[Coronita]

Bump. Let’s aim for page 4. Why not? Better than STEM is a big lie or Theranos or Buy versus Rent.

I choose option E, none of the above.

[Coronita]

[quote=no_such_reality][quote=harvey][quote=no_such_reality]Long thread, skipped most of it.

This is simple, if you’re currently around $400k on balance and at 4%, you can get a better rate, lower payment AND let the lenders pay for it. Aka free. Sure, you could do better, but you have to pay for that.

Don’t let great be the enemy of good.[/quote]

That makes sense if you ignore the fact that any loan is about paying for money.[/quote]

Your existing loan is about paying for money.

If your existing loan is at or above 4% and the balance is more than $400K, it’s costing you more money.

It’s simple, regardless of term, a remaining $400K balance at 4% is going to cost you about $1333, this month.

Refi to 3.75% with the same balance and that $400K costs you $1250.

Next month, it’s abut $1330 for your existing loan costing you, and the new one about $1248.

So, in the near term, it’s $80/month less. Just shy of a $1000 this year. And about the same next year. And then we’ll average $950 for the next three years.

It’s a simple question.

Choose one for your remaining $400K balance:

A) do nothing, continue to pay $1330/month in interest.
B) refi, pay nothing up front and still only owe $400K, pay $1250/month in interest.
C) refi, pay about $4000 up front to get a better rate and pay probably $1200/month in interest, maybe $1166.

end of discussion.[/quote]
Forget it NSR. Haven’t you seen? Harvey has a finance background as he clearly stated. Hence he must be right, you must be wrong. Its as simple as that.

[Coronita]

[quote=harvey][quote=flu]It’s was about “hey, do you guys have a lender/broker you can recommend for me, I’m interested in a 0/0 loan”…..[/quote]

OP’s mistake was to ask on a site populated by lingering HLS fanboys.

Hey, now we’re getting advice on credit cards![/quote]

I really don’t understand why you have an axe to grind with HLS. Or any of the former realtors that were on this blog. I’d say they helped a lot more people than didn’t.

I mean really, what is your point? Just like I am trying to understand why BG feels like she has an axe to grind even when she is glaringly wrong about something.

I never took out a loan with HLS. And while some of his opinions on other subjects outside of loans i don’t necessarily agree with (or those about condos), it’s pretty evident that those were his perspective on things.

I do have think a lot of you have nothing better to do these days than to start an argument on this board just for the sake of arguing, and without really adding anything really useful as either a positive or negative experience in things about finance or real estate..,which probably explains why a lot of the old timers that were actually pretty useful have long gone. Its really too bad because a lot of them could have really helped out people. Again just my opinion. That’s why I’ve been recommending PMs to actually discuss useful things. People are smart enough to do their own due diligence. But there’s no point in discussing anything here if it just simply starts out as a slapfest.

Afterall, I am sure all this slapfest has certainly helped improve the financial situation of people right? I mean clearly if people have all the right answers at their fingertips, there’s no need to ask or even be here on this board. You people are capable of making all of right decisions yourself all the time, even in subject matters you have absolutely no practical hands on experience with and are already wildly financially independent with your totally awesome 100% track record of knowing every correct decision for every situation possible.

[Coronita]

[quote=no_such_reality]Long thread, skipped most of it.

This is simple, if you’re currently around $400k on balance and at 4%, you can get a better rate, lower payment AND let the lenders pay for it. Aka free. Sure, you could do better, but you have to pay for that.

Don’t let great be the enemy of good.[/quote]

Thank you! Exactlly….

Sheesh….. And the irony is this thread isn’t even about what is the best loan.

It’s was about “hey, do you guys have a lender/broker you can recommend for me, I’m interested in a 0/0 loan”…..

However, I’m glad we were able to successfully butcher this thread, as we butcher every other finance/investment/related thread these days. 🙂

What is wrong with some of you people? If this was older times, some of you would probably insist the world is still flat.

[Coronita]

The great thing about a 30 year ARM is that while one might get lucky during the first half of the 30 year watching the ARM come down during a period of declining interest rates, there’s an entire 14-15 years of political and economic uncertainty that one gets to see if rates move in the opposite direction.

