Will you pay off your mortgage if Precious Metals continue higher?

jmski52

Part of my rationale for buying precious metals and holding a mortgage debt at the same time was to be in a position to pay off my mortgage with cheaper dollars (from profits in precious metals) as inflation picks up and as the currency depreciates. A double-whammy, if you will.

I could pay off the remainder of my mortgage right now, but over the past few years I've had a change in my thinking. As long as I know that I own the property and make payments, there is no reason to dredge up more issues until all of the mortgage mess is resolved, which may be a very long time.

In the meantime, why plow more cash back to the system? I think not. It would only disappear into the banking/government rathole - never to be seen again.

Monthly payments are still being made with depreciating dollars, so that benefit is still there. I'm still living in the house and have title insurance as well, so that benefit is still there. The mortgage deduction is still there. The equity in the house is still there.

The money can probably be deployed in more profitable ways anyhow, even if it were only to accumulate some cash or to pay for living expenses.

Do you agree?

pmcollectour

I once had 100k remaining on my mortgage and decided to pay off my mortgage instead of buying some stocks.
I could have done better with the stocks, being that this was in 1997, but really enjoyed not having my mortgage anymore.

gsa1fan

No, I do not agree. I paid mine off 10 years ago now. Best decision I ever made= Peace of mind~PRICELESS

I paid my property taxes yesterday. I good for another year

tydye

I considered it however with 7 years left at 3.9% I do not think it is worth it. I have however been searching for raw land which I may convert my PMs to

guitarwes

Are you comfortable with paying all that interest over time on your currect mortgage versus paying off your principle now and making interest on the $$$ you can plow into investment instuments or into more PMs?

DrBuster

I'd love to have ours paid off. We've been trying to refi down to a 15, but foreclosures and short sales in our hood cut our home value and the (our) banks are being picky on loan value. We pay extra every month on principle.

Now, we're close to having no car payments, so once that happens in the next 10 months that's extra money I'll be doing something with. Currently I pay for my wifes suv and the truck I bought last year (way used of course, she gets the new ones...I get 2 - jeep). Once those are title-in-hand, and pending me still having this consulting gig, I'll be throwing most of that money into something. Mortgage, pms, start playing the stocks again, dunno yet but I can almost see the light in that tunnel.

guitarwes

<< <i>"....dunno yet but I can almost see the light in that tunnel. >>



As long as it's not the headlight of an oncoming train.


We follow the Dave Ramsey philosophy pretty close here trying to get things paid off to release risk from our life.

DrBuster

<< <i>

<< <i>"....dunno yet but I can almost see the light in that tunnel. >>



As long as it's not the headlight of an oncoming train.


We follow the Dave Ramsey philosophy pretty close here trying to get things paid off to release risk from our life. >>



I hear ya. We actually just blew threw most of the savings failing at some expensive baby making things unfortunately. To think of what we could have done with that just buying PMs this past year, or throwing that at the house/vehicles and rebuilding quickly.....sigh. Gotta keep a wife full of hope and happy though, money is just money.

cash4gold

<< <i> Best decision I ever made= Peace of mind~PRICELESS >>



I completely agree! Pay it off as soon as you can is still the best advice I would offer.

mhammerman

"In the meantime, why plow more cash back to the system? I think not. It would only disappear into the banking/government rathole - never to be seen again."


Yepper, that is a good question. Even those with a modest stash are making hundreds of dollars a day, on paper, with the rise in the price of precious metals. While it would be good to pay off the mortgage, we've got ours at 4.4%, that's almost like free money. So, the questions is, do you cash the stash and do the boomer model and pay off the mortgage in a world of unpredictible circumstances? We all know the boomer model is dead and any real property is going to become a megatax magnet in the near future. So, if you pay off the mortgage, you lose your stash and you become seriously hooked up to the machine with few options other than selling into a dead market or living out your life with a paid mortgage chained to your ankle? Methinks that it is a day to day situational thing and no hard decision can be made at this point but it is certainly a question that should be floating around in the back of your mind.

jmski52

Are you comfortable with paying all that interest over time on your currect mortgage versus paying off your principle now and making interest on the $$$ you can plow into investment instuments or into more PMs?

All that interest is also an interest payment tax deduction. Paying off the principal now represents an "opportunity cost", i.e., the money invested in gold, platinum and silver is already doing quite well (and have been ever since we took out the mortgage in 2001).

Results may vary.

MoneyCollector

If you had a stack of PM that if sold now would pay 1/3 of your mortgage, would you sell it now and pay down the mortgage or wait until PMs rise 3x (or maybe 4x to cover taxes)and then sell and pay off the entire mortgage? We all know this could happen = $4,200 to $5,400 gold.

