Re: Mortgage interest ignorance
[Re: QuietButDeadly]
#6724574
01/11/20 12:03 PM
01/11/20 12:03 PM
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Joined: Dec 2012
Posts: 6,524 Wi.
Diggerman
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trapper
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Posts: 6,524
Wi.
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Here is a hypothetical mortgage loan:
200,000.00 Loan 4% interest rate 30 year term no insurance or taxes figured in
Monthly payment - 954.83 Total paid back - 954.83 X 360 payments = 343,739.38 200.000.00 principal and 143,739.38 Interest.
You pay back way more than 4% of 200,000.00 which is only 8,000
Your savings or stock investment return would have to be extremely high to come out ahead of the compound interest you are paying out. If this is how you understand a loan, then you should stay away from mortgages. First the obvious, It is 4% per year, on the remaining balance, payed monthly. Second, borrowing money at rates below the inflation rate just makes sense, add in a tax break and it is a no-brainer.
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Re: Mortgage interest ignorance
[Re: midlander]
#6724861
01/11/20 04:14 PM
01/11/20 04:14 PM
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Joined: Dec 2006
Posts: 21,042 St. Louis Co, Mo
BigBob
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Posts: 21,042
St. Louis Co, Mo
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My old man got it in his head that if you still owed on the mortgage, you couldn't lose your house in a lawsuit, (Alcoholic that would get behind the wheel crap faced), so he paid a couple of dollars in fee's every month for years instead of making that last payment.
Every kid needs a Dog and a Curmudgeon.
Remember Bowe Bergdahl, the traitor.
Beware! Jill Pudlewski, Ron Oates and Keven Begesse are liars and thiefs!
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Re: Mortgage interest ignorance
[Re: midlander]
#6724891
01/11/20 04:37 PM
01/11/20 04:37 PM
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Joined: Jan 2009
Posts: 4,568 Nebraska
Trapset
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Posts: 4,568
Nebraska
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I understand your point White, but what is the cost of risk? 100% of foreclosed homes had a mortgage. I hear that a lot. But I don't think that's always the case. You still have to pay property tax or risk foreclosure.
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Re: Mortgage interest ignorance
[Re: midlander]
#6724907
01/11/20 04:49 PM
01/11/20 04:49 PM
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Joined: Feb 2010
Posts: 19,719 pa
hippie
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I would tend to agree Hippie, however, I just dont beleive the initial money has to be borrowed. Not condemning how you did it, but its not the only way. I looked at it this way....... I could work for someone else until I had enough money to go on my own, probably I'd be well into my 40's or borrow the money. I semi retired at 50 the way I did it, borrowing.
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Re: Mortgage interest ignorance
[Re: midlander]
#6724959
01/11/20 05:57 PM
01/11/20 05:57 PM
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Joined: Jan 2009
Posts: 4,568 Nebraska
Trapset
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trapper
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Posts: 4,568
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Trapset, you are correct, however, I think that is different. You cant get out of paying taxes, they are with you for life..unfortunately. a mortgage on the other hand is a risk that you can control by eliminating it. Agreed, just commenting on the fact that 100% of foreclosures do not have mortgages. I am all for getting mortgage paid off asap. However, I have noticed that insurance companies can be harder to deal with on claims once they realize you do not have a mortgage. I had a flood insurance adjuster, after we had verbally agreed on claim amount, ask for my mortgage company's info. When I told him I owned the property he slammed on the brakes. He left then called later and started re negotiating the $ amount. Took another 30 days, endless estimates, pictures and receipts to get it back up to where he was when he thought he was dealing with me and the bank. One other possible advantage to having a mortgage is in the event of an eminent domain case. I was low balled on an eminent domain case for a portion of my property once. I argued that the bank obviously valued the property way higher than the bias appraiser the county sent out, based on what I owed at the time and original loan amount . I was also able to argue that my mortgage stated that I could not allow the property to be devalued in any way during term of loan so I was unable to legally negotiate. Ended up with more than 1000% from original ridiculous offer. Again, I'm all for paying it off asap, but a mortgage can have advantages that are not always obvious.
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Re: Mortgage interest ignorance
[Re: hippie]
#6724961
01/11/20 06:00 PM
01/11/20 06:00 PM
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Joined: Jan 2007
Posts: 2,168 B61-12 vicinity, MO
TreedaBlackdog
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Posts: 2,168
B61-12 vicinity, MO
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You also pay taxes on interest earned, no? No on 66% but yes on 34% - currently am putting 2/3 into Roth, paying taxes up front - my growth is tax free.
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Re: Mortgage interest ignorance
[Re: midlander]
#6724998
01/11/20 06:29 PM
01/11/20 06:29 PM
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Joined: Dec 2010
Posts: 11,199 Armpit, ak
Dirt
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Armpit, ak
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Lets say your buddy pays $12,000 in interest that he may be able to itemize on his taxes. With the Standard deduction for married people at $24,000 now he may not even gain $4,000 or $5,000 in total deductions over the Standard, however we will let him take a tax break at the top bracket of 37%. So now the end result is he only spent $7.560 on interest. If he paid off his loan he would be spending $0 on interest and still have a $24,000 standard deduction. Keeping a mortgage for a tax deduction makes no sense. Other reasons may. IMHO
Who is John Galt?
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Re: Mortgage interest ignorance
[Re: midlander]
#6725007
01/11/20 06:34 PM
01/11/20 06:34 PM
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Joined: May 2010
Posts: 28,978 potter co. p.a.
pcr2
"Twerker"
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"Twerker"
Joined: May 2010
Posts: 28,978
potter co. p.a.
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i'm a redneck--got what i want,owe no one,good to go. do have to wonder at times if somedy the government won't mke it so expensive o be that way that only a few can afford to own land.not n my time but i worry for the kids and grandkids.
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Re: Mortgage interest ignorance
[Re: gryhkl]
#6725093
01/11/20 07:37 PM
01/11/20 07:37 PM
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Joined: Dec 2012
Posts: 6,524 Wi.
Diggerman
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Joined: Dec 2012
Posts: 6,524
Wi.
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My wife just ran the numbers on the accounts we mange ourselves (Main investment account and ROTH IRAs) She said we were up a little over 32% in 2019. That's the second best year we have ever had. If we had some major purchase to make this year, I think I would go ahead and borrow the money with interest rates what they are now.
One mistake many make is not paying the CC of EVERY month. We use plastic for nearly every purchase. We get a little cash back and discounted gasoline(8cents /gallon). It also makes it easy to track our spending. Obama carry over in the third year , Impesssive.
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