Everything You Need to Know About Mortgages!

[@laurenprada3335]

You just changed my mind. My husband and I put an extra $100 towards principal and we were going to increase that every year $200 $300 $400 $500 but now we will put it into an investment account so we have more options with that money in case life happens. otherwise we can pay our mortgage off down the line. Great episode! thank you!

[@CheJoffre]

These videos where you all take sections from different shows that pertain to the subject at hand are my favorites. Seeing the changing subscriber count in the background is also a nice touch :)

[@michaelscannell2502]

I just did a refi on 300k to a 15yr at 1.99 with $549 in costs a month ago. And no, I did not roll any costs into the loan. Its a great time to get into a loan.

[@Salv-a-13]

We bought our first house in 2020, without 20% down. In 2021, we were able to refi and remove our PMI! If you would have asked me a few years ago about paying off a mortgage early, I would have been all for paying our first house off in 10 years. Now, with a 2.9% interest rate, we will not be that aggressive in our mortgage payoff in favor of investing our army of dollar bills. Butttttt I still like putting a little extra a year towards the house, so we’re making biweekly mortgage payments! 😊

[@hb7030]

Same, I put like 10% down and then refi'ed my mortgage to go from a 3.7% rate to a 2.85% rate. In the same time, my house has gone from $300k to $450k in two years. Honestly, the best decision I have ever made was buying my current house before I had 20%. I think the same strategy won't work now though because I predict housing to stabilize post-COVID.

[@MikeThePike316]

I don't get it, why not invest WHILE paying extra on the mortgage?

[@victorbaird8220]

😊😊😊😊

[@xavierblauvelt7595]

My break even refinancing went from 3.125 to 2.375 - Break even was only 8 months due to closing fees being so low!

[@ChevelleRocks88]

Nice. Also took advantage of this. Dropped my payment almost $200 and kept same term

[@KristinThompson]

Great tips!! So helpful. This makes me glad my husband and I opted for the 30-year, and then just add to the payments vs. being locked into a 15-year mortgage.

[@habbadabbado5765]

This brings up a terrific point. I’m was never one to pay more than required on the monthly mortgage. You consider at times, but it becomes dead money if you do. What I did is invest, and when the point came, simply paid off the mortgage with about 30% left kn the note BECAUSE it was the best option/choice at the time.

[@jake-hofer]

I remember reading that stat out of Chris' book and wondered if that was the case. Makes me feel a lot better with my current situation. Fantastic episode as always. I've learned and implemented a lot of your teachings over the last 3 years and thankful for all the episode and deliverables you have provided!

[@Dpaq13]

What stat

[@jake-hofer]

@@Dpaq13 most millionaires pay of their home in 10.2 years

[@marksweetser6312]

I got 2.75% on a 30 yr. Bought in March and have 100k in equity already. On paper anyway

[@codyphillips0]

Just purchased 550k home at 2.75% in Nov 2021! Austin, Tx.

[@ESPPsycho]

Dudes, I’m 29, and paying off my mortgage has brought me to a peaceful place that I didn’t want to wait till 45 for.

[@Newbuddyzx1]

my state is impossible to by a house . the prices are not reasonable

[@urbanlumberjack]

Well I live in Georgia and paid $263,000 for a 960 square foot fixer upper last year. Housing is insane even in places it used to be “cheap.”

[@gumerzambrano]

$263k is so damn cheap

[@superblump87]

@@gumerzambrano for a 960 sq ft fixer upper?

[@atdower]

Yes. Depending where you live. There are 1000 sq ft houses that go for 1M in SF.

[@benlackey5068]

Refinance - Could be a (1) rate/term or (2) might be a cash out (which includes rate/term). Kicking the term out and out will increase your leverage (and return!). Cash outs these days on a primary will get you down to 20% equity. That's nice too because then you get the interest deduction again. You don't have to refi to pay off debt. You can refi to free up the cash for other uses.

[@mtempz3165]

Thanks for the info!

[@andrewmamikins693]

Retirement is wonderful if you have two essentials - much to live on and much to live for. Invest wisely and get good returns.

