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brie k
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 Posted: 07/01/04 - 17:05 Post subject: Poll not poll: mortgages...
John and I have decided that we want to pay off our mortgage this year. We've got a CPA coming over on Tuesday to discuss the money we've inherited from mom, and he said he thought paying off the mortgage is a bad idea because of the tax break it offers, says we can discuss some investment options. I'm really scared to invest, figure (knowing us as I do and our inability to handle money well) that we're better off paying off the house.
So the question is this: If you had the wherewithall to be mortgage free, would you? Particularly if you had money left over to invest in your children's college funds?
TIA. Any opinion is welcomed and appreciated.
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brethelm
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Posted: 07/01/04 - 17:11 Post subject:
Bad advice from you CPA. Take it from another CPA (me) it makes more sense to pay it off.
1. You're saving total interest
2. The "tax break" is really a reduction of interest expense, so it naturally follows that never having to pay that interest to begin with is better than getting what amounts to a discount.
That CPA sounds like he's got an ulterior motive - is he trying to sell you some investments?
Pay off the mortgage and invest the monthly amount you would have normally paid for the mortgage.
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jrjo
Gone Fishin
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Posted: 07/01/04 - 17:15 Post subject:
| brethelm wrote: | Bad advice from you CPA. Take it from another CPA (me) it makes more sense to pay it off.
1. You're saving total interest
2. The "tax break" is really a reduction of interest expense, so it naturally follows that never having to pay that interest to begin with is better than getting what amounts to a discount.
That CPA sounds like he's got an ulterior motive - is he trying to sell you some investments?
Pay off the mortgage and invest the monthly amount you would have normally paid for the mortgage. |
 CPA #2 chiming in.
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brie k
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Posted: 07/01/04 - 17:16 Post subject:
I didn't know you were a CPA. He's talking about taking the money we would put on the house and investing it, saying our "real" interest rate is currently 3% (it's really 6%) since we get that break, and he could find us something "secure" to invest in that would guarantee a 3% rate of return. Maybe he knows something I don't (I'm sure he knows lots we don't) but I am with you. I just would LOVE to be debt free this young in life. Seems like the right way to go. If we keep going on the current path, we'll pay over $150k in interest, which is more than we paid for the house itself.
Thanks for your input. Nice to hear it from someone in the know.
Oh, and I was looking at our potential tax return, and we wouldn't even get a tax break on the mortgage interest this year according to Schedule A since we will be filing above the max it has on the form. We're gonna pay through the nose for this money, but I'm not complaining. Oh wait, yes I am. 
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crazyfrog
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Posted: 07/01/04 - 17:20 Post subject:
uneducated person chiming in....
if it were me, id pay the house off. even if you dont have money left over to invest or whatever, at least you know you are guarenteed to have a roof over you and your kids heads should (god forbid) anything happen to the hubby or yourself...
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akern
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Posted: 07/01/04 - 17:22 Post subject:
I'm no CPA but I'd pay off the mortgage. I know the tax break is not nearly what you pay a year in house payments, and without a house payment, you can always invest some of the money you'll be saving a month.
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brie k
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Posted: 07/01/04 - 17:24 Post subject:
froggie, you're right, and this is something I think about, given that John works all the time and would have to dramatically alter his lifestyle should something happen to me, and that since I am a SAHM, I don't have the earning potential right now should something happen to him. Stuff you gotta think about when you have kids, unpleasant though it may be.
(oh, having babies doesn't always involve a lot of needles, just so you know.  )
Bret and Jrjo, if youse guys lived in NC, I'd retain your services in a heartbeat! Thanks so much for the input!!
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Orange Bubble
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Posted: 07/01/04 - 17:24 Post subject:
I'm no CPA but I completely agree with the boys on this. It seems improbable that he could guarantee you a 3% return on your investments for the life of your outstanding mortgage. Pay off the house, dump the CPA. Be debt free.
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thegman
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Posted: 07/01/04 - 17:29 Post subject:
| Orange Bubble wrote: | | Pay off the house, dump the CPA. Be debt free. |
in spades.
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brethelm
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Posted: 07/01/04 - 17:33 Post subject:
| brie k wrote: | froggie, you're right, and this is something I think about, given that John works all the time and would have to dramatically alter his lifestyle should something happen to me, and that since I am a SAHM, I don't have the earning potential right now should something happen to him. Stuff you gotta think about when you have kids, unpleasant though it may be.
(oh, having babies doesn't always involve a lot of needles, just so you know. )
Bret and Jrjo, if youse guys lived in NC, I'd retain your services in a heartbeat! Thanks so much for the input!! |
My pleasure, ma'am! Then, that mortgage payment you no longer have to pay will be pure cash flow. You could fund your retirement, your kids education, start your own business, the sky's the limit!
Last edited by brethelm on 07/01/04 - 17:49; edited 1 time in total
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runaroundsue
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Posted: 07/01/04 - 17:33 Post subject:
Is there ever a situation that you shouldn't pay off the mortgage?? My hubby must be taking in our investment advisor's advice because not only did we take a second mortgage to finish off our basement.....we have an open-ended mortgage on our cabin. My hubby insists that it's not wise to pay in off. We do always pay off our car loans ASAP. I was paying extra on the mortgage payment each month and when the DH found out he told me to stop. Do I shoot DH??? (2.5 mil life policy)
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Noley
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Posted: 07/01/04 - 17:33 Post subject:
| thegman wrote: | | Orange Bubble wrote: | | Pay off the house, dump the CPA. Be debt free. |
in spades. |
I second that motion!
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Noley
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Posted: 07/01/04 - 17:42 Post subject:
| runaroundsue wrote: | | I was paying extra on the mortgage payment each month and when the DH found out he told me to stop. Do I shoot DH??? (2.5 mil life policy) |
I always thought that this was a good thing to do...paying extra on your mortgage that is.
Or is it shooting the DH?? 
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copteacher
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Posted: 07/01/04 - 17:50 Post subject:
I would pay it off. The interest deduction on the taxes is not a one for one deal. Even if you opened IRA's and deposited money for each other it would be better.
Plus it is a huge asset. The money you would save could easily pay off other bills in quick time.
You could even continue to pay the mortgage to yourself (or parts of it) to save for a new car and pay cash, etc.
Pay it off, I would definitely.
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Floridaboiler
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Posted: 07/01/04 - 17:56 Post subject:
It seems that you have already gotten some great advice. I don't know the tax advantages due to the interest but it seems if the house is paid off you can take that payment and either put in your retirement funds or the kids college funds!
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