Author Topic: DONT Payoff your Mortgage Club  (Read 110735 times)

Radagast

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Re: DONT Payoff your Mortgage Club
« Reply #950 on: October 23, 2018, 07:51:59 PM »
For my case I don't. My house's owner-bank sorts out the insurance and county property tax for me. If I paid down the mortgage not only would I have higher risk while partly paid, lower returns expected in any case, but if I succeeded I'd have to deal with two institutions instead of one (county....*shudder*). Totally a loser situation in every respect, and if you would be making periodic investments into the S&P500 the percentage of 5-year periods with returns under 4.65% would be notably lower than for the bad-luck-of-the-draw lump sum sucker.

I'm not really arguing with you, because you're right that you have to deal with the insurance company and the tax entity (county in your case) instead of just the mortgage company.  But I am curious what makes that a significant burden.
Actually it would not really be enough of a burden to think about twice, just not an advantage either. Though I can say the county mails me my property tax summaries once a year to be paid out quarterly as far as I can tell, and they look really annoying. I might have to join RWD in the 10% penalty club if I was in charge.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #951 on: October 23, 2018, 10:21:33 PM »
For my case I don't. My house's owner-bank sorts out the insurance and county property tax for me. If I paid down the mortgage not only would I have higher risk while partly paid, lower returns expected in any case, but if I succeeded I'd have to deal with two institutions instead of one (county....*shudder*). Totally a loser situation in every respect, and if you would be making periodic investments into the S&P500 the percentage of 5-year periods with returns under 4.65% would be notably lower than for the bad-luck-of-the-draw lump sum sucker.

I'm not really arguing with you, because you're right that you have to deal with the insurance company and the tax entity (county in your case) instead of just the mortgage company.  But I am curious what makes that a significant burden.
Actually it would not really be enough of a burden to think about twice, just not an advantage either. Though I can say the county mails me my property tax summaries once a year to be paid out quarterly as far as I can tell, and they look really annoying. I might have to join RWD in the 10% penalty club if I was in charge.
Yes, I know this is an MPP - I used to like having an impound account, but DH does not, therefore, we pay our taxes semi-annually ourselves. The taxes on all our properties total $32,500 per year. I know the tenants pay their share of the taxes in their rent, but that is still a fuck-ton of money. Fortunately, DH pays the bills, so I don't actually have to write the check(s), but damn, it hurts. I totally understand how an impound account takes some of the sting out of the taxman's bite.

TexasRunner

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Re: DONT Payoff your Mortgage Club
« Reply #952 on: October 24, 2018, 10:20:09 AM »
For my case I don't. My house's owner-bank sorts out the insurance and county property tax for me. If I paid down the mortgage not only would I have higher risk while partly paid, lower returns expected in any case, but if I succeeded I'd have to deal with two institutions instead of one (county....*shudder*). Totally a loser situation in every respect, and if you would be making periodic investments into the S&P500 the percentage of 5-year periods with returns under 4.65% would be notably lower than for the bad-luck-of-the-draw lump sum sucker.

I'm not really arguing with you, because you're right that you have to deal with the insurance company and the tax entity (county in your case) instead of just the mortgage company.  But I am curious what makes that a significant burden.
Actually it would not really be enough of a burden to think about twice, just not an advantage either. Though I can say the county mails me my property tax summaries once a year to be paid out quarterly as far as I can tell, and they look really annoying. I might have to join RWD in the 10% penalty club if I was in charge.
Yes, I know this is an MPP - I used to like having an impound account, but DH does not, therefore, we pay our taxes semi-annually ourselves. The taxes on all our properties total $32,500 per year. I know the tenants pay their share of the taxes in their rent, but that is still a fuck-ton of money. Fortunately, DH pays the bills, so I don't actually have to write the check(s), but damn, it hurts. I totally understand how an impound account takes some of the sting out of the taxman's bite.

Do your counties really not offer an online pre-payment or fixed payment schedule?  Ours charges $1 per online transactions and allows you to prepay as early as you want for the tax.  I was curious so I looked up the rules.  Get a rewards credit card, set up auto payments online and don't worry about it...?