If my memory serves me correct, many ARMs that were based on 11th district have a minimum floor that rates can’t go below and also no maximum cap, that will limit how much rates can be charged.

Personally, I would never gamble with an ARM with a floor on one end and no cap on the other, because to me, that would be a lot of risk. But that’s just me. Others could get it to work if that’s the loan product that’s best for them.

There are Helocs that have 3% rates with a 2% floor and 6%cap… I know, because I have one, though currently I’m not using it.

[Coronita]

.

[Coronita]

[quote=AN][quote=HLS]I can rant on as long as anyone BUT can also provide info that can make/save people money AT NO COST. Guaranteed. PERIOD.
It’s not economic theory OR projections OR NPV gibberish. It’s reality.

As far as credit cards go, I get $500-$750 every time I open a credit card account, with an 800+ credit score

I’ve probably had over 100 credit cards and have been on lots of flights, cruises and hotel nights FOR FREE.
Use of credit cards responsibly is a goldmine for responsible adults. (and can RAISE a credit score)

I’d be embarrassed to say that I only had 4 credit cards.
I think I have 18 right now and just got a Delta Amex card last week, that comes with enough bonus miles for a FREE round trip nonstop LA-Belize or other Caribbean locations. (There’s $57 tax to be paid to Belize)
and get to check 1st bag free.

I’ve paid mortgages off with 1-2% loans from credit card companies. I deal with facts, not theories.
Certainties, not projections.

Just because 99.5% of people don’t ‘get’ certain things, it doesn’t mean they’re wrong.
There are plenty of loopholes and ways to benefit when people are willing to listen instead of argue about things that they really don’t understand.[/quote]Shhh… don’t tell all the secret :-D. I just had a 4 round trip plain tickets to Hawaii and car rental for 8 days free of charge, thanks to credit card. I would never travel any other way. I’m planning a mini stay-cation this October and am looking into the 2 free nights Hyatt credit card, so I can stay at the Park Hyatt for free for 2 nights.[/quote]

You know AN, I have to thank you about bring up the frequent flyer miles thing you did over lunch.. That was a pretty interesting tip. I’m in the process of mind melding your FF tip with how eBay Bux program works when it comes to precious metal purchases…Since I was planning on stacking up on gold anyway, I might as well try to rack up frequent flyer miles in the process…Too bad eBay limits the rebate to $500/per quarter.

[Coronita]

[quote=HLS] was .375-.50% above market on his last ref and pocket a pile of cash.
The credit is cash and it’s up front. The lender hopes to make it back over time but I guarantee you they didnt. FLU & AN are MUCH further ahead than 99.5% of others who don’t get it and don’t want to take the time to get it.
Your attempt to discredit what FLU did is completely off.
[/quote]

Totally off topic, and my rambling… But there’s some food for thought. I love 1%CD’s. I don’t have a single one.

You can beat that 1%CD pretty easily by just making some mistakes in life…
For example, my favorite is when you screw up on your taxes and need to file a 1040X 2 years later to get your money back. The IRS sends you a nice refund + interest that beats that 1% CD. Heck, your impound account for a mortgage pays better than that 1%CD in CA, because impound accounts are 2% minimum in CA….Too bad it’s limited. That was why previously I asked “what happens if you over-deposit in an impound account..”

And if I was younger, I would definitely play the “credit card roulette” with the 0% balance transfer offers that one of my colleagues played as a means to pay for his daughter’s college so he could stay invested as long as he could, lol. The guy was a genius.

For me, this is just one big game/joke. Banks/institutions come up with some of the most elaborate schemes to screw the majority of the population, I’d say maybe 99% of the population….. with 1% of the population, they actually lose money off of. I strive to try to be that 1% that corporations, companies, etc lose money off of.

My inadvertent game these days? Buy gold bullion on Ebay and selling them near break even or slightly above, just to rack up frequent flyer miles..

[Coronita]

Look, BG, if you somehow think we’re trying to compete as to “who can provide more information”, you know what, I don’t care. I’m not “trying” to win any prizes or brownie points here on this blog. Maybe you think I am, but trust me, I’ve got better things to do.

