Consumer Reports Article: Paying down your mortage = not really a good thing...

[LakeCleElum]

I canceled my subscription over 20 years ago when they did an orange juice comparison!!!!! I said, I don't gotta pay money to figure out which OJ I like???

That was ever before they rigged their tests to get the little SUV 4x4's to roll....

[Flatbutt1]

Just locked in a 20 year fixed at 5.5% for my renovation. Here's hoping I can pay it off early.

[911Rob]

so the term is 20 years? or the amortization?
20 year term is incredible!

My grandpa told me that when he got his first mortgage, there was ONLY term, no amortization. The interest rate was stated for the entire duration of the loan. No fluctuation.

I've heard of 10 year terms, but the rate sucks. 20 years is outstanding at 5.5%!

[berettafan]

Rob i think you're thinking backwards. Shorter terms have better rates.

[911Rob]

No, I was replying to the thread above by Flatbutt1.
Sorry if I confused you?

I said that I'd heard of 10 year terms, but the interest rates suck (high)
Flatbutt1 said he got a 20 year term, which I've not heard of before, especially at 5.5 points?

[MRM]

Originally Posted by Wayne at Pelican Parts

That's a very good summary. Right now, inflation is at record lows, and interest rates are at record lows. If you can lock in a fixed rate now, chances are very high that inflation will increase in the near future, and you will have locked in a "deal of the decade".

-Wayne

It's not at record lows. It's been up and it's getting higher. Last report was the highest rate in years. Core inflation is starting to worry the Fed, but what can they do when they are lowering rates to head of a recession? Pumping the stimulous into the economy, lowering rates and increasing the cost of energy are all inflationary. In six months we'll see inflation like we haven't seen since the early 90s. Where that gets you in the mortgage payment calculation takes some thought. I think you're best off locking in now and saving up for the inevitable rate hikes. I can't wait to buy 30 year bonds yielding 9%.

[frogger]

Originally Posted by MRM

I can't wait to buy 30 year bonds yielding 9%.

Oh yeah.

[Flatbutt1]

Originally Posted by 911Rob

so the term is 20 years? or the amortization?
20 year term is incredible!

My grandpa told me that when he got his first mortgage, there was ONLY term, no amortization. The interest rate was stated for the entire duration of the loan. No fluctuation.

I've heard of 10 year terms, but the rate sucks. 20 years is outstanding at 5.5%!

yep 20 years at 5.5% ,,, not bad. But despite the considered advice to the contrary I will try to pay it off in 10,. I retire in 10.

[911Rob]

thanks, that is very, very interesting to me.
could be some very interesting things happening in the world of finance?

20 years at 5.5%; man, I still can't believe how GOOD that is!

[dmcummins]

Well I have a paid off home, and it helped me to reduce the amount of income I needed to retire early. It's easy to plug in 10% gains in the market to show how that comes out ahead. But wouldn't a more realistic risk profile be bonds or treasuries. By having a paid off home it allows me to be more comfortable with a higher stock allocation, as I consider my house more of a bond allocation. By reducing my housing cost I also don't have to withdraw more from my investments plus pay additional taxes on the higher income.

There are many way's to leverage returns, go on margin, options, ect. Just be sure you are weighing the risks. Also no one says you have to do one or the other. Pay extra on your mortgage and invest also.

[stealthn]

Sorry I think that's stupid

Let see: should I get out of debt, or take my extra money to a casino.....hmmm