time you owned those properties? Did you pay cash or did you spend interest as well? All those expenses lower your profit. Renting definitely makes sense if you are going to be somewhere short term. Long term it does not. Rent goes up over time. In my AO a house that rented for $500/mo twenty years ago rents for about $1300 now. Sure there are taxes, insurance, and upkeep but it is minimal compared to the costs of rent. If they weren’t there wouldn’t be houses for rent because the owners would be losing money. The first two houses were financed the last one was not. |
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Posted: 2/23/2021 11:45:23 AM EDT
[#12]
Quote HistoryQuoted: Over that same time, how did the market perform? Off the top of my head I don’t know. More than likely it outperformed the value of the house on the last two scenarios but likely not on the first. I am not against the market I love it and have 7 figures in the market but I am not going to borrow money to put in there. When the tide goes out you can tell who was skinny dipping. |
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Posted: 2/23/2021 12:58:04 PM EDT
[#13]
Quote HistoryQuoted: It’s not though. It’s an albatross that eliminates flexibility in the short term, and destroys wealth over the long term. The more expensive the paid off house, the worse the effect. There are a million reasons someone SHOULDN’T mortgage a house to invest. They are nearly all linked to being foolish or undisciplined. Character defects. The other couple reasons are asset diversification/hedging and being retired. Ultimately, it depends on feels. Most people are scared, and cut themselves short in everything as a result. Finances, careers, etc. Quote HistoryQuoted: Quoted: No. Owning a home free and clear is an investment in your security and your families security. It’s not though. It’s an albatross that eliminates flexibility in the short term, and destroys wealth over the long term. The more expensive the paid off house, the worse the effect. There are a million reasons someone SHOULDN’T mortgage a house to invest. They are nearly all linked to being foolish or undisciplined. Character defects. The other couple reasons are asset diversification/hedging and being retired. Ultimately, it depends on feels. Most people are scared, and cut themselves short in everything as a result. Finances, careers, etc. Amen, and I’ll add in an unwillingness to change. With different interest rates it’s a much different question, but where they are right now? Hell yes I’d mortgage the house. But I also know that I would have zero issues investing 100% of it. A lot of people simply can’t have money like that and not spend it, which is where all of the horror stories come from about people losing their houses. |
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Posted: 2/23/2021 1:12:39 PM EDT
[#14]
Quote HistoryQuoted: How exactly does owning a house destroy wealth over the long term? People must have a place to live. If you rent you are just pissing away money and have nothing to show for it. My experiences with houses: Bought for 40k sold for 72k five years later Bought for 80k sold for 150k fifteen years later Bought for 160k sold for 250k ten years later While not stellar returns in all cases it wasn’t bad while accomplishing the task of a roof over the head. Quote HistoryQuoted: Quoted: It’s not though. It’s an albatross that eliminates flexibility in the short term, and destroys wealth over the long term. How exactly does owning a house destroy wealth over the long term? People must have a place to live. If you rent you are just pissing away money and have nothing to show for it. My experiences with houses: Bought for 40k sold for 72k five years later Bought for 80k sold for 150k fifteen years later Bought for 160k sold for 250k ten years later While not stellar returns in all cases it wasn’t bad while accomplishing the task of a roof over the head. A paid off house. The younger you are, the worse it is. |
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Posted: 2/23/2021 1:14:10 PM EDT
[#15]
Quote HistoryQuoted: Off the top of my head I don’t know. More than likely it outperformed the value of the house on the last two scenarios but likely not on the first. I am not against the market I love it and have 7 figures in the market but I am not going to borrow money to put in there. When the tide goes out you can tell who was skinny dipping. Quote HistoryQuoted: Quoted: Over that same time, how did the market perform? Off the top of my head I don’t know. More than likely it outperformed the value of the house on the last two scenarios but likely not on the first. I am not against the market I love it and have 7 figures in the market but I am not going to borrow money to put in there. When the tide goes out you can tell who was skinny dipping. That analogy only applies to people who are living above their means. I 100% agree that it’s idiotic to finance an inflated lifestyle by leveraging debt. That isn’t what’s being discussed though. If anyone can do the math to show how this could be a bad idea in a somewhat realistic scenario I’d truly love to learn something, but all the simulations I’ve run show a consistent answer. |
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Posted: 2/23/2021 1:17:06 PM EDT
[#16]
