Comments on: Paying off your mortgage early http://www.retireyoungandwealthy.com/paying-off-your-mortgage-early/ Tips, advice and experience for making money from anywhere in the world Tue, 27 Jul 2010 18:41:22 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Landlord Shmandlord http://www.retireyoungandwealthy.com/paying-off-your-mortgage-early/comment-page-1/#comment-2759 Landlord Shmandlord Wed, 06 Dec 2006 19:06:30 +0000 http://www.retireyoungandwealthy.com/paying-off-your-mortgage-early/#comment-2759 I agree that you should never refi to buy non-appreciative assets. You're also right about using your equity to _responsibly_ expand your holdings, which can even be done according to your desired level of risk. Funny, I just recently wrote about this this on my blog: http://www.landlordshmandlord.com/2006/12/01/how-beneficial-is-it-to-make-extra-mortgage-payments-each-year/ I agree that you should never refi to buy non-appreciative assets.

You’re also right about using your equity to _responsibly_ expand your holdings, which can even be done according to your desired level of risk.

Funny, I just recently wrote about this this on my blog:

http://www.landlordshmandlord.com/2006/12/01/how-beneficial-is-it-to-make-extra-mortgage-payments-each-year/

]]> By: Tyler Weaver http://www.retireyoungandwealthy.com/paying-off-your-mortgage-early/comment-page-1/#comment-2757 Tyler Weaver Wed, 06 Dec 2006 04:31:55 +0000 http://www.retireyoungandwealthy.com/paying-off-your-mortgage-early/#comment-2757 I think you hit the end result on the nose. For my internal comparisons, I look at my mortgage rate, and look at the cost of more capital, and then look at the returns I can get by investing the money instead of putting it into equity. For instance, if my current mortgage is 5.4%, and a new mortgage would be 6.3%. Loan would be something like 8%, and the return I use as a cuttoff is 10%, then it makes little sense to pay off now. Your point about rolling equity into new properties is very good so long as things are apriciating and you have a long term view. It is very important to keep close tabs on everything as it will keep you highly leveraged. (a downturn could cause huge problems) Of course over the long term property is almost always going up. I think you hit the end result on the nose. For my internal comparisons, I look at my mortgage rate, and look at the cost of more capital, and then look at the returns I can get by investing the money instead of putting it into equity.

For instance, if my current mortgage is 5.4%, and a new mortgage would be 6.3%. Loan would be something like 8%, and the return I use as a cuttoff is 10%, then it makes little sense to pay off now.

Your point about rolling equity into new properties is very good so long as things are apriciating and you have a long term view. It is very important to keep close tabs on everything as it will keep you highly leveraged. (a downturn could cause huge problems) Of course over the long term property is almost always going up.

]]> By: Steve http://www.retireyoungandwealthy.com/paying-off-your-mortgage-early/comment-page-1/#comment-2754 Steve Wed, 06 Dec 2006 03:07:27 +0000 http://www.retireyoungandwealthy.com/paying-off-your-mortgage-early/#comment-2754 Good advice and thanks for the mention! Good advice and thanks for the mention!

]]>