[@henryclinton9317]

thank you, can you give a pointer the best investment now ? i am thinking of getting stocks or cryto

[@andrewmamikins693]

The key to making money in stocks is not to get scared out of them. An important key to investing is to remember that stocks are not lottery tickets. Get a financial assistant

[@andrewmamikins693]

I currently work with Tamara Diane Hagan a financial expert i met in a seminar

[@jamesmaduabuchi6100]

I recently watched Tamara Diane Hagan on TV , such a great speaker . but have you made any profit whatsoever working with her ?

[@andrewmamikins693]

i just added $240,000 to my portfolio within 4 weeks

[@alexjefferson8981]

What about in 10 years w/current inflation. Wouldn’t $$ owed in the future be worth less? So extending mortgage payments as long as possible would be a better thing to do while investing all the $$ you can today.

[@deeputhomas5397]

Agreed. That is why I always take 30 year loan even when I refinance. It is much wiser to stretch out the cheap debt as long as possible and invest the savings. But it is very important to make sure that you don’t take too much debt just because of the longer term and cheaper interest.

[@Natej04]

@@deeputhomas5397 what my wife and u are doing is picking our home based on if it were a 15 year mortgage and then we will probably do a 30 year for the flexibility and immediately invest the difference. That way our budget never really knows the difference and we don't end up taking the savings from being in a 30 year and spending it on random things. It also helps us keep our eyes on more modest homes than what a 30 year could potentially allow for within the 25% rule

[@BrianNC81]

we refied our remaining onto a 10 year at 1.8%, will probably pay it off in 5.

[@robb5270]

Sorry with today’s rates it’s dumb paying off your second or third house in 10 yrs. even if you have money and in your 40’s/50’s…..interested steps going to be below inflation. It’s literally dumb to pay more then minimum as long as you don’t have pmi on it.

[@robb5270]

@@BrianNC81 not smart, unless you have some deficiency such as you are a addicted to gambling or can’t control spending on total garbage…other wise it’s stupid. At 1.8% you could literally get more on a CD probably….and realistically should be easy to get 8% minimum

[@benlackey5068]

An OMG never get an ARM. You can always adjust with a refi. The nice part about that is that it adjusts down only. ARMs adjust up, precisely when it's going to be hardest on you.

[@priestesslucy]

ARM?

[@benlackey5068]

@@priestesslucy Adjustable Rate Mortgage. The initial rate will be lower at origination but it floats on prime, so it's quite likely you'll pay more over the life of the mortgage given we're hovering around all time lows currently.. There's also volatility in your payment as the rate floats that most people find concerning.

[@priestesslucy]

@@benlackey5068 Yeah, I might be tempted to do ARM if I was pumping and dumping flips or doing the Buy, Slow Upgrade for 2 Years and Sell to claim the Primary Residence Tax Exemption hustle. (Seriously though, in some markets a single person almost has to sell every 2-4 years just to keep up with the exemption and not wind up giving an arm and a leg to uncle Sam by putting down actual roots before selling) But for something I'm actually going to hang onto? No way

[@jasonandkathleenbarker6306]

We are 47 year old millionaires (net worth above a million). We put 3% down on our first house with a 30 year mortgage and our payment was 33% of our gross pay.. Our most recent house we bought at 45 and got a 15 year. Yes I get we could “make” money by investing the difference but I want the house paid off when we retire at 60. I also think you *need* to stretch to get into your first house. Home values go up year after year, you have to get on board as soon as possible so put 5% (or less) and have a payment that’s 30% of net income. Stretch early and your income will grow. If you wait another year to save a bigger down payment you’re just going to lose out on appreciation

[@jasonandkathleenbarker6306]

My point is it’s all about the stage of your life. Our first house we needed to stretch to get our foot in the door. Our newest house we already have wealth so we don’t need to make money investing the difference. I’d rather have a paid off house at 60 so I can retire if I choose. Same people but different life stages results in different optimal decisions in my view.

[@philipnorman9364]

Cool video! Just curious would the advice for paying off or not paying off the mortgage change if Paul and Melissa both had higher interest rates of %7.5?

[@apollo_1238]

Great advice. If you want to pay off your mortgage, save money to have flexible to pay off when you have accumulated enough money.