Quote HistoryQuoted: Amen, and I’ll add in an unwillingness to change. With different interest rates it’s a much different question, but where they are right now? Hell yes I’d mortgage the house. But I also know that I would have zero issues investing 100% of it. A lot of people simply can’t have money like that and not spend it, which is where all of the horror stories come from about people losing their houses. Quote HistoryQuoted: Quoted: Quoted: No. Owning a home free and clear is an investment in your security and your families security. It’s not though. It’s an albatross that eliminates flexibility in the short term, and destroys wealth over the long term. The more expensive the paid off house, the worse the effect. There are a million reasons someone SHOULDN’T mortgage a house to invest. They are nearly all linked to being foolish or undisciplined. Character defects. The other couple reasons are asset diversification/hedging and being retired. Ultimately, it depends on feels. Most people are scared, and cut themselves short in everything as a result. Finances, careers, etc. Amen, and I’ll add in an unwillingness to change. With different interest rates it’s a much different question, but where they are right now? Hell yes I’d mortgage the house. But I also know that I would have zero issues investing 100% of it. A lot of people simply can’t have money like that and not spend it, which is where all of the horror stories come from about people losing their houses. In the days of Gold standards and high risk of deflation, low inflation, etc it’s entirely possible and likely a paid off house was the best choice. I think the clinging to it today is rooted in times where the wise choice was owning free and clear. A paid off house is a financial relic, like cash under a mattress. Money isn’t the same, economics isn’t the same, our financial system is faaaaar from the same. Different times and conditions call for different measures. Adapt or die is the one truth chasing humanity through the ages. It will always do so. |
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Posted: 2/23/2021 1:20:28 PM EDT
[#17]
Another question: Would you pay off your mortgage early if you had a zero percent rate?
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Posted: 2/23/2021 1:41:37 PM EDT
[#18]
Quote HistoryQuoted: Debt is debt. If you owe money on your house with an interest rate and don't pay it off, you owe that money and interest to the lender. If you own a house and take out a loan for that same amount of money, you owe that money and interest to the lender. If you owe someone 100000 with a 4% interest rate for 30 years. You pay the same amount in interest to the lender in either case above. If you can guarantee you can beat a 4% interest rate with no risk for loss, also understanding you will be paying taxes on investment income you make, have at it. If you can beat 4% with risk and are comfortable taking that chance have at it. If it so easy guaranteeing you can beat the interest rate of your loan, why would any financial institution in the business of making investments("experts") be so foolish to take their money and loan it to you for less return instead of it investing those things that "easily" beat that interest rate? It’s a complicated answer but I’ll just give you one simple example. They aren’t allowed to do proprietary trading which means they can’t invest in anything but cash and cash equivalents (treasuries and agency bonds). I’m greatly simplifying but that’s about it. Even universal banks like BofA Merrill (now BofA securities) and JPMC can’t prop trade any longer. The can make interest rate and pre-payment hedges in the swap market and very little else. Their securities unit can no longer do any prop trading but can only principally facilitate customer flow (which is committing capital). Then we can go on forever on Basel/Basel II/Basel III capital requirements but that would put me to sleep really quickly. I can go on and on and my professional experience is as an institutional structured products trader and managed a structured products portfolio for a buy side firm. Now mostly just chilling and advising. |
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Posted: 2/23/2021 2:42:46 PM EDT
[#19]
Quote HistoryQuoted: Another question: Would you pay off your mortgage early if you had a zero percent rate? |
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Posted: 2/23/2021 2:44:43 PM EDT
[#20]
Quote HistoryQuoted: Another question: Would you pay off your mortgage early if you had a zero percent rate? Only an idiot would not have a paid off house. Owing money on your house makes you a debt slave |
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Posted: 2/23/2021 2:49:18 PM EDT
[#21]
Not just no, but f*ck no. That's the mentality of the late '90s to 2007. Your house is a piggy bank. Get an equity loan and enjoy the life that you deserve.
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Posted: 2/23/2021 3:20:50 PM EDT
[#22]
Quote HistoryQuoted: Only an idiot would not have a paid off house. Owing money on your house makes you a debt slave Quote HistoryQuoted: Quoted: Another question: Would you pay off your mortgage early if you had a zero percent rate? Only an idiot would not have a paid off house. Owing money on your house makes you a debt slave Nope. It does make my bank (and the fed gov) my risk slaves. I like that! |
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Posted: 2/23/2021 3:21:45 PM EDT
[#23]
Quote HistoryQuoted: Not just no, but f*ck no. That's the mentality of the late '90s to 2007. Your house is a piggy bank. Get an equity loan and enjoy the life that you deserve. All you had to do was finish reading the thread title, and you wouldn’t have posted something so off-topic and derptastic. |
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Posted: 2/23/2021 3:39:09 PM EDT
[#24]
Quoted: Lots of threads lately about whether or not to pay a mortgage off early, but let's look at it another way. If your home was paid off, would you pull cash out of it (assuming you could do so at a low interest rate) to invest and/or upgrade your home/property, or do anything else with the cash? It is a solid question. It is effectively the same thing when you cut out emotion. I would want to identify the investment before proceeding. In my wife's job she knows what competitors and others in related fields have going on in regards to leadership and product quality vs competitors. So we invest accordingly. We put all of our property gains from 18 months ago in 4 different stocks. All have grown nicely. We will bail when conditions within the company or that industry cause her to loose confidence that it will keep growing. |
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Posted: 2/23/2021 4:04:36 PM EDT
[#25]
Personally I wouldn't but I have a lot of high net worth borrowers and financial advisors doing that exact thing. They feel like they can make a better return in the market than the 2-3% rate that the mortgage will cost.
