 OT: Mortgage advise, pay off or invest |
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| Always Looking |
 Apr 15 2006, 03:52 PM
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Member  Group: Members Posts: 194 Joined: 9-December 04 From: Orange, CA Member No.: 3,246  |
Hi All,
I am considering moving out of state. With the equity I have in my home, I could either buy a home outright, or finance 80% (or something in between). I've been reading on the net and it seems that IF (big if) you can earn more interest from investments than the interest on your mortgage, you should finance the home and invest the cash. Most of the articles assume a 10% or 11% annual return on the cash. That seems VERY high to me. I get 5% on CD's and my 401k isn't much more than that. Where do you get 10%?? What is the break even point where it makes financial sense to buy the house outright? Thanks for the free advice. Dan (IMG:style_emoticons/default/beerchug.gif) http://www.usatoday.com/money/perfi/column...-mortgage_x.htm |
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| blitZ |
Apr 15 2006, 04:05 PM
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Beer please... Group: Members Posts: 2,223 Joined: 31-August 05 From: Lawrenceville, GA Member No.: 4,719 Region Association: South East States |
I would get the mortgage as the rates are still low, 15 year fixed is the least interest paid. Then invest your equity. Say you have 100,000 for example, see what your current investments will yield in 15 years, plus your new house will be paid off. If you pay cash for a house, no mortgage is nice, but will you save enough to equal what the time value of money will do with your current equity?
If your 401k is not getting more than 5%, I would research other funds. |
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| Always Looking |
Apr 15 2006, 04:08 PM
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#3
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Member Group: Members Posts: 194 Joined: 9-December 04 From: Orange, CA Member No.: 3,246 |
QUOTE(blitZ @ Apr 15 2006, 03:05 PM)  I would get the mortgage as the rates are still low, 15 year fixed is the least interest paid. Then invest your equity. Say you have 100,000 for example, see what your current investments will yield in 15 years, plus your new house will be paid off. If you pay cash for a house, no mortgage is nice, but will you save enough to equal what the time value of money will do with your current equity? If your 401k is not getting more than 5%, I would research other funds. Thanks Blitz, I am considering coming to your neck of the woods. Woodstock OK? |
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Always Looking OT: Mortgage advise Apr 15 2006, 03:52 PM
Always Looking |
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