[@MikeThePike316]

The problem with too much flexibility is that the job may not get done. In the time it took for someone to finally get around to paying extra, they could've already paid the mortgage off. Sure, someone could have a lower monthly payment, but I feel they have a bigger problems if they need the extra couple hundred dollars to have "flexibility" in their budgets.

[@mariefernandeaugustin1392]

Thanks for being somewhat honest. 15 y v 30y is not a debate about affordability or investing the difference. It’s a debate about a smaller v larger house. People need to be honest about this. It’s 25% of your income either way. This is why 95% of mortgages are 30yr mortgages. Americans want the biggest house they can get. If it was really about the math; the interest is less, the down payment is less, the lower insurance on a smaller house all point to the fiscal responsibility of a 15yr mortgage on a smaller house. But Americans don’t want smaller houses. If 40yr mortgages became available to Americans would go for that. The Paul and Melissa example once again mischaracterizes the comparison. The payments should be the same, if The bank approves you for a 1500/ mo mortgage, it does not matter if the loan term is 15 or 30 years. So is Paul at 25% of his income or Melissa? This only makes sense if you are saying Melissa has intentionally elected a mortgage that is less than 25% of her income.

[@benlackey5068]

20% is a terrible terrible idea. I've bought seven houses (all of which I still own). I paid 20% on one and only because I had no other choice. One was 3.5%. The remaining were 5% conventional with PMI. Given what's happened with FHA loans, 5% down conventional are the way to go. Take the free money!

[@priestesslucy]

What's happened with FHA loans?

[@benlackey5068]

@@priestesslucy previously (pre 2013 I think?) the PMI included with FHAs would go away once you hit a certain loan to value (LTV). They changed that and you now pay PMI for the life of your loan (effectively till you refinance). Given that rather thank making a 3.5% downpayment with an FHA, you're probably better off doing a 5% down conventional with PMI. That way you can drop the PMI once your LTV is ok.

[@priestesslucy]

@@benlackey5068 oh, yeah that's a big deal. Thanks for explaining for me ❤️

[@MikeThePike316]

Free money? Where?

[@benlackey5068]

@@MikeThePike316 It's in loans with fixed rates below the rate of inflation. I'm always amazed when people pay such loans off.

[@jaredgates4310]

In the perfect world a 30 mortgage makes sense if you invest the difference saved by taking a longer term. But in the real world most people with extra income don't save it. Also this assumes you keep the house for 30 years. How many people have actually kept a house for the full 30 year term? The rough statistic I've heard thrown around is that people move about every 7-8 years in which case folks with a 30 year mortgage never really build any equity. I would like to see the two terms compared under more realistic circumstances.

[@Alan-jk1yi]

If the show were restricted to what most people did, all of their shows would be restricted to the single sentence "Don't invest much, and get into more debt". That's what most people do. The show is to talk about good strategizing, not what most people do. And even if you are only in the house for 8 years, the advice doesn't really change as far as I can tell; a 30 year still gives more leverage potential, more flexibility, and more investment opportunity. Short term housing may open up the discussion to other types of mortgages, but with the current state of interest rates, I think it's is silly to go with a different kind of loan when you can lock in 3%.

[@83zeus]

You guys recommend only spending 25% of your gross income on housing. If one were to do that you could be both "Paul" and "Melissa". Great advice guys. Keep it up

[@marc8919]

I refinanced to 2.75% earlier this year to a 15. But now I think that was a mistake, I don't intend on being here forever so I am thinking about getting a 2.75 for 30 years and taking out 170k. My payment would be the same and I'd have cash ready for my next home.

[@nuri00ko]

Hello! Can you help address mortgage refinancing and interest rates? How does one go about getting a lower interest rate when currently already in a home with a mortgage? Can one get a lower interest rate on the current loan value? Does one have to “sell” the home to the lender at market value, then “rebuy” the loan from the lender at market value? What are closing costs? What can be negotiated in closing?