Another argument is if something happens and you lose your income the equity in your home does you zero good unless you are prepared to sell. In today lending world no income means no new loan. From a loan officer / broker this is one of the most aggravating restrictions. If you have a high net worth client with great credit there is no reason why we shouldn't be able to loan up to say 70% LTV. We are seeing A LOT of retired couples that are not able to take advantage of the low rates due to this. |
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Posted: 2/23/2021 4:16:57 PM EDT
[#26]
Quote HistoryQuoted: Personally I wouldn't but I have a lot of high net worth borrowers and financial advisors doing that exact thing. They feel like they can make a better return in the market than the 2-3% rate that the mortgage will cost. Another argument is if something happens and you lose your income the equity in your home does you zero good unless you are prepared to sell. In today lending world no income means no new loan. From a loan officer / broker this is one of the most aggravating restrictions. If you have a high net worth client with great credit there is no reason why we shouldn't be able to loan up to say 70% LTV. We are seeing A LOT of retired couples that are not able to take advantage of the low rates due to this. I viewed 3% as once in a lifetime opportunity. So I refied with a big chunk cash out for 30 years and invested it all. That shit is locked in at inflation rate. I retire in 5 years so I had to seize it. The big chunk cash out will pay the mortgage monthly expense on the income it generates. 10 year yield are ramping up fast and the free money isn’t going to be here long. That’s the thing with opportunity, you have to act on it. |
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Posted: 2/23/2021 7:12:46 PM EDT
[#27]
Quote HistoryQuoted: Another question: Would you pay off your mortgage early if you had a zero percent rate? I would. I hate debt. Maybe part of my issue is my house value isn’t that big of deal relative to everything else. I am happy with my house but bought it ten years ago when I was making less. Now it represents less than one years earnings for me. I just don’t feel any need to play games to try and get some extra investments. My investment portfolio returns in 2020 were more than my house is worth. |
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Posted: 2/23/2021 7:32:27 PM EDT
[#28]
Quote HistoryQuoted: I would. I hate debt. Maybe part of my issue is my house value isn’t that big of deal relative to everything else. I am happy with my house but bought it ten years ago when I was making less. Now it represents less than one years earnings for me. I just don’t feel any need to play games to try and get some extra investments. My investment portfolio returns in 2020 were more than my house is worth. Quote HistoryQuoted: Quoted: Another question: Would you pay off your mortgage early if you had a zero percent rate? I would. I hate debt. Maybe part of my issue is my house value isn’t that big of deal relative to everything else. I am happy with my house but bought it ten years ago when I was making less. Now it represents less than one years earnings for me. I just don’t feel any need to play games to try and get some extra investments. My investment portfolio returns in 2020 were more than my house is worth. I also bought my home at the very bottom of 2011 at 4%. (Another opportunity of a lifetime). I also hate debt. But I do love good secured debt at inflation rates guaranteed for 30 years. But having a good chunk of wealth tied up in a home that has more than doubled what I paid for it? (Not directed at you as you’re not in that position). Nah, fuck all that when I can get that capital locked in at inflation rate and that capital works for me and isn’t locked up in a house/property. Managing and growing money is a mind shift that once you make it and see the rewards after 10-20, 30 years everything you do is about “how can my money make more money? What leverage can I use?” I now have a mortgage locked in at 3% and I’ll turn 80 before the term ends and it’s paid off. And that’s exactly what I want and allows me to not have to work or worry about money when I’m early 50s. But it takes a lifetime of thinking this way to reap the rewards. |
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Posted: 2/23/2021 10:02:09 PM EDT
[#29]
Quote HistoryQuoted: In the days of Gold standards and high risk of deflation, low inflation, etc it’s entirely possible and likely a paid off house was the best choice. I think the clinging to it today is rooted in times where the wise choice was owning free and clear. A paid off house is a financial relic, like cash under a mattress. Money isn’t the same, economics isn’t the same, our financial system is faaaaar from the same. Different times and conditions call for different measures. Adapt or die is the one truth chasing humanity through the ages. It will always do so. So if I pay off my house I'm going to die. |
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Posted: 2/23/2021 10:11:51 PM EDT
[#30]
Not having a house payment is pretty awesome.
