We've been debt free for over nine years now, having paid off the 30-yr.
mortgage in 10 years. That means we paid 1.5x our purchase price (instead of 3x
which would be normal for a 30 year mortgage). With no mortgage, we've
been able to accelerate our retirement savings and help others in ways that
wouldn't have otherwise been possible. Pay your debt and live! The advice
is scriptural and confirmed by the Church leaders. Remember the story of Elder
Faust whistling as he worked because he paid off his mortgage? Be wise--start
retirement savings early. But as the opportunity arises, pay off that
mortgage!Come on in, the water's fine!
I questioned my wife when she was paying double payments on our mortgage and had
it paid off about 5 years short of its 15-year term. When she had it paid off
is critical--early in 2007. While some of our friends were struggling to pay
their underwater mortgages, we were whistling while we worked in our garden with
no financial worries. Would I do it again? Absolutely. As Idaho Dad said,
"Come on in, the water's fine!"
When WILL people quit thinking of a house as an investment? It IS NOT: IT IS A
PLACE TO LIVE! Only a fool would think, in retirement, of how to get money
"out of their house". Why? To be in debt again? Or--what?--invest it
to earn more? This is the kind of wrong-think that has gotten people into
trouble since time immemorial. Pay off your mortgage, folks, the sooner the
better, and rid yourselves of the sword of Damocles hanging over your head. I
have 3 years to go on my mortgage, at which time I will have cut 8 years from a
30-year mortgage. Hallelujah!
Besides the mathematical and emotional answer, there's the spiritual
answer. The prophets have said (I'm paraphrasing) "Get out of the bonds
of debt and live within your means". While it's debatable as to whether
or not purposefully putting off the payment of your mortgage to increase total
revenue is living within your means, it is certainly not getting yourself out of
debt.All things considered, I will follow the Lord and get out of
debt as early as I can.
Having debt (leverage) and being in debt are two different things. I have my
home paid off in theory because I have more than enough liquid money available
to me to cover my mortgage. I don't actually pay off my house. Why? because
I can earn a consistent 7% on my money compounding while I'm only paying
simple interest 3.5% to my bank. I'm creating wealth this way. Some prefer
to create wealth after paying off their house. These things are a situation by
We paid off our house 17 years ago after 12 years into a 30 year mortgage. And
have never regretted it for a day. I will never forget the elation I felt
walking into the bank to transfer the funds! We've been unemployed a
couple of times since and never had to worry about a big house payment and the
misery that comes from getting behind on a mortgage. The article
has 'experts' splitting hairs about how a person can come out best
financially. The truth is that the security you have from being mortgage-free
trumps all that.
Notice how every person advising against paying off your mortgage is hanging on
investments that "earn more" than the return on your mortgage interest?
In other words, they are banking on greed and the concept that being in debt is
ok if you maximize your return.Pres. Hinckley said his father
advised him to get a modest home and get it paid for. He said he followed that
advice and found it to be good anf advised others to do the same because it
something were to happen to world financial markets at least your wife and
children would have a roof over their heads. I find that advice to be superior
to the experts who want to leverage debt.Look at how many are in
trouble due to the bubble bursting a few years back. My mortgage has been
cleared for 12 years and that has made all the difference regarding money for a
family vacation, funds for weddings, vehicles for family members needing a car,
educations, etc.Also, consider staying ahead a year on taxes and
insurance, too, or you might lose your home to the government if taxes become
delinquent.Burdensome debt is foolish.
Those counting on the stock market to make more money for them than what they
could save by having no mortgage are 'betting'/hoping the stock market
doesn't self-destruct.Up until recently I was comfortable
betting that, too. However, given the fact of who we have in charge of our
government these days AND the $17 TRILLION in debt we are as a nation, I
don't think our economy is going to survive. I think it is more likely
that we are headed for a depression and economic catastrophe that will make the
Great Depression look like small potatos. Why? Because manufacturing
capability is waaaaay down in America today versus 90 yrs ago and because we, as
a nation, lack will, strength, ethics, integrity and morality. Back then
one's word was generally their bond. Today....not so much.I
reeeeeally need to decide what to do with my mortgage.
Never, ever, ever ask a real estate agent or a mortgage broker whether you
should pay your house off early. Also never, ever, ever ask a securities broker
(who would love to sell you an investment with all that "extra" cash)
the same question. The real answer is incredibly simple: Pay your house off as
soon as you can. Anyone who says you can "easily" exceed the 3% or 4%
without significantly increasing your personal financial risk is selling
something. The S&P is up exactly 5% since March 1, 2000. That's less
than half of 1% per year with HUGE equity swings and taxes charged on what
little gains that may have been realized. And keeping a mortgage to preserve the
dadgum tax deduction?! Anyone who even brings that up loses all credibility,
immediately and irretrievably.
Not having a mortgage is a good idea for some.But I know a lot of smart
Mormon folks, who are worth millions, that owe on there homes. They could pay it
off 20 times over, but why when they make millions in the market. Less educated
folks don't like the market. They don't like risk. So, they of off
The issue is cash flow. Without a mortgage payment one has more monthly cash.