[@Alan-jk1yi]

How much negotiating can be done depends entirely on the lender, but its fairly easy to shop around what refinancing rates would be online. As with mortgages on a new property, credit score is probably the biggest factor in how good a rate you can get. And the way most refinances work (not counting cash out refinances), is the lender you are refinancing with essentially buys out the remainder of your current mortgage, and then establishes a new mortgage using that remaining amount under the new terms. It has nothing to do with the market value of the house, it has to do with how much debt is left in the current mortgage. (Well, nothing do with the mortgage calculation itself anyway. But it might make a lender nervous if the house has plummeted in value and you owe more on it than it's worth.) Example (ignoring things like down payment, insurance, fees, and taxes for simplicity): You have a house you took a $300,000, 30 year mortgage on at 5%. Your monthly payment would be $1,610. After, let's say 15 years, the remaining balance of that mortgage would be about $203,000. Now you wanted to refinance to a 30 year at 3%. Your new lender buys out the mortgage from your old lender, and creates a new mortgage on the $203,000 of remaining debt. So your new mortgage would be $203,000 at 3% over 30 years, or $989 a month.

[@coolfool1219]

What is your take on interest only loans, assuming you could qualify for them? The significantly reduced monthly payments provide for more liquidity and you can refinance after 5-7 years to start paying down the principal as well. The only real con I have read/heard about is that, if the house loses value, you are now in the negative. That seems a bit odd to me though, because if you're paying down principal, your cash would be going to equity that is losing money anyway. Not sure if I'm missing something, but think that would be an interesting discussion!

[@urielreyes7509]

F$$k Yeah 💰 Love your videos and thank you for all the information my teacher didn’t know himself to teach me!💯

[@paulbrown5937]

As a Paul that has a 15 year mortgage, I don't regret my decision haha. Paying off my car and student loans was such a relief, I can't wait to actual own my house instead of the bank owning it. I'm already maxing out 401k though, so I guess the point is mostly moot.

[@abrahamflores2566]

Yeah but how much more can you invest instead? Maybe get your mortgage down to $1000 a month or lower so that its almost no noticeable.

[@derekp6636]

yeah couldn't do 20% on either house but at least we are locked in for 30 years. I went for the same flexibility, always easy to pay more but hard to reduce the minimum.

[@isaacjameson]

Hearing this makes me feel even better about my 2.5% 30 year mortgage.

[@ThePatriot1123]

Need an update to this with new interest rates

[@BrianNC81]

We got the best rate on a 10 year fixed mortgage refi at 1.8%. Save a little interest and be out of debt faster. Going to pay it off in 5 years while at the same time investing 25%. No mortgage buys freedom to do what you want. Let's say you are transferred to a new boss at work that is a total A-hole or maybe you get layed off from your 6 figure job, without a mortgage its easy to make ends meet while you find something else and live on a single income for a while.

[@angieharris8015]

I put down 3.5 on a credit card too. Yayy. This was in 2010, for which it qualified me to get the Obama $7500 tax credit back PLUS Schwarnegger’s $10K NEW HOME(construction) tax credit. Down payment on the credit....PAID!

[@lukekondak326]

Me watching this a year later looking at 8% interest rate…

[@DemetriPanici]

I’m excited to get my 30 year fixed!

[@cjchamp3]

Look for no closing cost lows at rates below average. I refinanced 3 times in the past 2 years and all I had to pay was around a $200 title fee and I got around 0.2% below the 30 year Freddie Mac average rate each time. I did have 60% LTV and good credit. Just like everything else, lenders have different charges and rates. If I would have paid thousands of dollars on my first loan it wouldn't have made sense to refinance again or I would have lost that money if it did make sense.

[@gumerzambrano]

My friend just got a mortgage bc his mom was tired of renting and the monthly payment is $4k 😂 it's a $750k home here in the LA suburbs

[@afternoononthedock]

Great compilation show, thanks!

[@Ethernet480]

Where the taxes at? 15 year PITI payment on $208k house here in SE MIchigan is $1983. (Annual taxes = $4300) assuming $1200 per year insurance and 3.875% interest

[@conorkamperman957]

I would like to see some numbers on the avg loan amount for a 15 year vs a 30. This example is good but I have a feeling when people do a 30 vs a 15 they end up just buying a more expensive house.

[@matthewartz165]

quick mortgage question here..... Is paying the SAME amount of extra principle more valuable the sooner you do it? If i put $10,000 of extra principle payment today or in 10 years from now, would it take away the same amount of time left on a mortgage?? Thanks for any help here!!

