Good news for a change (housing)

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gonjah wrote:

http://www.google.com/hostednews/ap/article/ALeqM5g_PHuCxoAxt9hjM_-BeX-V3qcbuA?docId 78a40e8a4a4399bba26c7a804cd670
Hmm, You must be pretty young fella. My mortgage paying days are LONG gone. Wish I were young again with mortgage to pay....
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On 5/23/2012 12:19 AM, Tony Hwang wrote:

Good for you grandpa.
Many people don't stay in one house or one mortgage. Personally, I've bought three houses, sold 2, and refinanced at 3 times. Just because you're paying a mortgage doesn't mean you don't have equity. I could own my old house in ABQ, which appraises at less than half of my current house.
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On Wed, 23 May 2012 00:40:09 -0500, gonjah <gonjah.net> wrote:

Not sure I was old or not by today's standards but I was in my young 40s when my mortgage days were gone. Actually I might have been able to do it in my late 30s at my CPA wife's urging but I didn't feel comfortable with little in the bank account so I waited. She still thinks she was right but it's a moot point now.
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On 5/23/2012 7:42 AM, Doug wrote:

I dunno about anyone else but around here quality "full day" day care will be costing a wee bit more a month than our mortgage payments.
So for our family, we will make the minimum mortgage payments, then ramp up once the kiddies enter school.
It's just one take on mortgage payments but it's easy to make that decision with rates still so damn low.
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In the long run, it may be better to raise your own kids, even if it means taking one parent out of the work world. No ammount of money is worth having kids with separation anxiety, and mental problems.
Christopher A. Young Learn more about Jesus www.lds.org .
I dunno about anyone else but around here quality "full day" day care will be costing a wee bit more a month than our mortgage payments.
So for our family, we will make the minimum mortgage payments, then ramp up once the kiddies enter school.
It's just one take on mortgage payments but it's easy to make that decision with rates still so damn low.
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On Wed, 23 May 2012 10:18:05 -0400, "Stormin Mormon"

...and the kid's heads full of the crap the public schools teach.
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On 5/23/2012 10:18 AM, Stormin Mormon wrote:

Not only that but there is more than cost of day care with working. It puts family in a higher tax bracket and there are the expenses of getting back and forth to work and maintaining a better dress style. I've seen professional women leave work to raise their kids.
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-- X-No-Archive: Yes On 5/23/2012 2:06 PM, Frank wrote:

And then, some people are better off letting others take care of their kids.
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You and Frank both have good points. My wife and I chose to work because we thought our incomes outweighed the negatives years ago. This doesn't mean the negatives go away but we wanted to provide vacations and college education for them so we had to make sacrifices. For a while I was even a Mr. Mom and I can tell you as I told my co-workers that after taking care of my 2 young daughters in diapers, etc..., "it was nice to be at work again because it felt like I was on vacation and I got paid for it". But in a way I was happy to be a Mr. Mom (tho it wasn't my choice then) because I got to be closer to my kids and understand better what my working wife had to go thru.
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On 5/23/2012 4:33 PM, Doug wrote:

I'm Mr. Mom right now to a 7 month old. I will be Mr. Mom again with the second child. I'll go back to work for about 12 to 18 months, then take more time off depending on what/when nature allows the second child.
I'm not looking forward to going back to work, partly because I dislike my workplace, partly because I do enjoy cooking, baking, cleaning and gardening in addition to talking, cuddling, playing, feeding the baby.
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Duesenberg wrote:

Very wonderful house husband?
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On 5/23/2012 4:33 PM, Doug wrote:

I'm Mr. Mom right now to a 7 month old. I will be Mr. Mom again with the second child. I'll go back to work for about 12 to 18 months, then take more time off depending on what/when nature allows the second child.
I'm not looking forward to going back to work, partly because I dislike my workplace, partly because I do enjoy cooking, baking, cleaning and gardening in addition to talking, cuddling, playing, feeding the baby.
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Frank wrote:

Hi, Until our kids reached Jr. high wife worked part time to make sure one of us is home with kids at all time. Now kids all grown up, on their own, a MD and an engineer like me, she started a business with her pro. knowledge and experience. She is doing very well. Bless her with good health.
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On 5/23/2012 9:08 AM, Duesenberg wrote:

My kids got more expensive as they got older. With 2 kids in college at the same time, I was lucky to contribute the minimum to my 401k and with three sons, there was at least one in college over a 10 year period.
On housing, I considered myself lucky. First house was 5% mortgage at 20% down. Second house was in those inflationary days of the seventies so I was stuck with a 20 year mortgage at 9% so I put 50% down and paid it off in maybe 18 years.
Never believed in refinancing and I know people that lost their shirts in taking the money and investing and losing it to end up owning a house worth much less than they owed due the current housing crisis.
The housing market may not recover for another 10 years. It is a buyers market.
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On 5/23/2012 3:40 PM, Frank wrote:

BUT you did the right thing. Get that retirement money saved. The earlier the better.
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So you wouldn't refinance a 9% mortgage at current rates?

