Now, as Carlos suggested use the money you were using to pay the mortgage to your full advantage. Here is what I’m doing.

1) I set up the money that I’ll need to pay taxes and insurance to automatically go in a Money Market account that pays 1%.

2) I’m buying ETF Dividends funds into my IRA and Rot-Ira. This ETF’s pay me nice monthly and quarterly dividends, which I used to buy more share of the funds. When retirement time will come, I’ll select for those dividends to be paid in cash in order to pay bills, etc.

Also, now that I have a dividends strategy, I really don’t care too much how the stock market doews (Up,Down), actually when is Down I jump in and buy more ETF’s shares.

It took me a while to finally figure out a strategy that is/will work for me, and now I can sleep better at night.

If I may give you an advice, make sure you don’t spend what used to be your mortgage money. First, save a little each money in a special savings account to pay property taxes and insurance each year. It will be a great feeling to receive a little bit of interest when managing your own escrow. For the rest, invest it. You can now put your savings and investment accounts on steroids. I am currently collecting CDs to build up a large emergency fund. That’s sacred. After that, stock market, etc.

I have the same question as Fausto…what documentation do I need.

Thanks!

As of Friday, my debt to income ratio is 0%. I am free.

You FIRST need more money in savings to protect yourself against a potential job loss. I’ve had friends who were unemployed for over 6 months. Where I live, they typically rely on their church for help when something like that happens. I find it humiliating, and not a good situation to be in. I was raised to be independent. Others will sign up for welfare. I would rather save and fend for myself. The days of relying on credit for emergencies are long gone now. I used to keep a couple of credit cards active in case I needed them. It would be a suicidal plan these days. In the new United States, you better not rely on credit as your primary emergency plan. Save enough money to cover at least 12 months of total expenses, then invest more aggressively. Investing some money to pay down your mortgage is a great way to diversify your investments. After all, by paying down your principal, you are instantly getting a 4.6% return and getting a little closer to owning your home free and clear someday.

Did you receive a deed when you purchased the house? I certainly hope so. If so, you are (and always have been) the owner — the bank never owned any part of your house, the bank merely used the house as security for its loan to you (the bank would have foreclosed on your house if you defaulted on your loan). What you need is a recorded copy (from the NC County Register of Deeds) of the NCGS 47-46.2. Now you have clear title.

I recently paid off my mortgage, and would like to know what kind of documentation do I need to prove that I’m the sole owner of the property(instead of the lender)?

All the give me is the followings:

1) A letter from Wells Fargo (my lender) saying that they received the pay off and the loan is closed.
2) NCGS 47-46.2 Certificate Of Satisfaction of Deed of Trust, Mortgage, or Other Instruments. Electronically submitted by Wells Fargo to my NC County Register of Deeds ( I have a certified copy of it).

Are the above document suffice to legally prove I own it? What about an updated Deed, Title or anything else?

Thank you in advance for all your help.
Fausto

Yes, the tax benefit of a mortgage looks more like a joke with each new payment as the portion that goes into the interest payment gets slightly smaller each month.
With my 15-year mortgage, I am getting even less tax deduction. It blows my mind that Americans have been conditioned to believe that having a huge mortgage payment that will take up to decades to pay off is actually a good thing, and that spending hundreds of dollars on monthly interest in order to get a tax deduction is wise.

The feeling and the sense of FREEDOM of knowing that the home is really yours is incredible beautiful and Liberating.

Forget about the gimmick of holding a mortgage for the Tax benefits (do the math, it is a joke!), or invest in in the stock market instead for a better return (maybe, it depends).

We choose to have a GUARANTEED return on our money by eliminating the 6.5% we were paying on mortgage interest + no debt!

Now, that free up money that we can use to \\\”Play\\\” the stock market

It can be done if you set it as your goal and stick to it.

Here’s an example: 5% mortgage interest – tax deduction savings in the 28% tax bracket = 3.6% net return on paying off your mortgage. However, don’t forget that you don’t start seeing the advantages of the tax deduction until you have accumulated enough deductions to get over the standard deduction on your taxes. Therefore, the amount you save is a bit north of 3.6%, without a lot of calculations lets just say it is conservatively 3.8%. Now I ask you, where can you get 3.8% in todays savings environment for a risk-free investment?