A lot of the stuff I post, is because these are things that I have wondered about because it was relevant to what I needed at my time or what I’m curious about. And it was a pain in the ass to find out because either (1) no one ran into the same issues or (2) those that didn’t didn’t give a shit about trying to help other people out by saving time for them.

When I post something, I always add a disclaimer *your mileage may vary*. *this is my understanding of it, do your own due diligence*.

If you somehow feel compelled that you have to post so that others think you’re more knowledgeable, or experience, or whatever, well that’s your agenda and your prerogative. That’s certainly not mine.

Bottomline is, I don’t get paid for this shit, and that’s really the only time that I would care if I was in competition with someone else for something. And then, in that case, I definitely would make sure you wouldn’t win.

[Coronita]

[quote=bearishgurl]This post is in response to the post below which can be found here:

http://piggington.com/tempted_sell_out_landlording_san_marcos

[quote=flu][quote=no_such_reality]Good point about the interest deduction flu on the rental.

For some there’s great comfort in paying off therimary. I also agree with HLS reasonable debt at reasonable rates is prudent as long as you don’t gamble.

You can lock up your money in equity or use it as the down payment for a small apartment building in a nearby state with a 7-10% cap rate.[/quote]

I totally agree. If you are able to pay off your primary and have sufficient reserves left over to pay for other things in retirement, you really can’t go wrong with the approach you take, and its a matter of personal preference imho. The key I think is as you head into retirement to try to pin your living costs and make them as fixed and consistent as possible. Fixed mortgages can do that if your income streams are more or less fixed. Or if you don’t want to deal with the pita factor of tenants, perhaps sell or 1031 exchange into a primary. I am trying to figure this out so who knows what strategy is optimal. I think I am just trying not to majorly screw this up.

The other thing about being old and retiring is if you sell and buy another property of equal or greater value, you can keep your old property tax rate. So if you had your primary since 1980 like my parents did, then your total property tax on a very nice single family home is probably less than 2 months of rent people pay on a 2 bedroom condo. And I believe if your kids end up inheriting those properties, that property tax rate continues. Prop 13 is just great. That probably is also one of the reasons housing inventory is staying low. Net of doing a house exchange is doing nothing to the inventory.[/quote]

I have posted on this board dozens of times that Props 13, 58 and 193 are the sole reasons for the dearth of available inventory in CA’s most established areas and this dearth of inventory is most pronounced in the most valuable and desirable areas of the state (i.e. mostly coastal). I’ve also posted here repeatedly that Props 58 and 193 have allowed the original Prop 13 benefactors (from 1978 forward who still own same property today) to pass on their base year assessment (as far back as Sept 1975) protected by Prop 13 (plus 2% per year of ownership) on into perpetuity.

So the subject of “inheriting” a CA property with ultra-low property taxes in accordance with Prop 13 is old news. There is currently little to zero incentive for any CA “heirs” to sell free-and-clear property of a deceased parent (or grandparent, if their parent is deceased) when it costs them practically nothing to keep it and occupy it themselves or rent it out forever. The negative ramifications of Props 58/193 are enormous to this state’s coffers as well as exacerbating an already very-tight housing market in CA’s most expensive coastal counties and will continue to do so as long as these sections are still on CA’s books.

As the years roll by, state, county and city coffers suffer more and more as longtime property owners (esp those whose families owned valuable coastal residential and commercial properties prior to Sept 1975 and someone in the family still owns those properties today) pay annual property tax on an assessment equivalent 1/8 to 1/10 of today’s actual market value of said property! In legally being allowed to do so, the “rich” get richer and the “poor” and “middle class” get poorer. For all of the above reasons (as well as the grossly unfair inequity of assessments from neighbor to neighbor on the same street), I believe that Props 58 and 193 should be repealed and the sooner, the better. If that happens, the effects of Prop 13 will eventually die a natural death.

******************************************

For whatever reason, flu, you appear on this (as well as the “landlording in San Marcos”) thread to be averse to ARMs. Could this possibly be due to all the “good ones” disappearing before you purchased your first property?