Randy

Mesquite

I did that about 18 months ago, before I started to seriously invest in PMs. Your tact is OK, and if I were to do it again I might well have kept paying on the mortgage and bought PMs instead. But, I'm not unhappy with the situation as it sits. I did convert a lot of my IRA mutual funds to PM mutual funds with two years remaining before I hit the magic date. Will the $$ still be there in two years? Hope so.

BTW, I did not sell off PMs to pay off the mortgage.

gdavis70

If the dollar continues to deteriorate it will be nice paying off my 380k mortgage with the equivalanent of a months wages....

I know it's not nice to wish for hyper inflation but it doesn't hurt everyone...

yellowkid

I think that one of the smartest moves that a person of average means can do is pay off the mortgage. I hear from people who say, "pay it off in inflated dollars later," or, my favorite, "I get a tax deduction." Who knows what the future will bring, the right unfortunate circumstances and you, or your family, may be incapable of making that payment in any kind of dollars, hyper inflated or otherwise.
Getting out from under the banks foot opens new possibilities and freedom, pay it off, owing money makes you a slave!

percyb

<< <i>If the dollar continues to deteriorate it will be nice paying off my 380k mortgage with the equivalanent of a months wages....

I know it's not nice to wish for hyper inflation but it doesn't hurt everyone... >>



Exactly my sentiment. Why buy a declining asset? Paying off a mortgage now is like throwing money out the window. Holding onto your PM position is like having money flowing in through the window instead of going out of it.

Wolf359

With today's title questions, are you really paying off your mortgage or just throwing money out the window? The other variable is Uncle Ben wants to inflate and pretends he can control it. HA! Hyperinflation here we come. By the time he's done, your mortgage can be paid off with the equivalent of pocket change.

The best course of action is unclear - it depends on your circumstances. I have a cloudy title on mine, so my choice is not to pay.

gdavis70

I think that one of the smartest moves that a person of average means can do is pay off the mortgage. I hear from people who say, "pay it off in inflated dollars later," or, my favorite, "I get a tax deduction." Who knows what the future will bring, the right unfortunate circumstances and you, or your family, may be incapable of making that payment in any kind of dollars, hyper inflated or otherwise.

My primary mortgage is costing 3.15%... my secondary has to be close to that....

By the time I am done with write offs it's down to ~2.6% Also, there is no sign of fed tightening, in fact QE2 is all the rage.

IMHO, selling PM's to pay down a loan where the effective rate is sub 3% is the act of one who is risk averse to the point of paranoia.

YMMV

yellowkid

<< <i>I think that one of the smartest moves that a person of average means can do is pay off the mortgage. I hear from people who say, "pay it off in inflated dollars later," or, my favorite, "I get a tax deduction." Who knows what the future will bring, the right unfortunate circumstances and you, or your family, may be incapable of making that payment in any kind of dollars, hyper inflated or otherwise.

My primary mortgage is costing 3.15%... my secondary has to be close to that....

By the time I am done with write offs it's down to ~2.6% Also, there is no sign of fed tightening, in fact QE2 is all the rage.

IMHO, selling PM's to pay down a loan where the effective rate is sub 3% is the act of one who is risk averse to the point of paranoia.

YMMV >>



What is the old saw "want to make God laugh? tell him your plans." One of the reasons I was able to retire at 54 was because I didn't owe any money.

dontippet

<< <i>I think that one of the smartest moves that a person of average means can do is pay off the mortgage. I hear from people who say, "pay it off in inflated dollars later," or, my favorite, "I get a tax deduction." Who knows what the future will bring, the right unfortunate circumstances and you, or your family, may be incapable of making that payment in any kind of dollars, hyper inflated or otherwise.

My primary mortgage is costing 3.15%... my secondary has to be close to that....

By the time I am done with write offs it's down to ~2.6% Also, there is no sign of fed tightening, in fact QE2 is all the rage.

IMHO, selling PM's to pay down a loan where the effective rate is sub 3% is the act of one who is risk averse to the point of paranoia.

YMMV >>



How are you getting 3.15%? Did you pay some points? I am rewriting my mortgage to 3.875% with no points which could be as low as 3.75% if the mortgage was greater than $100,000.

dontippet

Mine isn't paid off yet, but oweing less than 50,000 on it and having a plan to have it paid off in 69 months sure is relieving. Having lots of equaty is comforting as well.

gdavis70

I bought in 2004 with a 5/1 adjustable and a second to avoid PMI. I started with 4.5%

First reset I went from 4.5 to 3.25.

Second reset went from 3.25 to 3.15

I am not worried in the least about the next reset. (although I will probably be moving up north a bit)

fishcooker

Think a silver investor will get a bailout if it declines?

percyb

<< <i>Think a silver investor will get a bailout if it declines? >>



Big If. IMHO you ain't seen nothin yet in terms of Silver prices. The $ is doomed. We're going to be another banana republic.

