Paying off mortgage

[wrbtrader]

So here I am in my late 50's and Mrs. Gee and I are within spitting distance of having our mortgage paid off. It's something every middle-aged, middle-class person looks forward to, right? Also, we're currently doing some home renovations. Instead of borrowing money to fund the renovations we're spending our own money in the spirit of not increasing our debt burden.
So we got this weird advice from a financial planner recently. He said that instead of doing our home renovations with our own cash we should refinance to a 30 year and take out like another $200K in debt! WTF? Who'd advise making mortgage payments when your 80?
Isn't paying off debt prior to retirement just plain common sense?

Congrats...pay it off. I was in a similar like situation as you a few years back and got the same silly advice just prior to me paying off my house in 6 years. Now my Mom lives in it to take care of it and doesn't have to worry about mortgage, rent and such while I live in another country.

Instead, of refinancing...I took the money and purchased a duplex and will be in the position to pay that off by year's end. Amazingly, a different financial planner recommended the same concept of refinancing for my second home as the one in the states.

By the way, not sure where you live at, there's home insurance that will pay off your home in case of death or serious illness (stroke) so that your love ones still living there will not be burden with debts. Look around and check into that.

All this debt stuff is crazy and scary.

 

[sle]

Debt (also known as leverage) is a good thing when used wisely. Home mortgage is especially good because you do not get marked to market during the bad times - as long as you can pay the carry, you are OK. The only reason to pay off your mortgage is if you can't generate returns that are higher then your mortgage rate (adjusted for volatility of RE vs your income stream, of course).

It's one of those cases of "do as I say not as I do". My NYC apartment was bought for cash (bought it in 2008, mortgages were hard to get) and my property upstate was also a cash purchase (I bought land and then built a cabin). However, if there is no special circumstances, I'd take a mortgage and I'd definitely keep it if the rate is low.

 

[Overnight]

Debt (also known as leverage) is a good thing when used wisely...

Your whole point after that line is moot and irrelevant, because the line itself is counter-intuitive to sanity everywhere.

Debt is not a good thing. Not now, not ever. It means you OWE. Why not give the Federal Reserve Bank a call and ask them about debt and interest payments on that debt?

 

[Sig]

Your whole point after that line is moot and irrelevant, because the line itself is counter-intuitive to sanity everywhere.

Debt is not a good thing. Not now, not ever. It means you OWE. Why not give the Federal Reserve Bank a call and ask them about debt and interest payments on that debt?

Using that logic we'd all rent our house for 30 years with nothing to show for it at the end because debt is never a good thing. You'd pass on a CS degree at MIT to go to the local community college, because heaven help you if you have a student loan when you graduate! And of course you'd opt to give away 95% of your company in equity instead of taking that in debt you could easily service?
The world's not black and white, there's no moral high horse on debt. Sometimes it's a bad idea, often it's very worthwhile. I find that often those who claim "always" and "never" are either fundamentalists of some kind or just don't get the concept of nuance.

 

[Overnight]

...or just don't get the concept of nuance.

What is the nuance in having to owe money? You owe. End of line. How is this good?

 

[Sig]

What is the nuance in having to owe money? You owe. End of line. How is this good?

Well I just gave you 3 examples, you could try those for starters!

 

[Overnight]

Well I just gave you 3 examples, you could try those for starters!

You could try explaining how owing money is a good thing. For example, you have a mortgage on your house. So you then take an equity line of credit on your house because you need the money. So you now pay interest on the debt you owe to the bank for the house, plus the interest for the equity loan you took out against a home you do not own outright. So you pay interest twice? Makes no sense.

 

[Sig]

You could try explaining how owing money is a good thing. For example, you have a mortgage on your house. So you then take an equity line of credit on your house because you need the money. So you now pay interest on the debt you owe to the bank for the house, plus the interest for the equity loan you took out against a home you do not own outright. So you pay interest twice? Makes no sense.

I just explained with 3 examples, do I need to spell them out for you, or are you just being purposely obtuse? Lets just go with one example, if that's easier for you. Are you better off getting a BS in Computer Science from the worst university in the country with no debt or graduating from MIT with the same degree and $10,000 in student loans? According to you, "Debt is not a good thing. Not now, not ever." I would say you would be the ultimate idiot to pass up the MIT degree over $10,000 in debt, and in this case if the debt enabled you to get a degree from one of the best schools in the world in that particular area it was in fact "a good thing".
Sure there are times when debt is a bad idea. I've no doubt you could provide many examples of times when it's a bad idea. However the statement "Debt is not a good thing. Not now, not ever." isn't proven by an example of when it was a bad idea, or even 50 examples. It is disproved however, by a single example of when it was a good idea. This is how logic works my friend.

 

[Overnight]

Are you better off getting a BS in Computer Science from the worst university in the country with no debt or graduating from MIT with the same degree and $10,000 in student loans?...

That depends upon how much money was spent to get the degree from the worst university in the country with no debt following graduation, vs. how much one had spent getting the MIT degree and being $10K in debt following graduation.

Which was the better value? What would the time-ROI difference be between those two choices, from time of entry into the respective colleges, and time to break-even on that investment? Not to mention the countless other variables that would go into that calculation. While the MIT grad is working to pay off his debt for the student loan, the lowly CIS BS student is now building up his savings and is investing some of it into retirement funds.

 

[Xela]

Who'd advise making mortgage payments when your 80?

Someone selling financial services and earning his income through commissions, in my opinion.

I'm 30 years younger than you, and therefore won't presume to offer any financial advice about your own situation, but it sounds absolutely insane, to me (and I know my father would agree).

Isn't paying off debt prior to retirement just plain common sense?

Yes, obviously.

If my financial advisor disagreed with that, I'd be looking for a new financial advisor.