Always pay off your debt, your never know when the $ will run out. Like it is now for a ton of people.

 

Maybe, but you don't want to leave yourself cash poor either. No debt is great, but you still need a rainy day fun, and a equity line of credit.

 

May I ask where your getting 6.47%?

 

I elected to pay ours off before retiring. I've never had any second thoughts on that decision. No house or car payments it's a great feeling.

 

Carm,

If you do not need cash for other expenses or business capitalization, then I think the analysis is pretty simple. Answer these questions.

1. For how long do I want to have a mortgage?

2. What is my mortgage rate?

3. What can I invest in that I feel very confident about, and what realistic return will that investment yield over the same period?

I, too am on the fence about this. I will have to make a decision this spring. I want to retire my mortgages in five years. My big unknown is, what interest rate I can get this spring If I were to refinance. If I can roll it all up in one mortgage for 4.5%, I'll probably refinance and keep the mortgage if I feel confident that reasonably safe investments will yield 5% or better. It may be hard to say that about any investment in the current economy, but I think that over five years there will be some big gains.

 

I've talked about it here before - my credit union has a high-yield savings account that is paying over 6%. I have no idea how they do it, but I'm not asking too many questions. I was assured that I can expect it to stay that way until at least summer (had it for over 2 years now). I put all my rainy day money in there, and the severance pay I got when I was laid off in 2006.

My credit union is 5-star rated, and hasn't had a single foreclosure. It's good to be less regulated than the big banks.

JonasM

 

That's a GREAT return. Locally, the highest current interest rate is 3.5%

 

Here are my answers LB:

1) Don't want one but who ever does?
2) Getting 4.625% on refi
3) Sadly, pretty much nothing. If we were still playing by the "old rules", I'd sit on the sidelines then invest as it would HAVE BEEN pretty easy to exceed 4.625% investment return. Now? Who knows?

As far as I'm concerned, until I see REAL solutions to the core problems, I'm not counting on the old rules (the market has gone up over the past 70 years...blah, blah, blah) applying anymore. As others have said, the whole structure of our economy has changed. Example: Do you foresee banks ever loaning money like drunken sailors to unqualified applicants again? (part of the fuel that drove the house of cards economic growth). I don't.

And what about manufacturing? We don't make anything here anymore. And I can't blame businesses for moving production overseas. Maximizing profitability is their responsibility right?

And lastly, what of consumer spending? Do you think paniced Americans are going to go out on spending binges? I don't. People are going to play it close to the vest for a long time.

 

Lainey, Im assuming that the people that wil pay off the house will be those that are of ample means to do so.

 

One must never ASSume, Dave. You know what can happen when one ASSumes.

Some folks pay off the mortgage with a nest egg and don't have much ready $ left.

They don't want the bill of the mortgage, but neglect to think as to where they might get the cash if the roof leaks. Then they need a home equity line to pay for the new roof, and may not qualify.

Folks should never make themselves cash poor, but it does happen.