Justacommeman

In answer to the OP's question, not a chance. MJ

Weiss

This is a question I think about with some regularity.

It seems like I never have enough PMs to feel "safe" enough to do this.

But you'd think the higher prices go, the bigger my safety cushion would feel, and the more apt I'd be to sell and pay off.

But no. The higher prices go, the less confident I am in the economy at large. So I'm actually less inclined to sell my PMs. Especially to pay off something like a mortgage.

I guess I'm doomed

mrpaseo

Yes.

InYHWHWeTrust

Already did it a while ago, sleep better like some others here have said. I had mentally played around with the idea of buying metals with a low interest equity line, but did not have the testosterone, or stomach, to do it. Then I got physically hurt, and the prospect of putting myself in surety really grew fangs, so we have shunned any debt/margin like plague.

The kids' 529 college fund, too. The only move I made right in late 2007 pulling out near top; wrong guess--did not dive back in at bottom and get to ride it back to where it is now. Did not cash it out and pay penalty on earnings and buy metals, to sell when they need $ for college (like this year). Playing 'safe' with cash, but really m-markets. If the whole thing melts down, this would be lost.

I guess not paying off a mortgage (when able to comfortably) can make financial sense in these strange, turbulent times and really test the 'boomer model' as has been euphemistically called here. But what I am hearing from some Big Names, saying to SELL now before your depreciating asset depreciates further, if you can even sell it---and RENT RENT RENT. Rent money down the drain is BETTER than building equity into an asset class that hasn't fully corrected from its bubble and will depreciate further as the Empire wanes. The mortgage deduction argument never made sense to me as I looked at the amortization schedule and front-end interest/ the final cost of the house (even in future inflated dollars). I could take that interest saved /regular mortgage payment and put it to work.

We have 4 kids and our home is our shelter. It sure is nice if it could appreciate slowly over time, but that wasn't the primary motivation. Should have bought waterfront instead. Can't stand the idea of renting and getting kicked out to the streets.

The risk of defaulting on our property taxes in the future...wow, if the swindled masses getting a free ride in their yet-to-be-foreclosed-never-to-be-forclosed houses can pull it off, maybe I'll get some slack, too? Or maybe we have to make Custer's last stand?

Pray for the best, prepare for the worst.

Great topic for discussion, thanks, jmski

secondrepublic

I paid off the mortgage on a rental property that I own... it's a very nice feeling to own a piece of property outright and know that no matter what, I have somewhere to live. Eventually I'll pay off my existing place (am currently refinancing it).

When it comes to mortgages, banks aren't stupid. They make out pretty well loaning money for 20 or 30 years. People end up paying 2 or 3 times what the house originally cost, when factoring in all the interest paid.

If someone bought $50,000 in PMs back in 2001 or 2002 and was sitting on a huge profit that could be used to pay off the mortgage, I would advise doing it. The time to sell is when prices are high.

Then again, those who believe we're going to experience hyperinflation probably should go out and borrow some money at today's low rates. Buy a few properties and just wait.

wpr101

I wouldn't pay off the mortgage right away. The "sleep at night" affect is over rated. Your post doesn't sound like you are in dire straights so you should do what will be most profitable in the long run.

fastrudy

YMMV, but for us old folk ( 60 here) it is advisable to have a mortgage iff you have a TSA plan. At age 70, you MUST remove money from your TSA, and the mortgage interest is used to offset that amount. If you think PM's are going higher ( and who here doesn't?), then don't pay off your mortgage, but pay on schedule with inflated dollars.

Baley

Great thread!

I fall in line with SecondRepublic's thinking

as far as in InYHWHWeTrust's comment

"what I am hearing from some Big Names, saying to SELL now before your depreciating asset depreciates further, if you can even sell it---and RENT RENT RENT. Rent money down the drain is BETTER than building equity into an asset class that hasn't fully corrected from its bubble and will depreciate further as the Empire wanes"

that might depend on if you Love the house you're living in, or if you'd like to move in the near-to-intermediate term.