Not ALL ARMs are volatile. My payment on my OWN current ARM has fluctuated up or down (up as often as down) between $0 and $43 month (mostly $3 to $7 month) in the past 8 years. Even before that, it only fluctuated up to ~$77 month (up or down) and as little as $11 mo. My ARM has been fully amortizing every month since I took it out. COFI ARMs have historically been very stable and available only to ALT-A and prime borrowers and were all mostly in-house (portfolio) mortgages offered by commercial banks, mortgage banks and S & L’s. I’ve had three of them in my lifetime and actually would consider another smallish one (10 yr) as partial purchase money on a “retirement” home if they actually still existed with the good terms they once did.

The problem is that after the “mortgage crises,” all the “good” ARMS disappeared from the market. The ones now left have have much less desirable terms in the form of higher margins of 2.75% to >=3.5% (the old margins were originally about 1.75% and later reached 2.5%). The newer ARMS also had/have ultra low “teaser rates” lasting a year and then built-in interest resets (not necessarily closely following a particular index) in increments in the early years of the loan (1 yr, 3 yrs, 5 yrs, etc) to prevent neg am in the later years of the mortgage. These *newer* ARMS also typically have annual caps set at a percentage of the (old) payment instead of a percentage shown in the form of an “interest-rate hike” (i.e. max of 2% per year with a life cap of 10%) and the 3-4 payment choices every month of the old ARMs in the first five years have been taken away. Of course, an annual cap of a percentage of the payment (a common one in recent years has been limited to 7.5% higher or lower than the old payment) is easier for Joe and Jane 6p to understand, but suffice to say, this sleight of hand benefits the bank more than the borrower on a COFI ARM.

The PTB evidently took a “paternalistic view” of mortgage holders in about 2007/08 and decided they were ALL too ignorant to “responsibly handle” an ARM over the long haul. The result is that ARM offerings on the mortgage market have been severely curtailed in the past 7-8 years. Hence, millenials (and even some younger Gen X) do not really understand how ARMs work and are thus afraid of them. The older, sophisticated longtime ARM borrowers (such as myself) ended up being painted with the same broad brush as all the whining “victims” of the “mortgage crisis” who bought more house than they could afford as well as used their primary residence as an ATM.

I believe FIH posted somewhere on this forum recently that he has held a COFI ARM on a SD property since 1989 (now has ~3 years left of pymts). flu, why don’t you ask HIM why he has never refied his (now 27 yo) ARM? Better yet, ask YOURSELF (and be honest!) why he (or I) should refi? There are built-in annual caps on COFI ARMS (as well as other types of ARMS), and even so, I have never, ever had an annual cap result in neg am on any of my ARMs.

Unlike you, I haven’t paid to refi (or refied at no cost [cash out?]) and re-started the mortgage on my principal residence at 30 or 15 years over and over again, as you have posted here numerous times over the past ~9-10 years that you did. That’s great if YOU think it was wise to do so (only to retire your primary mortgage just months/one year from your last refi?) . . . but as NSR suggested here, I’m not a gambler.

flu, I would ask YOU, “What is the point of all those machinations (from ~2006/7 forward?) if you were just planning on paying your residence off early, anyway? How many years elapsed from the purchase of your primary residence and its final payoff? And how many refis (incl cash-outs)/HELOC/2nd TD, etc transactions took place against your residence in the ensuing years?”

I’m not judging you, here. I’m just saying that not everyone lives the way you do, makes the same decisions you do or thinks the way you do. Whether or not I could have actually qualified to refi during my ~15 years of ownership of my latest residence is immaterial to your central argument on this thread recently railing that I should have refied my current mortgage.

Even if I had had a consistent and easily verifiable (W-2) salary at any given time, I would likely not have ever refied. I don’t care for the hassle, the credit inquiries, the employment inquiries, the starting-all-over at year one, having to pay an out-of-area lender due to having my loan sold immediately after loan closing and dealing with a bunch of “garbage charges.” Portfolio lenders, which are far and few between these days, didn’t have any garbage charges and kept all their loans in house (as were their underwriters) and thus escrow officers loved working with them.

flu, you’re a “self-professed math whiz.” Can you tell the Piggs, if, in hindsight, you feel it was “worth it” to continually refi/take out a 2nd TD/HELOC your primary residence only to turn around and pay it off months or a year after your placing your last encumbrance against it?