In fact, I have no debt at all. |
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Posted: 2/23/2021 11:16:18 PM EDT
[#31]
A lot of tough guys who think they know more than the billionaires who lend them that money lol. It’s like watching people step up with confidence to the ring toss at the carnival.
You know how I know you guys don’t like debt as much as you’re posturing? Not only wouldn’t you give your niece/nephew a $100,000 dollar note from a bank, your brother/sister would hate you for it. |
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Posted: 2/23/2021 11:25:46 PM EDT
[#32]
Quote HistoryQuoted: A lot of tough guys who think they know more than the billionaires who lend them that money lol. It’s like watching people step up with confidence to the ring toss at the carnival. You know how I know you guys don’t like debt as much as you’re posturing? Not only wouldn’t you give your niece/nephew a $100,000 dollar note from a bank, your brother/sister would hate you for it. Are you having a stroke? |
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Posted: 2/23/2021 11:40:54 PM EDT
[#33]
Quote HistoryQuoted: Are you having a stroke? Are you unable to read? |
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Posted: 2/23/2021 11:46:24 PM EDT
[#34]
Quote HistoryQuoted: Are you unable to read? How does “give your niece/nephew a $100,000 dollar note from a bank” have anything to do with this thread topic? |
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Posted: 2/23/2021 11:49:24 PM EDT
[#35]
Quote HistoryQuoted: How does “give your niece/nephew a $100,000 dollar note from a bank” have anything to do with this thread topic? “A note from the bank” is a loan. Debt. Maybe that’s a colloquialism. I thought it was common. |
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Posted: 2/23/2021 11:51:10 PM EDT
[#36]
Quote HistoryQuoted: A lot of tough guys who think they know more than the billionaires who lend them that money lol. It’s like watching people step up with confidence to the ring toss at the carnival. You know how I know you guys don’t like debt as much as you’re posturing? Not only wouldn’t you give your niece/nephew a $100,000 dollar note from a bank, your brother/sister would hate you for it. Exhibit 1,564,877 of feels and emotion over math. Mixing emotions and money is bad...mkay? It’s only money. It’s only math. |
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Posted: 2/23/2021 11:53:32 PM EDT
[#37]
Quote HistoryQuoted: All you had to do was finish reading the thread title, and you wouldn’t have posted something so off-topic and derptastic. Your tolerance for risk is much higher than mine. I have no debt and everything is fee simple absolute. Should OP become unable to repay his equity loan, which can happen during the hyper-inflation, he can be foreclosed on since all funds will be going to food. Oh, the investments, they may not even be liquid anymore thanks to market or bank holidays. If the investments are outside of the system, there is a chance he could profit. But that is a timing issue and like Jim Rogers, I suck at timing. |
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Posted: 2/23/2021 11:59:55 PM EDT
[#38]
Quote HistoryQuoted: Exhibit 1,564,877 of feels and emotion over math. Mixing emotions and money is bad...mkay? It’s only money. It’s only math. So since you sidestepped my example, you would saddle your loved ones with debt on purpose? And then get angry when they weren’t pleased with your “gift”? |
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Posted: 2/24/2021 12:27:57 AM EDT
[#39]
Quote HistoryQuoted: So since you sidestepped my example, you would saddle your loved ones with debt on purpose? And then get angry when they weren't pleased with your "gift"? |
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Posted: 2/24/2021 12:34:55 AM EDT
[#40]
No I would not.
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Posted: 2/24/2021 12:36:13 AM EDT
[#41]
Quote HistoryQuoted: I'll be encouraging my kids to use debt to increase wealth and not use it for living outside their means. Exactly what Kiyosaki (Rich dad/Poor dad) recommends (use debt to create wealth). |
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Posted: 2/24/2021 12:36:42 AM EDT
[#42]
Negative.
