Author Topic: Spouse's thinking about mortgage  (Read 1114 times)

By the River

  • Bristles
  • ***
  • Posts: 319
Spouse's thinking about mortgage
« on: August 14, 2020, 09:34:32 AM »
My wife's original thoughts about retirement was that one had to have the house paid off before retiring.  I'm sure that was conditioning from her parents.  We were able to get to a compromise in that we could retire and pay the house off in the 4-8 years between working and taking social security when we would have lower tax rates. 

Early during WFH, her BigCorp savings plan admin had webinars for people in different career phases.  She came out of it and said that we should keep the mortgage because that would make financial sense.  Now, I'm in the process of refinancing and she said, "if we can borrow at less than 3%, lets go ahead and get cash out, and invest the difference."     Wow, this is a major change, now I'm the one worried about additional risk. 

Is anyone taking cash out refinancing and investing the difference?

bigblock440

  • Bristles
  • ***
  • Posts: 261

appleshampooid

  • Bristles
  • ***
  • Posts: 301
  • Relentless Snacker
Re: Spouse's thinking about mortgage
« Reply #2 on: August 14, 2020, 10:36:23 AM »
My wife's original thoughts about retirement was that one had to have the house paid off before retiring.  I'm sure that was conditioning from her parents.  We were able to get to a compromise in that we could retire and pay the house off in the 4-8 years between working and taking social security when we would have lower tax rates. 

Early during WFH, her BigCorp savings plan admin had webinars for people in different career phases.  She came out of it and said that we should keep the mortgage because that would make financial sense.  Now, I'm in the process of refinancing and she said, "if we can borrow at less than 3%, lets go ahead and get cash out, and invest the difference."     Wow, this is a major change, now I'm the one worried about additional risk. 

Is anyone taking cash out refinancing and investing the difference?
We refinanced and while we didn't take cash out, we did extend to another full 30 year term (and hoping to be retired in about 8 years).

I think if you take cash out, you get a worse rate. But I'm not an expert on this. This was my first refinance, and the previous mortgage was my first ever.

erutio

  • Pencil Stache
  • ****
  • Posts: 703
Re: Spouse's thinking about mortgage
« Reply #3 on: August 14, 2020, 01:25:53 PM »
Wow, what a journey for your wife.

What kind of BigCorp does she work for that the savings plan admin has such advanced techniques in their webinars?

Steeze

  • Pencil Stache
  • ****
  • Posts: 999
  • Age: 33
  • Location: NYC Area of Earth
Re: Spouse's thinking about mortgage
« Reply #4 on: August 14, 2020, 01:46:28 PM »
My parents cashed out a couple times - now they owe about 140k after making payments, often extra payments, for 25 years now. Another 7 years of double payments they should be done for good.

Oh yeah, original purchase price: 140k - in 1998

Of course they didnít invest the difference, they spent it on credit card debt and paying off car loans usually.

House is worth about 200k now.

By the River

  • Bristles
  • ***
  • Posts: 319
Re: Spouse's thinking about mortgage
« Reply #5 on: August 14, 2020, 02:22:58 PM »
Wow, what a journey for your wife.

What kind of BigCorp does she work for that the savings plan admin has such advanced techniques in their webinars?

The 401K admin is T Rowe Price.  I think it was in questions at the end when someone asked if they should pay off their mortgage.  The presenter went into why he wouldn't do it because of rate of return and tax implications.  (also, if everyone takes money out of the 401K to pay off mortgages, then the amount they are managing becomes less.)

rmorris50

  • Bristles
  • ***
  • Posts: 272
Re: Spouse's thinking about mortgage
« Reply #6 on: August 14, 2020, 08:13:41 PM »
Just lock in 2.5 30yr fixed and close on new house in September. I donít plan on ever prepaying, and will continue to invest as much excess cash flow as possible. Well who knows, maybe in 15 or 20 years I just get sick of the mortgage and cut a check and pay it off. But Iíll cross that bridge when I get there. But I plan to retire with a mortgage for sure.


Sent from my iPhone using Tapatalk

alcon835

  • Bristles
  • ***
  • Posts: 415
Re: Spouse's thinking about mortgage
« Reply #7 on: August 17, 2020, 09:01:35 AM »
Mathematically, I get the thoughts on not paying off your mortgage ever - even in retirement. And yet, there's something so comforting about the though of never paying a mortgage again.

That, for me, is worth more than the gain's I'd get by investing that extra little bit now. But, I readily admit, that's an emotional driver, not a financial one.


Dicey

  • Senior Mustachian
  • ********
  • Posts: 16059
  • Age: 63
  • Location: NorCal
Re: Spouse's thinking about mortgage
« Reply #8 on: August 17, 2020, 07:59:26 PM »
You know, that whole thing about not dragging a mortgage into retirement is so clueless. It's not directed at people who are mustachian, it's directed at the people who can't survive an unexpected $400 expense. If you have a big, fat-ass ball of investments and another of glide cash, having a mortgage in retirement ain't no big thing.

For OP, I published this elsewhere on the forum today, but I'm too lazy to dig it up. Grab a [free, library] copy of Ric Edleman's "Ordinary People, Extraordinary Wealth". It's old, but still relevant. Read the first chapter, it's the one that will help you with this question. Better still, read it with your wife. It's amazing. Short, concise and uses layman's terms. Total game changer for me on the path to FIRE. The rest of the book is fluff, IMO, but that first chapter nails it.

MrThatsDifferent

  • Handlebar Stache
  • *****
  • Posts: 2177
Re: Spouse's thinking about mortgage
« Reply #9 on: August 17, 2020, 08:41:04 PM »
You know, that whole thing about not dragging a mortgage into retirement is so clueless. It's not directed at people who are mustachian, it's directed at the people who can't survive an unexpected $400 expense. If you have a big, fat-ass ball of investments and another of glide cash, having a mortgage in retirement ain't no big thing.

For OP, I published this elsewhere on the forum today, but I'm too lazy to dig it up. Grab a [free, library] copy of Ric Edleman's "Ordinary People, Extraordinary Wealth". It's old, but still relevant. Read the first chapter, it's the one that will help you with this question. Better still, read it with your wife. It's amazing. Short, concise and uses layman's terms. Total game changer for me on the path to FIRE. The rest of the book is fluff, IMO, but that first chapter nails it.

http://www.innovativeadvisors.net/files/10reasonsforMortgage.pdf

rmorris50

  • Bristles
  • ***
  • Posts: 272
Re: Spouse's thinking about mortgage
« Reply #10 on: August 18, 2020, 09:29:56 AM »
You know, that whole thing about not dragging a mortgage into retirement is so clueless. It's not directed at people who are mustachian, it's directed at the people who can't survive an unexpected $400 expense. If you have a big, fat-ass ball of investments and another of glide cash, having a mortgage in retirement ain't no big thing.

For OP, I published this elsewhere on the forum today, but I'm too lazy to dig it up. Grab a [free, library] copy of Ric Edleman's "Ordinary People, Extraordinary Wealth". It's old, but still relevant. Read the first chapter, it's the one that will help you with this question. Better still, read it with your wife. It's amazing. Short, concise and uses layman's terms. Total game changer for me on the path to FIRE. The rest of the book is fluff, IMO, but that first chapter nails it.
First chapter is free (preview) on Apple Books. I found most useful the history/reminder why many people fear mortgages. After reading that chapter and jus flicking in 2.5 30yr, I may never move again and wonít pre-pay one cent. Plenty in retirement savings to cover it in retirement.


Sent from my iPhone using Tapatalk