I have frozen my credit at all three credit repositories (for identity theft/fraud protection which has become rampant in my area in recent years). I haven’t needed to apply for any loans since I bought my current residence, I have all the credit cards (4) I want or will need for the rest of my life and have had them for years (even decades) and have refused all offers from my CC companies to raise my credit limit.

Since I don’t need any credit, I may never “thaw out” my credit reports. If I do, it will only be for ONE repository for less than a week (for a lender of my choice to peek at it) and it will be re-frozen forthwith.

My FICO score at the time of freezing my credit reports was 811 – 822 (851 “Vantage”). It’s going to stay that way because nobody can even see them but me (and any of my current creditors), much less use any of my credit or open accounts in my name by successfully assuming my identity.

I like my life simple that way.

***********************************************

And the second topic you discussed over in the “landlording” thread is NOT about Prop 13. It is about Props 60 and 90 and some of the bolded gibberish you posted over there (copy above) is false and/or misleading and omits important information for the reader. Again, it is clear that you did not do any research before posting. I’m replying to it here (on this now decimated thread) cuz I don’t want to further hijack ldub818’s thread.

Your parents would have to have had a lower purchase price on the home they bought within two years of selling their home they purchased in 1980 (purchase price of new home lower than sold price of orig home).

8. What does “equal or lesser value” of a replacement property mean?

The market value of the replacement property as of the date of purchase must be equal or less than the market value of the original property on the date of sale. The meaning of “equal or lesser value” depends on when you purchase the replacement property. In general, equal or lesser value means:

100% or less of the market value of the original property if a replacement property were purchased or newly constructed before the sale of the original property, or
105% or less of the market value of the original property if a replacement property were purchased or newly constructed within the first year after the sale of the original property, or
110% or less of the market value of the original property if a replacement property were purchased or newly constructed within the second year after the sale of the original property.

In determining whether the “equal or lesser value” test is met, it is important to understand that the market value of a property is not necessarily the same as the sale or purchase price. The assessor will determine the market value of each property. If the market value of your replacement dwelling exceeds the “equal or lesser value” test, no relief is available.

http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#8

A homeowner or group of homeowners … (HWJT or everyone named on the original deed) can only avail themselves of Prop 60/90 once in a lifetime If a married couple (HWJT on deed) takes advantage of Props 60/90 and one of them dies while they reside in the newer purchase, then the survivor cannot take advantage of Prop 60/90 ever again. Only ONE of the owners on title has to be 55 years old to take advantage of the base-assessment transfer but doing so prohibits any of the other owner(s) on the deed (whatever their age) from ever taking advantage of Prop 60/90 again. The new (lesser valuable) home would have had to have been purchased in the same county as the old home (Prop 60) OR purchased in one of ten CA counties which qualify for Prop 90 base assessment transfers:

What is the difference between Proposition 60 and Proposition 90?

1. Proposition 60 allows transfers of base year values within the same county (intracounty). Proposition 90 allows transfers from one county to another county in California (intercounty) and it is the discretion of each county to authorize such transfers.

Currently, the following ten counties in California have an ordinance enabling the intercounty base year value transfer:

Alameda
Los Angeles
Riverside
San Diego
Santa Clara
El Dorado *
Orange
San Bernardino
San Mateo
Ventura

Since the counties indicated above are subject to change, we recommend contacting the county to which you wish to move to verify eligibility.

* Please note that El Dorado County’s ordinance is scheduled to sunset on October 1, 2016, unless the El Dorado County Board of Supervisors takes further action.

http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1

One cannot use an investment property (which has NOT had a $7K homeowner’s exemption attached to it in the past two years) for a Prop 60/90 transfer of its base value assessment.

Do I need to be receiving the homeowners’ exemption on my original property when it is sold?

