Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: JoanP who wrote (83742)	3/21/2001 8:14:14 PM
From: IceShark	Read Replies (2) \| Respond to of 436258

I would think twice about that. It is a pretty reasonable rate and is tax deductible so the net cost isn't that high. Plus having the cash at your beck and call is a lot better than going to a banker and 'esplaining why you want it. Even if you put it in some munis you may actually have a positive carry trade after the taxes wash everything out.

To: JoanP who wrote (83742)	3/21/2001 8:15:45 PM
From: Skeeter Bug	Respond to of 436258

joan, if interested, i can show you how to track your payments so that you know when you are all paid up to the day. this is no rigid system and offeres tons of flexibility. pm me for info. i hope you have no prepayment penalty. refi to a 15 year loan is an option, if applicable.

To: JoanP who wrote (83742)	3/21/2001 8:48:17 PM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 436258

pay it off! your cash flow burden will be reduced, you will be ahead a bit of interest, and you will have an asset owned solely by you... hopefully it holds its value.... calculate to a degree the offsets for interest deducts on your taxes vs. increased tax on higher income.... but... as they say in first year accounting... doing into debt to reduce taxes is terrible logic.... actually if you are paying higher taxes...you are making more money....good logic... unless you can beat the interest rate on debt.... its a fools game if you had the money to buy the thing in the first place... two cents

To: JoanP who wrote (83742)	3/21/2001 10:01:06 PM
From: Don Lloyd	Read Replies (2) \| Respond to of 436258

Joan - ...I have been thinking about taking some cash and paying off my 6.5% mortgage. It's the only debt I have and it would be a guaranteed return. Please give me your thoughts. ... Some possibilities to rank ahead of mortgage repayment - 1. 401K with employer match 2. Roth IRA contributions 3. Partial Roth IRA conversions from traditional IRA using your available cash to pay the taxes on the conversions Regards, Don

To: JoanP who wrote (83742)	3/22/2001 1:05:32 AM
From: Ilaine	Read Replies (1) \| Respond to of 436258

According to the Mortgage Professor, the real rate of return when you pay off your mortgage is the nominal interest rate, e.g., in your case, 6.5%. The Mortgage Professor is emeritus from Wharton, so he's credible. decisionaide.com If you can get better than 6.5%, don't pay it off, otherwise, pay it off. As for the tax consequences, in a retirement fund you don't pay tax on your gains, so if you bought T-bills in an IRA that paid 6.5%, you'd get the 6.5% return double tax free, just like paying down your mortgage principal. But I don't know any T-bills or the like paying 6.5%. I think if you put the money into a taxable investment, you need a higher rate of return to match the 6.5% from your mortgage, say 9% or so to make it worthwhile. So I think these days it makes sense to pay down the mortgage. Unfortunately extra principal payments aren't tax deductible, but they do shorten the length of the loan.