Perhaps it could make a marginally better return on an investment although with
low interest rates that is not assured. But considering the risks and the fact
that many home owners are in the latter half of life, having more discretionary
income now is paramount. Some of the consultants in the article make their
living from mortgages and are not exactly a disinterested third party.
I love how narrow minded people are. Just because someone says Im investing my
liguid money elsewhere doesn't mean its in the stock market. Believe it or
not the stock market isn't the only place to invest. To those
who quote prophets on all this talk, that's great for you. Those are
personal opinions of those prophets. Also I think you'd be surprised by the
debt (leverage) the Church has on their real estate BUT they also have liquid
money well above those debts to pay them off. Again, being in debt
and having debt are different things.
I believe in the principle of being out of debt. I do not care if I miss some
potentially high return investment because I chose to pay off my mortgage early.
The spiritual blessings of obedience outweigh the financial benefits. That said,
can somebody please point me to an investment that is guaranteed to return at
least 3% annually?If you are worried about not having liquidity, the
solution is simple. Take out a home equity line of credit, and use it only for
emergencies. You can get one at UCCU, for example. This allows you be very
aggressive about your mortgage and throw everything you've got on it. If
you overdo, pull the amount you erred by out of the line of credit. This
requires self-control - never pull out of the line of credit more than what you
have put into the mortgage. You end up paying off your mortgage faster with less
If your house is paid off, it's yours. If its not and your investments tank
and you lose your job, you are homeless. Your house is not an investment, it is
your home. The tax deduction isn't work the debt load.
I am fully on board with Tresidder's philosophy - There is no right answer.
There really is a mathematical (or analytical) answer and an emotional answer.
Sometimes the two answers are the same and sometimes they're not the same.
The important task for each individual, couple, family, or whatever group, is to
determine which element is most important to come up with "your" right
"Could-a, should-a, and would-a" are three words the come to mind when
people start thinking they should do this or that. Hindsight is 20/20, and you
can always look back and say that things would be different if you "could-a,
should-a or would-a" done something differently. A family needs
to figure it out for themselves, by putting things out on paper and do the pros
and cons each year. We can't see into the future, but we sure can use our
gut feeling to determine what is the best course of action for this particular
"Mortgage" a French word meaning Slave.Any questions?
Billionaire Mark Zuckerburg took our a loan on his home at 1.05%. He is actually
getting paid to buy a house. Inflation alone makes that a risk free loan. I
would bet if he loses his billions, the last thing he is going to worry about is
whether his mortgage is paid off.
a House is NOT an asset. Accounting terms state the following: "In
financial accounting, assets are economic resources. Anything tangible or
intangible that is capable of being owned or controlled to produce value and
that is held to have positive economic value is considered an asset. Simply
stated, assets represent value of ownership that can be converted into cash
(although cash itself is also considered an asset)."So...until
you pay off your house it is a liability.All of you quoting the
Prophet...he said there were exceptions. Education; Housing and Car. I have known only one man who paid cash for cars/house etc. My grandfather
walked in and paid cash for every car he bought. Always a blue lincoln
continental.So...your house is not an asset until it is paid off.
It is a liability.We have re-written our primary home various times,
why? To use money for investment properties where someone else is paying for
our places and two to make investments. We average 10%+ a year over the last 10
years on our investments.I hope I have a home loan my kids can
The tax deduction I get for my home loan is less than my total annual house
payments. Why would I not want to pay off my house if I could (though I'm
not in a position to do so yet)? I will still have to pay property taxes and
insurance either way, but I'd have an extra thousand bucks every month to
invest for retirement.A lot probably depends on where you live and
what the home is worth--that hedge fund guy with the million-dollar condo is not
in the same position as a family with a $165,000 mortgage.
Anyone that proposes investing your money in today's environment instead of
paying off your mortgage should be sued for malpractice! The markets are so
manipulated and in a bubble it isn't funny. How can the market continue to
go up even when company after company has reported less than expected results
and it continues to get worse? Could it be that the government and the federal
reserve are manipulating the markets to make everything look rosy so that they
can continue their keynsian policies? Can't go on forever folks!
The sad thing is when you pay off your mortgage you still do not own your home.
The government requires property tax payments forever, if you don't they
will take your paid off home. Sorry to be the bearer of bad news.
So many things drive me crazy about this topic. There is still such old school
thinkers like, "But if people pay their mortgages off, he says, they lose
the tax deduction. They lose flexibility." Why should I spend 10k to get
2.5k as a write off? I could donate that amount and get the same deduction.
Also, you don't pay off a mortgage unless you have an emergency fund
because you need liquid money and shouldn't rely on your house to bail you
out of messes. Not having a house payment allows you to invest or save or give
or go on vacations or..... it is in your hands and not the bank's.
This is ridiculous. There is no safe investment today that pays more than what
you're paying in interest on a mortgage. And the tax deduction excuse is
ridiculous - in most cases you're paying far more in interest than
you're saving on taxes. Pay the thing off as soon as you can, and then
you'll have that much more money available each month.