[@conggao5565]

No, mortgage interest is front loaded. Think about total interest for the remaining term of the loan, so earlier the more interest saved total. But also think about today’s dollar is more than later; and if interest rate is very low, paying aggressively is hurting you, since you can earn much more than total interest saved.

[@michaelscannell2502]

More valuable sooner.

[@benlackey5068]

If you really want to juice your returns, you should probably be doing cash outs along the way too. Not that too many people actually live in a house for the term of a mortgage....

[@codyrae549]

I've been binging your videos over the last couple weeks. You consistently suggest that people "Save" their army of dollar bills. Saving isn't a good idea because it doesn't grow. You never emphasize that what you really mean is to invest your money. None of the math you share works if you just dump this money in a savings account. Maybe you explained this in an earlier video but for people that just jump in on a KZbin suggested video, we would never know. Just some friendly feedback. Big Fan. Thanks for the content.

[@Alan-jk1yi]

It's a bad habit of theirs. They do mean invest, not save, they just use them interchangeably.

[@chemquests]

Their system is based on the FOO, and the early steps are saving in the traditional sense. Besides getting the match, investing comes after paying off high interest debt and securing an emergency fund.

[@brentlove6414]

Living in a town with less than 20 houses on the market under $350,000 makes it very hard to spend less than 25% of income

[@gojl5567]

I’m looking at a mortgage to get a vacation home. I can’t justify cashing out of some investments earning 8% when the interest rate is 3%

[@MikeThePike316]

If you're already investing, what would it hurt to invest cash into real estate? Would it not appreciate ±8%?

[@gojl5567]

@@MikeThePike316 I’m not sure that it would be quite that much. I should add the money is in an inherited IRA so that I have to pay taxes - not sure incurring $200k+ in taxable income beyond my wages is the best decision for one year

[@burkles4456]

Jeez 25% housing cost including insurance and utilities leaves me with a $600 mortgage payment lmao

[@stephenparsons6011]

Great information! Paying off the mortgage regardless of all else has always been my problem with that Dave guy. I see it as the epitome of his hypocrisy. Everyone's situation is specific. The best plan is to listen to the Money Guys (and others) and educate oneself about what you are are not doing with your money.

[@KP-uz3nk]

Paying off the mortgage is the final step on his to do list. Paying off consumer debt, having a fully funded emergency fund and investing all take priority. Then any left over is for paying off the mortgage.

[@MikeThePike316]

@@KP-uz3nk - Ppl also forget that if someone's following the baby steps, they're investing 15% while paying extra on the home. Opponents of the baby steps typically treat the process disjunctively: either invest or pay off the home, but not both. Even Money Guy has made this mistake in one of their case studies on this topic.

[@MikeThePike316]

What hypocrisy? Also, if you view the baby steps in a vacuum, you'll obviously find it objectionable. In order for it to make sense, you have to view each step in context with the program.

[@sergio8858]

Awesome content as always 👍

[@WinS392]

meanwhile 1 year later mortgages are 7%

[@ryanfrancisco4916]

I still think following Dave Ramsey’s plan is the way to go. He advises having no debt prior to buying a home, save 3-6 months of emergency fund, have life/disability insurance, saving 15% on retirement, fund kids education fund, and put any other disposable income into the mortgage on a 15-year fixed.

[@jasonandkathleenbarker6306]

Ramsey is overly conservative because he’s a fool (he’ll admit it) who was irresponsible with debt and went bankrupt. Now he believes *everyone* is as foolish as he is so that’s why he recommends no credit cards or debt. But if you aren’t a fool Dave’s plan is not for you

[@mortonmattd7494]

Is she investing in a taxable account i assume or is it all in a Roth? wasnt very clear

[@Visaliaipa]

Bought a second home in Tennessee for retirement in December of 2020 and locked a 30 year mortgage in at 2.875% (with 10% down).

[@ynprice05]

The mortgage example makes sense but most people aren’t disciplined enough to invest the extra so you’re stuck with a 30yr and not a lot in retirement

[@aboucher2110]

2,800 SF for $330,000?! Here in MA that’s like 1,500 SF max lol

[@BrianNC81]

280k for 3400sq ft on an acre of land with a three separate stall side load garage in NC... 8 years ago. More like 500k now.