Personally, we have a great house in a wonderful neighborhood, and would like to pay it off. I intend to split the difference, averaging out of metals (and certain appreciated stocks) gradually as the prices move higher, and paying down the principle on the loan.

strategy subject to change depending on specific circumstances and developments, but I'm never an all-or-nothing guy, preferring balanced asset allocation

Barndog

paid it off already. I'm not moving, ever.

yellowkid

<< <i>YMMV, but for us old folk ( 60 here) it is advisable to have a mortgage iff you have a TSA plan. At age 70, you MUST remove money from your TSA, and the mortgage interest is used to offset that amount. If you think PM's are going higher ( and who here doesn't?), then don't pay off your mortgage, but pay on schedule with inflated dollars. >>



It's a deduction, you most probably will still end up paying out more money with a mortgage, you just pay some of it to the bank.
If you are over 60 you remember 15% mortgages. My first mortgage was for around 5%, in just a few years it went up ten points, it was said that the days of cheap money were over. My point is is that we don't know what is going to happen, if you're retired and have plenty in the bank, do what you want, but if you're a young person a lot can change in a few years, a 60 year old knows that, as does a 62 year old Most younger people think they are going to live forever and they will never have any hard times , financially or otherwise. It can all change in a second.
There was nothing like paying off my mortgage and having that $1600 every month to "play" with.

gsa1fan

The "sleep at night" affect is over rated











I suppose to those who never experienced it!

HalfStrike

It looks to me like the title insurance companies are on the hook just as much if not more than the banks with this foreclosure issue. I don't see how they give the homes back to people that can't afford payments, and to those that purchased the homes they then say you really didn't buy it?

So the title insurance company pays off the buyer of the foreclosure for any losses and then the house reverts back the the person that stopped paying the mortgage. Then they just start the foreclosure process over again and they still lose the house later.

PS Good luck to the states that plan to litigate each individual foreclosure, I hope they add 500 judges to get it done by 2025. Also most of the title insurance companies will probably go belly up now, adding to this mess and hurting the innocent buyers.

57loaded

<< <i>If the dollar continues to deteriorate it will be nice paying off my 380k mortgage with the equivalanent of a months wages....

I know it's not nice to wish for hyper inflation but it doesn't hurt everyone... >>

SportsModerator

Been paid off for many years. Peace of mind is not overrated.

Mesquite

I just backed up my computer using one of those off-site companies that encrypt - now that is peace of mind (took eight days - wow). Keep in mind that for most, there is a spouse in play. My wife specifically asked that we pay off the house. While I was fairly neutral to the idea of getting the house paid off, paying it off gave her peace of mind. Knowing that made it well worth it to me.

mrpaseo

Most of my life it never occurred to me to actually pay off the house... When my neighbor told me he paid his off, it was almost something alien to me. Don't get me wrong, I have been frugal my whole life (Born and raised in poverty) but everyone in my family pays rent or a mortgage... everyone. It still did not click, I figured, someday I'll be there but it's a long way from now.

About a year ago, a friend told me that he paid off his house... At that point, I thought... why not us. I did some math and have been paying extra every month since. Someday (Sooner rather than later) we will have the house paid off.

I am eager to feel this piece of mind that everyone speaks of, and as mentioned, my wife is eager as well. That said, if I had enough PMs to pay off my house, I would sell in a heart beat.

Thanks for listening.
Ray

2ndCharter

Exactly my sentiment. Why buy a declining asset? Paying off a mortgage now is like throwing money out the window. Holding onto your PM position is like having money flowing in through the window instead of going out of it.



We just refinanced this summer at 3.75% fixed for 15 years. It won't get paid off early because we need the tax deduction and besides, I don't see big government slowing down the spending machine. In the meantime, our PM's just continue to grow.

7over8

Why pay off a VERY low rate loan.......when who knows??? there may be a hand out coming to those with debt......

just kidding guys

coinnerd

It won't get paid off early because we need the tax deduction

That's the worst reason not to pay it off.
Spend a dollar to save a quarter.
Pay it off and give an amount equal to your interest payments to your favorite charity if you want a deduction. They'll make better use of the money than the banks.

cjmezz

Agree 100%......pay $10,000 a year in interest payments, so you can write off $3,000 on your taxes......hmm.......not much logic there!

TwoSides2aCoin

I'd prefer using my equity to buy more precious metals, but since I owe the current value of 12 ounces of gold on the mortgage, I don't want to use what little gold I have in inventory for personal use, and vice-versa. What's "in-store" is business. What's "in-house" is not.

Precious metal continuing higher is offsetting the property taxes which tend to do the same. Balancing a budget is something most Americans cannot do, and this is largely a reflection of our leadership.

Baley

I'll keep the mortgage as long as I have an income stream from working; still intend to pay off all loans prior to retiring, but for now, the money works harder than 4% a year.

TwoSides2aCoin

5 years later. Yeah, it's paid off, but I need to borrow a ladder to do some repairs.
Used to have a step ladder. Never knew my real ladder.

BAJJERFAN

<< <i>5 years later. Yeah, it's paid off, but I need to borrow a ladder to do some repairs.
Used to have a step ladder. Never knew my real ladder. >>



Are you a member of the Church of Ladder Day Saints?

jmski52

I had that sucker in my sights 5 years ago, and I finished paying it off just this spring. No mortgage payments now. One less bill to pay. Feels kinda good.

Baley

Hey now, congratulations jmski! Very big accomplishment.