Somebody brought up that the LDS Church advises that it's ok to go into
debt for education, a house, or a car (modestly, at that; it's certainly
not wise to go into debt for a huge home that you really can't afford with
your salary). That being said, it's still generally advised by church
leaders to get out of that debt as soon as possible. Just because they say
it's ok to go into debt for one of those three things doesn't mean the
principle of getting out of debt as soon as possible doesn't apply.
Riverton Cougar...it was me...that someone. Yes...we should always live within
our means. I blame a lot of the housing bubble on the folks that were already
in houses and saw new neighbors moving in and paying high prices and then
decided to re-write their own homes and take out 200K or 75K to go do something
with. That is wrong.However, being in debt is not a sin. Yes,
Interest never sleeps. However, nor does making money on my 401K. So if I can
have a 100% return on my 401K because of an employer match, should I not save
those monies each month instead of paying off a house?How about the
7-12% and 15.8% this year I am making on the 401K? No I am not a stock jock but
I am active.So I state again a HOME is a LIABILITY. Buying a house
is cheaper than renting....so keep re-writing....use the other monies wisely and
do not invest what you can't afford to lose. Some simple advise.
Interesting article and comments coming at an interesting time. We are at a
stage in our lives where we can consider paying off our home mortgage.We have gone both ways, hanging onto our savings or using the money to pay off
our last loan obligation. We were fortunate when the economy tanked a few years
ago. Many here lost 40% of their investments or more. We lost 20% and have
since recovered that and been fortunate to have an increase from there.I agree wholeheartedly. When I was in a situation to counsel people on their
finances, I realized early on what has been stated earlier: your house is not an
investment. It is a place to raise a righteous family, stay out of the weather
and whatever else happens there. There really is no "underwater." If you
can make the payment, you can survive. If you can't, no matter how much
equity is in the house, it won't matter.As for me and my house,
we will follow the prophets and get out of debt. And it wasn't an opinion
from the prophets.
Those who pay off their mortgage learn the meaning of liberty. Debt is bondage.
Debt is working for others. "Those who understand interest collect it;
those who don't, pay it." HJGrant Those who lost half of their
retirement savings in the stock market crash could have done what I did before
the crash; I paid off my mortgage and now have the joy of paying cash for
everything I want to buy: cars, appliances, entertainment, vacations, computers,
toys, etc. Also, it is so nice to be able to help the needy in and out of the
Better off to save money and sell home and live in the woods.
Baddog - Yes it was an opinion from the prophets. It isn't doctrine, I
don't see that question in the temple recommend interview. It is sound
advice, but it is just that - advice. Many temple going mormons don't
follow it, they live far beyond their means. Yet they can still go to the
temple. It depends on your individual situation. The main point of the arcitle,
as I took it, is that you can do it either way and come out ahead. You can also
do it either way and come out behind. If you can make more money with your cash
while only paying a %3 interest rate, maybe it isn't a bad idea.
In theory, investing your money into other investments rather than paying down
your home seems sensible, until you look at the reality that the majority of
middle-income earners do not have the positive net-worth to even begin investing
in more than just their 401(k) or other employer sponsored retirement plan, if
they are even doing that. I work in personal finance and from a real world
standpoint, it is better to pay off your mortgage early than not. When things
go south, like being unable to liquidate your assets, you will at least be able
to keep your home and know it is yours. A home is an investment in lifestyle.
If you can manage to pay off your home early, then you can rent it into an
investment by leasing it. If you get good enough at it, you can use the majority
of that new income to pay off another property and so forth until you have 5
properties (or more) by the time you retire. Passive income can be created by
real estate ownership, but only by disciplined budgeting and willingness to
forego instant gratification in the here and now for greater rewards in the
Mortgage is not a French word for slave. Just to set the record straight,
here's the word's etymology: [Middle English morgage, from Old French
: mort, dead (from Vulgar Latin *mortus, from Latin mortuus, past participle of
mor, to die; see mer- in Indo-European roots) + gage, pledge (of Germanic
origin).]Word History: The great jurist Sir Edward Coke, who lived from
1552 to 1634, has explained why the term mortgage comes from the Old French
words mort, "dead," and gage, "pledge." It seemed to him that it
had to do with the doubtfulness of whether or not the mortgagor will pay the
debt. If the mortgagor does not, then the land pledged to the mortgagee as
security for the debt "is taken from him for ever, and so dead to him upon
condition, &c. And if he doth pay the money, then the pledge is dead as to
A house can be both a home and an asset. In my case we owe just over four years
on a $400,000 house, obviously a big asset for us. My wife and I look at this
as having a big asset, one that we can sell in the future to help finance our
retirement and then live in a downsized house that will cost us much less. We
are looking forward to that final payment but until then we will go with a 2.90%
I thought the prophets were generally referring to non-mortgage/student loans
type of debt like credit card debt (the sort of thing that is often due to poor
money management and carries much higher interest rates).