[@999bmxbandit]

The numbers seem off on the bi-weekly vs rounding up numbers at 31:00. The round up option would only result in 2 years and 5 months of shortened duration and the biweekly option would result in 4 years and 3 months of shortened duration of the loan. I don't know how Daniel got those numbers but they don't seem to reflect reality at all.

[@codyphillips0]

What are your guys' thoughts on stretching that 25% rule on your first house early on in your career since your income is likely to increase and the payments would no longer be as burdensome?

[@hullihenfamily829]

spending 25% on housing is way to much. 15% should be the maximum. If you spent 25% on house and 25% on invesiting and 30% in taxes you only have 20% for everything else. That only works if the 20% left is a really big number. Which is why not having a mortgage is important because it frees up that 15 to 25% for investing.

[@Dudemanbro1577]

Literally just paid $420 per sqft for my house…

[@mortonmattd7494]

these Numbers Dont work in HCOL aereas

[@davidvillarreal3598]

You did not include the $50K down payment in the total amount paid for the $250K house example.

[@elmateo77]

You guys forgot to account for mortgage interest tax deductions and inflation in your calculations. Since mortgage interest is tax deductible, if you're in a 35% tax bracket every $1000 in mortgage interest paid saves you $350 on taxes, so effectively the actual interest rate cost to you is 65% of the rate on the contract. That brings a 3% interest rate down to 1.95%, which in most years is less than inflation. So if inflation is 2% and your effective rate is 1.95%, that means the net value of the money you owe has actually gone down. Over the last 100 years, the US dollar inflation rate has been 3.25%. So if your effective interest rate is lower than that, you want to drag paying off the loan out as long as possible because you're effectively getting paid to keep the loan (and of course you can invest more $ instead of using it for extra loan payments).

[@wdeemarwdeemar8739]

No such thing mortgage interest is not deductible for three years now. Where have you been?

[@elmateo77]

@@wdeemarwdeemar8739 Yeah it is, they just reduced the cap to $750k. If you don't believe me check with your CPA or lender.

[@michaelscannell2502]

In the US, the standard deduction, for a married couple, is much higher than most all of us can get from interest paid from a mortgage.

[@MikeThePike316]

@@michaelscannell2502 Exactly, the only way someone's gonna benefit from mortgage interest deduction is if they itemize and those itemizations far exceed the standard deduction bc of the mortgage.

[@benlackey5068]

The reason not to get out of debt is that it neuters your returns. If you can get over how you feel, you can do an awful lot better by taking on debt (and leverage).

[@chemquests]

Debt is risk. It’s not just a feeling but a factor to take into account. Certainly one can take calculated risks, but it would be foolish to disregard the cost if the risk is realized. Having a means to mitigate the impact if everything goes south is appropriate.

[@benlackey5068]

Debt is no more risk than an asset is risk. Funny enough - debt can actually reduce the risk of your portfolio.

[@chemquests]

@@benlackey5068 it’s different types of risk. If an asset falls in value, don’t sell; lack liquidity for debts, lose your belongings. One sucks more than the other

[@benlackey5068]

@@chemquests I think I understand what you're trying to say, but am somewhat of a pedant. Assets and debt are merely things that go on your balance sheet. Risk is more a characteristic of those things. From investopedia: "Risk is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment."

[@supercrazydesi]

I was 32 and my husband 33 when we bought our first home with 20% down payment. Interesting the survey says 33.

[@VM-fr1qn]

What are your thoughts and contributing 15% of gross income on investment ie 403b/IRA etc… and the rest on extra mortgage payment. FYI I’m under 45 yrs and my husband is over 45.