17. No. The original property must be eligible for the homeowners’ exemption because you own it and because it was your principal place of residence, either
1) at the time of its sale or
2) within two years of the purchase or new construction of the replacement dwelling.
If you did not have the homeowners’ exemption on your property, you may need to provide documents to the assessor that prove it was your principal place of residence. Proof of residency may include voter or vehicle registration, bank accounts, or income tax records.

http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#17

In addition, one can’t deed their longtime residence to their kids or a spouse/soon-to-be former spouse (in settlement) thru any kind of an intrafamily or interspousal transfer deed (so the grantee can avail themselves of the grantor(s) spouse or parent/grandparent’s base assessment) and then turn around and use that “transfer” (NOT “arm’s-length sale”) for making application for a Prop 60/90 base assessment transfer for their retirement home.

2. I am over 55 and planning on selling my long-time residence to my child. Can my child benefit from the parent-child exclusion and can I also transfer my base year value (Proposition 60) when I purchase a replacement property?

No. You must choose which exclusion you wish to apply your base year value. If you sell the property to your child and choose to transfer your base year value using the parent-child exclusion, then the base year value is no longer yours to transfer to a replacement property.

(emphasis mine)

http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#26

For all FAQ’s on exclusions to reappraisal (Props 60/90), see:

http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm

For all FAQ’s on exclusions to reappraisal (Props 58/193), see:

http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#header

For all FAQ’s on change of ownership, see:

https://www.boe.ca.gov/proptaxes/faqs/changeinownership.htm#header

Here’s a more recent letter from the CA BOE clarifying the law on base-assessment transfers:

http://www.boe.ca.gov/proptaxes/pdf/lta08018.pdf

In short, Props 60 and 90 weren’t written and passed to enable a CA homeowner who is still residing in their longtime principal residence to step up their lifestyle in retirement, but was instead intended to allow the homeowner to downsize to a less-valuable home and keep their old assessment. The devil is in the details, folks. If it wasn’t, every . single . longtime . CA . homeowner (or partial homeowner) would be attempting to use the measures to justify property tax relief on just about every property in existence as well as attempt to have their cake and eat it, too (ex: “sell” their residence for pennies on the dollar to a relative and then transfer its base-year assessment to another residence) :=0[/quote]

BG, WTF are you responding to? I swear, do you have dementia or something?

I’m not going to spend my time reading this long ass post you just made. If you have a cliff notes version, please post that version instead. Cliff notes are great. I got through AP english reading cliff notes for novels that I didn’t want to waste my time over so I could spend more time on the subjects I liked. And cliff notes has been my guideline at work when someone wants to write me a long ass 3 page email detailing me about a problem which can be summarized with 5 bullet points on a status report to my VP.

I’m not sure why you are talking about Prop 13 on this thread, because this thread is about mortgage brokers/lenders and recommendations, with the first order of hijack about expertise in mortgages.

I think you’re talking about Prop13 now. I’m not sure why (again I didn’t read that long ass paragraph). I’m not sure how this is relevant to the OP’s original request of asking for a mortgage broker’s referral..

Then, I thought you might be responding to my inquiry as to why you haven’t refinanced yet. And I only brought that up because apparently you jumped into this thread about mortgages, stating you aren’t very popular around here because you say things that are to the fact, even if it rubs people the wrong way… to which I corrected you..that absolutely not…people aren’t responding to your posts in the way they respond not because they don’t like you (well, at least until it because evident on that one thread about UC schools that you are a racist, and then it was only for that thread)….People respond to most of the rest of your threads about finance and real estate, because what you post is completely wrong and not factual at all.

And here we are with your long ass post about Prop13, which has nothing to do with either (a) a recommended mortgage broker/lender or (b) rebuttal as to why you haven’t to refinance your 30 year 3.66 ARM when 15 year and 10 year FIXED mortgages are much cheaper, or why you haven’t paid off your home if you say you can, despite in other threads you complaining about the low returns of 1%ish CD’s.

I mean, seriously, have you taken a look back and seen what you post, where you post it, and can’t you see how comically hysterical this is? I’m laughing my ass of here because I have no idea why you are talking about prop 13 in this context, and you must of spent considerable amount of time writing that previous dissertation on prop 13.

BG, though I’m definitely not “overstressed”, if had to choose between being overstressed of dementia, I’ll take overstressed for the win please.

[Coronita]

The only thing though is college expense. Hopefully, our budgets for that is sufficient. Part of that will come out of a well funded 529 account that clobbered most of my other account’s performance, a custodial account that’s been religiously gifted to annually, and if necessary selling of a rental property if necessarily at that point. I figure that should take the little kiddie through med-school (if that’s going to happen) heh heh.

