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argent_pur
Penny Sorter Member
78 Posts |
 Posted - 08/10/2010 : 12:53:27
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For those of us who are homeowners--which would you rather have, the principal amount you owe on your loan in Au/Ag, or a paid-off mortgage? Why?
Personally, I think I'd take a free and clear home even if it wasn't the option that put the most $$$ in my pocket, there's something about owing nobody anything that appeals to me. I'd have to trade-off current liquidity for future liquidity as well.
The only reason I bring this topic up at all is that I'm considering doing a hybrid between buying PM's and paying down my mortgage. We got a $0 down home loan, and I feel so (I guess, icky, is the best word) for doing so. With market forces dictating deflation and fed policy dictating inflation (who wins I don't know), I'm starting to think paying down debt may be a wise investment at this point. What do you guys and gals think about this issue?
Thanks,
Jim
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Country
1000+ Penny Miser Member
USA
3121 Posts |
Posted - 08/10/2010 : 13:11:31
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Being out of all debt should be a person's goal. With the exception of monthly credit card payments (I use my cash back credit card as a cash substitute and pay it off in full each month), I've been completely out of debt for decades. My wife and I own our home and have paid off the mortgage decades ago.
You can take chances being in debt when you are younger, but as you near retirement you want to be debt free. When you are younger, you have to make choices when you buy a home. However, if you can only buy that house because you use someone else's money, I wouldn't do it. I would rent instead until I could afford a substantial down payment. Buying a home because it is an investment that will appreciate does not mean that it will and could put you deeply underwater in a deflationary scenario - why chance it?
IMHO, you've got to have a nice stash of PMs these days, sort of like paying for insurance just in case something bad happens. Use your own CASH to the extent you are able to fund your stash. |
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Edited by - Country on 08/10/2010 13:13:25 |
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totalcount
Penny Sorter Member
USA
77 Posts |
Posted - 08/10/2010 : 14:21:32
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quote:
Originally posted by argent_pur
For those of us who are homeowners--which would you rather have, the principal amount you owe on your loan in Au/Ag, or a paid-off mortgage? Why?
It depends on if you are in the inflation or the deflation camp (long term, not over the next year or two). If you think trillion dollar a year deficits are going to cause interest rates to go up significantly then locking in a sub 5% rate now for 30 years is a great idea, the money you eventually pay the loan back with will be worth much less.
It also depends on what type of job you do. Do you think that you are likely to be laid off and not be able to find work for an extended period of time, or won't ever be able to find a job with a similar salary? If so, having a paid off house could be what keeps you from loosing it to foreclosure. |
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Which Would You Prefer?
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