[@Alan-jk1yi]

Depends on how much you already have saved up and when you plan to retire, but I'm probably gonna go with no. If you were extremely aggressive with your savings early on and already have enough to retire comfortably, I guess it wouldn't hurt anything to lower it down to 15%. I do very much like the idea of not having a mortgage in retirement, but getting rid of it too early means losing out on quite a lot of investment opportunity, and age 45 is kind of an arbitrary number they throw out that I personally don't love. Early mortgage payments mean not only lost growth opportunity, but you also lose out on the tax advantages that retirement accounts give. On the other hand, I think it's a great idea to ear-mark some of your retirement savings for paying off the mortgage early. That way, it still gets the growth during that time, and once you hit retirement, if you still have the mortgage, you can decide then whether you want to just lump sum pay off the rest as a retirement present to yourself.

[@Mymindsgoingblanknow]

I have 130,000 left on my mortgage. I have 375 thousand in my retirement plan in which can borrow 50 grand. My mortgage rate is 3.75. I'm 53 years old. I'd really like to get the mortgage down to below 100 Grand before I retire in six years. I'm thinking take the $50,000 loan from my tsp. Put the $50,000 towards the principal. Then my mortgage would be below a hundred thousand and I'd be paying myself back with no early withdrawal penalty. I've watched a lot of videos and heard a lot of talk about what's better, pay down the mortgage or invest. The money guy show says if you're over 45 you can pay extra towards the mortgage. I'm 53 so I'm thinking that might be the way to go for me.

[@thomasa5619]

Getting down below 100k in six years is only $800 a month In six years that $50,000 could nearly double

[@HughMirin-Bruh]

I don't get it. Interest (around 1% here) is far below the level of inflation (projected 2%, but higher in reality). Loading on some debt sounds like a good choice to me...

[@James-rn7uz]

I honestly thought the 25% gross rule included principal/interest, taxes and insurance all together

[@Alan-jk1yi]

In my opinion, it should.

[@James-rn7uz]

@@Alan-jk1yi agree. Always good to err on the side of caution

[@markparra6731]

I’m 20 I take everything to heart I have my school paid for by my job. I’m a registered pharmacy Technician making 21$ a hr I have 12 grand saved up right now I’m thinking about buying a duplex when I turn 23 what do you think. I think 30k is a good amount to use.

[@markparra6731]

I also don’t pay any bills at my house just the gas on my car.

[@jaredflurry937]

I’ve been doing real estate for 15 years. Your plan sounds cogent; you might not even need to wait as long as you think, as you should be able to get owner-occupied advantages (i.e. low down payment) for this purchase. Your main risk will likely be bad tenants, especially considering your immediate proximity. It may be worth placing the other half under management; peace of mind and safety (imagine telling your “2A” neighbor you’re evicting him) are easily worth 10%. Other folks who have done this can certainly provide better advice; maybe I’m catastrophizing. I had a colleague that purchased a duplex, lived in it for only one year before marrying and moving out, and ended up cash flowing $800/mo. across both units. One will almost never achieve that on a single family rental without a substantial down payment.

[@jacobgrund701]

Even though its low interest, houses are going for more than they were before. How does that effect it

[@jacobgrund701]

Actually curious because i know a couple that bought a house for 130 and now could sell for 180

[@cynthiasimpson78]

Do you change shirts every time your subscription board changes? Does that have anything to do with mortgage rates? 🧐🤨🤣

[@sebastianrodriguez672]

I changed something I was sure was right. Pay my home as soon as possible and because of this I'm really grateful guys.

[@rentas13]

I ❤

[@robb5270]

Sorry with today’s rates it’s dumb paying off your second or third house in 10 yrs. even if you have money and in your 40’s/50’s…..interested steps going to be below inflation. It’s literally dumb to pay more then minimum as long as you don’t have pmi on it.

[@MikeThePike316]

How is it dumb? You eliminate risk, your profit is no longer offset by mortgage payments, you save money on interest in the long-run which could be used for investing, and you could save or invest those monthly payments. If we're taking the all or nothing approach (i.e., choosing to pay off the mortgage instead of investing rather than doing both simultaneously), then you may have a point.

[@tastymuffinss]

How does a twenty something know he/ she is financially ready for home ownership? And at what point does at 10% ROI from investment accounts in my twenties outperform a rental property?