I agree. It's going to be a long time and this "good news" doesn't show any new trend on a chart. We're still near bottom, going sideways.
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-- X-No-Archive: Yes On 5/23/2012 2:40 PM, Frank wrote:

My first was around the high 8s. About 5 or 6 years into the loan we refi'ed around 5% and knocked about 5 years off.

Maybe if you borrowed more money. I'm just refinancing the balance due on the house. The 3 refi's I've done have been no-brainers. Initially, the rule of thumb was, only refi when there is a 2% drop in interest rates, but that's obviously not always true. You have to look at closing costs. By going through Costco I save much more which was one of the reasons I refi'ed this time. The other reason is I want control of the escrow money.
https://www.costcofinance.com/LoginAndPricing.aspx
I've never heard of anyone that "never believed in refinancing". It sounds like you're more against borrowing. I don't like borrowing at all, unless it's a zero percent loan, and even those have risks. It would be much better to pay cash in all situations but, unfortunately, it's not my reality. 3.875% takes a lot of the sting out of borrowing.
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I just missed that, and paid 8.5 % on my first mortgage in '76. It was well into Reagan's second term before I could refi at a better rate. "Luck' often figures into this stuff, like everything else. It's tricky figuring it out, because you can't be sure what's going to happen short-term. My last refi was in 2004 or 2005. 3 year ARM at 3.5%. Had to have a backup plan in case rates took off, but I was in a position to do it. Luckily, that ARM never went past 6% and averaged about 4.5%.
I paid off the mortgage last year, taking a tax hit by cashing in part of my IRA. I'm still not sure of the bottom line on that, but I don't regret it. Here's something for those interested to think about, and what played into my decision to take the tax hit. My sister was doing taxes for H&R block when she said this to me years ago. Now she can't remember saying it, and can't even figure out what the hell it means. She said "Never think about your mortgage interest for just this year. It's there again next year, and the year after, and the year after."
So you pay down principle $10g on a 10% long term loan in January. It's easy to see you just saved $1000 in interest that year. Never forget you also saved $1000 next year, and the next year, etc. Yeah, everybody knows at least something about amortization. But the "next year and year" way of thinking about it worked for me, and prodded me to pay down fast.
--
Vic






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On Thu, 24 May 2012 15:35:47 -0500, Vic Smith

My CPA wife is sleeping right now but based on what I've heard on tv, you should not use your IRA to pay off the mortgage. I'm not sure why to be honest but here's my take... you didn't say how many years left on your last mortgage but I think if it were at the tail end, you aren't paying much in interest so you are paying mostly just principle so you might think of this loan at this point as almost an interest free loan. Now your IRA is compounding each year and the greater the amount within, the greater the compound amount becomes and so forth. I don't know what the yield is on your IRA but by taking out some principle, you have to be losing some years that the compounding did for you. I don't know how to figure this out without more thought but I think you get the idea what I mean (I hope). Now if your loan was at the beginning, I think the picture gets more fuzzy but I still think I still never heard anything to the effect to use your IRA money to pay off your loan. Maybe someone else can break this down better.
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wrote:

No point in that unless they are a financial twin of me. I didn't recommend that anybody else should do it. But my circumstances were as follows. No penalty on IRA distribution. Effective tax rate on distribution was 9.4%. Mortgage interest rate was about 4%. IRA earnings rate (interest CD) was 1.25%. I'll be dead before 1.25% does any serious compounding. The mortgage was 6 years into a 30 year schedule. Even 3 year ARM's have a 30 year amort schedule. Mine did, anyway. I have no extra disposable regular income to pay down the mortgage. That's the tricky part. If I could pay it down quickly from my "normal" income, I might have done that. But it's still tough to figure out, because then you're working with assumptions. Not only "can" I pay, but "will" I pay. And even that effective tax rate of 9.4% is deceptive. That's the total income rate. IRA money will always get taxed upon distribution. And there's no point to money unless you spend it. The *extra* tax I paid on income because of the IRA distribution, while ridding myself of that mortgage, was maybe 10%. So on $20k - which is all I had left on the mortgage - that was an $2000 *additional* tax hit. My mortgage interest totaled $600 for that same year. On the surface it looks like I spent $2000 to get $600. But that's a one-year view. Anyway, my personal finances have nothing to do with it. Everybody's has to be considered separately. My point was what my sister said. "Never think about your mortgage interest for just this year. It's there again next year, and the year after, and the year after." And some of this is purely psychological - debt aversion. I like having no debt. Compounding interest works real well when you're young and building a nest egg. It's pretty useless when it's time spend the nest egg. If you can earn more on interest or investment than the mortgage rate, then there's no sense paying down the mortgage. But one thing is always certain - the amort schedule is locked in.
--
Vic


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