Everyone might not have the same options though.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #953 on: October 27, 2018, 04:17:37 PM »
For my case I don't. My house's owner-bank sorts out the insurance and county property tax for me. If I paid down the mortgage not only would I have higher risk while partly paid, lower returns expected in any case, but if I succeeded I'd have to deal with two institutions instead of one (county....*shudder*). Totally a loser situation in every respect, and if you would be making periodic investments into the S&P500 the percentage of 5-year periods with returns under 4.65% would be notably lower than for the bad-luck-of-the-draw lump sum sucker.

I'm not really arguing with you, because you're right that you have to deal with the insurance company and the tax entity (county in your case) instead of just the mortgage company.  But I am curious what makes that a significant burden.
Actually it would not really be enough of a burden to think about twice, just not an advantage either. Though I can say the county mails me my property tax summaries once a year to be paid out quarterly as far as I can tell, and they look really annoying. I might have to join RWD in the 10% penalty club if I was in charge.
Yes, I know this is an MPP - I used to like having an impound account, but DH does not, therefore, we pay our taxes semi-annually ourselves. The taxes on all our properties total $32,500 per year. I know the tenants pay their share of the taxes in their rent, but that is still a fuck-ton of money. Fortunately, DH pays the bills, so I don't actually have to write the check(s), but damn, it hurts. I totally understand how an impound account takes some of the sting out of the taxman's bite.

Do your counties really not offer an online pre-payment or fixed payment schedule?  Ours charges $1 per online transactions and allows you to prepay as early as you want for the tax.  I was curious so I looked up the rules.  Get a rewards credit card, set up auto payments online and don't worry about it...?

Everyone might not have the same options though.
Last we checked, the fees were prohibitive - i.e. for cash strapped Sukkas only, not worth the "rewards". Also, that 32.5k is spread out over five properties in two counties. Any fee, however modest, multiplied times five, tends to turn us off. I will look into the fixed payment schedule, but it would still essentially be pre-paying. We have the money to pay the taxes, it just hurts in a mustachian kind of way when the big checks get written.

TexasRunner

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Re: DONT Payoff your Mortgage Club
« Reply #954 on: October 29, 2018, 07:47:03 PM »
Last we checked, the fees were prohibitive - i.e. for cash strapped Sukkas only, not worth the "rewards". Also, that 32.5k is spread out over five properties in two counties. Any fee, however modest, multiplied times five, tends to turn us off. I will look into the fixed payment schedule, but it would still essentially be pre-paying. We have the money to pay the taxes, it just hurts in a mustachian kind of way when the big checks get written.

Dang that stinks.  Though it might help to compare the cost of the fees - even stacked together - compared to the costs of missing one payment by even a week.  The online fees might simply be a cheap insurance against forgetting to pay it (assuming your allowed to schedule in advance).

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #955 on: October 29, 2018, 11:57:23 PM »
Last we checked, the fees were prohibitive - i.e. for cash strapped Sukkas only, not worth the "rewards". Also, that 32.5k is spread out over five properties in two counties. Any fee, however modest, multiplied times five, tends to turn us off. I will look into the fixed payment schedule, but it would still essentially be pre-paying. We have the money to pay the taxes, it just hurts in a mustachian kind of way when the big checks get written.

Dang that stinks.  Though it might help to compare the cost of the fees - even stacked together - compared to the costs of missing one payment by even a week.  The online fees might simply be a cheap insurance against forgetting to pay it (assuming your allowed to schedule in advance).
Zero chance that we'll forget to pay, the penalties are huge. Not gonna happen.

We're in the middle of a very extensive flip; we're spending over $100k OOP* on renovations. First question as we were roughing out the budget was, "Do we have enough cash on hand to do this and easily pay our taxes?" Yes.

*If you've seen me say $200k before, you're sharp. We have a partner. They're putting in the other $100k. Even if we really screw up and go over the budget, we can still pay our property taxes, all of them.

dandarc

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Re: DONT Payoff your Mortgage Club
« Reply #956 on: November 02, 2018, 04:20:17 PM »
In the comments on an article that say "30 year mortgage are stupid", responding to a comment about a 30-year 3.75% mortgage, MMM himself advising to hold onto the mortgage for the long haul.

https://www.mrmoneymustache.com/2011/05/24/mmm-challenge-get-yourself-a-lower-mortgage-rate/#comment-1748446

Guess some things have changed since 2011.