Of course, we can always try to get into a UC school, pay in-state tuition, and piss off people that think paying in state tuition costs CA taxpayers a lot because of the reduced tuition, especially if the student is chinese,lol.

[Coronita]

[quote=HLS]FLU
If you can recognize and admit to enjoying life more,
isn’t that a good thing ??

I can share plenty of discussions I’ve had with
senior homeowners about reverse mortgages
(I don’t like them; only a last resort)
Most were similar..
a) They were in a rush to have no ‘debt’ so they paid off their house. They have no debt, but very little cash to live off & enjoy life. Only option today is a reverse mtg.
They can no longer qualify to refi for a conventional cash out loan.

b) Others had lots of equity but no cash. They didn’t sleep well because they had no money and worried about paying bills and enjoying life.

Ive never met anyone who had money in the bank/cash cushion that didn’t sleep well even though they had a mortgage.

Many seniors are just getting by. It’s hard to imagine when you only know ‘wealthy’ people. Not everyone collects SS or gets much.
The heirs of people with no mortgage will be the winners, and many of them deprived themselves of enjoying life.

Of course there is a price to pay to have some debt, but you cannot understand the feelings that some people have about their situation.
There’s a price to pay to have no debt as well; not always financial.[/quote]

I agree that being house rich and cash poor isn’t necessarily a good thing heading into a retirement. As long as “income in” is more than “expenses out”, and “income in” and “expenses out” are relatively stable, that’s what matters to me. I’m just trying to set my required “income in” at a minimum wage job, just in case. But even then, it might not that be that bad. Afterall, I hear that minimum wage will now be $15/hour.. Awesome. 🙂

[Coronita]

[quote=HLS][quote=flu]One bad thing about paying of a primary…. I am finding I am having less financial discipline these days.

I use to do a much better job budgeting things. Now, there’s less motivation to cut things so close. Or spend the time to figure out the most optimal way to save on X. I don’t know if that is a good or bad thing. I just call it how it is.[/quote]

Are you enjoying your life more OR less now ??
(more relaxed/less stress?)

The transaction of paying off your primary did not make you less disciplined;
Your feelings about your situation have made you less disciplined.

**Your feelings about this could change at any time; and that’s OK.[/quote]

I guess I feel I can enjoy life more because I don’t need to be as careful of where my money goes. (I’m not burning through it, just less anal about it).

I don’t know if that’s good or bad.

[Coronita]

One bad thing about paying of a primary…. I am finding I am having less financial discipline these days.

I use to do a much better job budgeting things. Now, there’s less motivation to cut things so close. Or spend the time to figure out the most optimal way to save on X. I don’t know if that is a good or bad thing. I just call it how it is.

[Coronita]

[quote=no_such_reality]Good point about the interest deduction flu on the rental.

For some there’s great comfort in paying off therimary. I also agree with HLS reasonable debt at reasonable rates is prudent as long as you don’t gamble.

You can lock up your money in equity or use it as the down payment for a small apartment building in a nearby state with a 7-10% cap rate.[/quote]

I totally agree. If you are able to pay off your primary and have sufficient reserves left over to pay for other things in retirement, you really can’t go wrong with the approach you take, and its a matter of personal preference imho. The key I think is as you head into retirement to try to pin your living costs and make them as fixed and consistent as possible. Fixed mortgages can do that if your income streams are more or less fixed. Or if you don’t want to deal with the pita factor of tenants, perhaps sell or 1031 exchange into a primary. I am trying to figure this out so who knows what strategy is optimal. I think I am just trying not to majorly screw this up.

The other thing about being old and retiring is if you sell and buy another property of equal or greater value, you can keep your old property tax rate. So if you had your primary since 1980 like my parents did, then your total property tax on a very nice single family home is probably less than 2 months of rent people pay on a 2 bedroom condo. And I believe if your kids end up inheriting those properties, that property tax rate continues. Prop 13 is just great. That probably is also one of the reasons housing inventory is staying low. Net of doing a house exchange is doing nothing to the inventory.

[Author]

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