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Posted: 2/24/2021 12:38:04 AM EDT
[#43]
Quote HistoryQuoted: So since you sidestepped my example, you would saddle your loved ones with debt on purpose? And then get angry when they weren’t pleased with your “gift”? Quote HistoryQuoted: Quoted: Exhibit 1,564,877 of feels and emotion over math. Mixing emotions and money is bad...mkay? It’s only money. It’s only math. So since you sidestepped my example, you would saddle your loved ones with debt on purpose? And then get angry when they weren’t pleased with your “gift”? You realize it’s a silly comparison right? In one scenario, I get a house that I can use and get equity in (which should rise in value with inflation) and a bunch of cash that I can invest now. In the second, I just get a bunch of cash that I can invest now. But hell, I’ll play. Show me why anyone should be mad about that at a 2.5% interest rate. I’ve done the analysis, but maybe I’ve made a mistake. I’m happy to learn something. Use math. |
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Posted: 2/24/2021 12:39:48 AM EDT
[#44]
Quote HistoryQuoted: I'm not. I could see using a heloc to cover any emergencies, but I like sitting in my paid off house. Agree.. we paid off ours w/ all the damn covid overtime in May.. we were anticipating July this year... but since we couldn't do crap, canceled vacations, etc.. and were working like mad.. why not pay it off early. We just added our house payment into our regular investments.... no need to over complicate things at this point |
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Posted: 2/24/2021 12:54:52 AM EDT
[#45]
Quote HistoryQuoted: You realize it’s a silly comparison right? In one scenario, I get a house that I can use and get equity in (which should rise in value with inflation) and a bunch of cash that I can invest now. In the second, I just get a bunch of cash that I can invest now. But hell, I’ll play. Show me why anyone should be mad about that at a 2.5% interest rate. I’ve done the analysis, but maybe I’ve made a mistake. I’m happy to learn something. Use math. I take your point that taking out a loan without the house involved isn’t the same. My point is that a kid getting a 100,000 dollar loan as a graduation present wouldnt be thrilled, and neither would his parents. Regardless of inflation rate. And yeah let’s use your example. The math is simple. You take out a 100,000 dollar loan against your house for just 2.5 percent. The bank calls the loan due to a mortgage crisis. The funds you invested in the market are worth 55,000 because the market followed the mortgage crisis down. What do you do? |
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Posted: 2/24/2021 7:22:24 AM EDT
[#46]
Quote HistoryQuoted: I take your point that taking out a loan without the house involved isn't the same. My point is that a kid getting a 100,000 dollar loan as a graduation present wouldnt be thrilled, and neither would his parents. Regardless of inflation rate. And yeah let's use your example. The math is simple. You take out a 100,000 dollar loan against your house for just 2.5 percent. The bank calls the loan due to a mortgage crisis. The funds you invested in the market are worth 55,000 because the market followed the mortgage crisis down. What do you do? |
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Posted: 2/24/2021 8:20:43 AM EDT
[#47]
Quote HistoryQuoted: Only an idiot would not have a paid off house. Owing money on your house makes you a debt slave Hardly. |
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Posted: 2/24/2021 8:26:37 AM EDT
[#48]
Quote HistoryQuoted: I take your point that taking out a loan without the house involved isn’t the same. My point is that a kid getting a 100,000 dollar loan as a graduation present wouldnt be thrilled, and neither would his parents. Regardless of inflation rate. And yeah let’s use your example. The math is simple. You take out a 100,000 dollar loan against your house for just 2.5 percent. The bank calls the loan due to a mortgage crisis. The funds you invested in the market are worth 55,000 because the market followed the mortgage crisis down. What do you do? Quote HistoryQuoted: Quoted: You realize it’s a silly comparison right? In one scenario, I get a house that I can use and get equity in (which should rise in value with inflation) and a bunch of cash that I can invest now. In the second, I just get a bunch of cash that I can invest now. But hell, I’ll play. Show me why anyone should be mad about that at a 2.5% interest rate. I’ve done the analysis, but maybe I’ve made a mistake. I’m happy to learn something. Use math. I take your point that taking out a loan without the house involved isn’t the same. My point is that a kid getting a 100,000 dollar loan as a graduation present wouldnt be thrilled, and neither would his parents. Regardless of inflation rate. And yeah let’s use your example. The math is simple. You take out a 100,000 dollar loan against your house for just 2.5 percent. The bank calls the loan due to a mortgage crisis. The funds you invested in the market are worth 55,000 because the market followed the mortgage crisis down. What do you do? The bank can’t just call the loan because of a mortgage crisis. The buyer has to be behind in payments. Which again, only really is possible if you put all your money into making payments instead of investing, and then lose your job or something. In the above example, you just keep making payments. |
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Posted: 2/24/2021 8:40:50 AM EDT
[#49]
LOL nope
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Posted: 2/24/2021 8:55:05 AM EDT
[#50]
Quote HistoryQuoted: Theoretically might be a good move - but I don't think I'd actually do it. This is where I'm at too. Sounds like a great idea to make 5 or 10 percent cash on cash but in reality I don't think I could do it. |
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