[@chasesigler1048]

Watching this in 2024 crying because I know I am trying to buy a 300k house in this market and looking at a like 7% interest rate 😢

[@therationalistparty9742]

If you buy a $240k house and pay the mortgage down to $90k, you lose your job and the realestate market tanks. Even if your home value drops to $150k which is highly unlikely to happen in any market. All you owe is $90k. You pay off the house and still have liquid funds to live with. If you put it all in retirement and still have $200k in mortgage. You are screwed. You owe more than you can sell for and your retirement funds are locked.

[@derekbutts2660]

This is why you have more than straight retirement. Regular stocks, emergency funds, and savings accounts are all necessary on top of Paying down mortgage.

[@therationalistparty9742]

@@derekbutts2660 I agree. It's not one or the other. It's diversification that is the answer

[@deborahb.277]

Not to mention, if all that happens you get another job. I got laid off a few years ago and took another job paying much less and the job was awful. But, I was never late on my mortgage or any bill. It took 10 months to get another job that is I enjoy.

[@Alan-jk1yi]

What? How are you magically paying off the $90k in that scenario, while somehow being screwed with the lower monthly payment 30-year? The point is that if things get tough, it's much easier to make the required payment on 30-year than on a 15-year. And while it is unrealistic for them to compare "30-year + investing" to "15-year + no investing", retirement accounts aren't strictly speaking "locked". There is just a penalty for accessing them (excluding Roth principle). I'm much rather pay a 10% penalty than have my house foreclosed on. And yes, I'm aware they are doing a dollar to dollar comparison, but in making the assumption that the 15-year scenario has no investments, they are breaking their own FOO rules and recommendations. While the person doing the 30-year will be ahead, both would still have the money outside of that dollar for dollar $1,600 to fall back on.

[@therationalistparty9742]

@@Alan-jk1yi I think you need to reread my post. I never once said anything about a 15 year mortgage.

[@benlackey5068]

Yeah, so cash out, don't HELOC... Once you have that money you have it.

[@CT-O]

do as i say, not as i do

[@jgg204]

Cash out refinanced all of our rental properties at 3%, pushed them all out another 30 years, used the cash out money and bought 3 more properties also with 30 yrs mortgages below 3% rates. I can retire now before 40 if I wanted to, and I didn't even do anything except cash out refi. Dave Ramsey doesn't know what he's talking about

[@Alan-jk1yi]

What happens if the market crashes and you lose half your tenants for a year?

[@jgg204]

@@Alan-jk1yi I have B class multi-family properties. During the 2008 crash, my rents went up due to increased demand for them

[@Alan-jk1yi]

@@jgg204 That doesn't answer my question.

[@mortonmattd7494]

Well this doesnt bode well for people starting out at 40 and doesnt really shed any advice for those who are except you should have started 20 years ago

[@thomasa5619]

The same information applies. Pay the 3% interest and make minimum payments. Invest everything else and get 8%

[@benlackey5068]

I think you guys have veered into Dave Ramsey anti debt territory. You really ought to compare investing freed up money (either cashed out or excess from lower payments). The results are going to be very different than what you're showing.

[@Dpaq13]

They showed the results

[@Alan-jk1yi]

I mean, they explicitly talk about how you should get a 30 year mortgage and coast on minimum payments while you're young. They only talk about paying it off early when you get closer to retirement.

[@benlackey5068]

Yeah. Got the idea. Lever down when you’re old. Just not sure I agree.

[@Aj_9_]

Every time they do one of these examples, they try to make it seem like the man is always making bad financial decisions.

[@Je.rone_]

No one wants to give me a mortgage 😂

[@Dpaq13]

Life goals

[@pal8h]

I get that there is an emotional component to this but regardless of your age, it will almost always be more advantageous to invest your money at higher rates of return and pay off your mortgage over 30 years rather than paying off the mortgage earlier. It's simple math.

[@TericT]

Holy fuck houses are cheap in the states

[@noel4854]

👏🏽

[@blexaarron]

When will we see Bitcoin mortgage loans?

[@alexjefferson8981]

Use Celsius - can loan against your collateral

[@Danny...]

Not in your lifetime.

[@alexjefferson8981]

@@Danny... lol yes in the next 3-5 years with all the defi protocols out there

[@JoDonn]

You can already take out loans against your Bitcoin using Celsius or BlockFi

[@JoDonn]

@@Danny... you’ll get there someday bud.