I have practiced the concepts of “the millionaire next door”. It’s a great book, have you read it? I wish everyone else in this country would have lived within their means if possible…. No new Mercedes for me, driving the 10 year old paid off car….

Jcw

You are in good shape, congratulations!!!!!!!!!

Did not list other substantial retirement assets (800k) and 2 other paid for rental properties.

Thks

My situation

Just refinanced to a 7/1 arm at 3.375% 417,000 loan. Home value 850,000. Plan on paying about an extra 3,700 month from monthly income not savings to pay off the loan in 7 years to eliminate risk of rising interest rates. Also have 4 years liquid living expenses.

If rates on cd’s go up over 3.375% than I will stop adding the extra principle payment, save the money instead to pay off the mortgage at the end of seven years anyway.

Comments please on this strategy.

Investments are paying NIL right now, in many cases and paying off the mortgage is a guaranteed return on investment.

Personally our savings rate is about 48% and both my wife and I earn 100k per year which oddly puts us something like in the top 7% of the country but for our area we certainly are not. Our original mortgate was $225k and have paid it down to $110 through extra continious fixed payments and a couple of one time payments totally $35k over a ten year period. With a 5.375% fixed interest, there is no “safe” stock market investment that would beat that rate. Speculating that 1,2,3,4 or 5 years from now you could take x amount and earned more by investing is futile. It’s equivelent to saying that if I only invested in Microsoft or Apple years ago. I don’t personaly have a crystal ball.

If I can reduce my interest payments and pay myself instead, why is that a bad strategy? As opposed to a fictious investment returns of 10% or more people are advising others to make?

In our early 40’s, we only have $200k in 401k/b, $45k stocks, and $200k cash and $20 cds. I’m thinking to take $50k and dump it into the mortgage and pay it off by 2013 with continuing extra payments of $500, will net another $25k in reduced interest on top of the $75k we already saved from prior one time payments.

So why is paying down this debt and avoiding future interest a bad thing? So what, I don’t get a tax credit? Why wouldn’t I just up my 401k savings rate to help make up the difference? Either way, we would NEVER put 100% of our money in any investments anyway so whether its sitting in the bank or went to pay off the mortgage and the intest yeild in the bank is lower than the interest we have to pay to the bank, sounds better to me to pay it off. I just went to my taxes and removed my mortgate interest and I owe $2500 compared to previous. Ok so keep paying $8k to the bank versus $2500 to the government????

Found this article: http://www.thesimpledollar.com.....deduction/

I would really to get over with my mortgage once for all and paid it off now. The remaining balance of 48k.

The reason for doing so now is mostly phsycological, as well I don’t want to pay $5800 yearly in interest this mortgage is costing me (at 6.5%).

We do have 50k in an Emergency fund, and thinking to use it to pay the mortgage now.

Both myself and my wife have full time jobs (appear to be safe) and no other debts.

After paying off the mortgage we’ll concentrate in building up the emergency fund again, this time we’ll have extra money to add to it as we won’t have a mortgage.

Do you think I’m jumping the gun here, what do you recommend?

Thanks to All,
Fausto

Example: Principal $200,000 (30)YR.Mortgage at 5.5%
Interest $208,808 Over 30 Years
Total $408,808 True Cost

You have to consider that the interest charges are Front-End loaded heavily to the first years.

Example:

Monthly Mortgage Payment Amount $1135.58
1st Monthly Payment Principal Proportion $219
1st Monthly Payment Interest Proportion $917
2nd Monthly Payment Principal Proportion $220
2nd Monthly Payment Interest Proportiom $916 etc.
(Moves very slow in first years)

As you can see, any concept of paying 5.5% interest does not make much sense when you take into account how much front-end loaded interest will actulally be paid for the first 15 to 20 years of the amortization.

Also, what is freqently not understood by mortgage holders is that when extra dollars are added to the monthly payment for the purpose of principal reduction, it advances the set amortization schedule to a more favorable proportional level each time extra payments are made. Not only do you immediately add to equity position but you cancel interest payments at the highest levels of the amortization schedule. Subsequent monthly payments are made at a more favorable proportions of interest to principal.

That is why even by using a half-payment bi-weekly method, which is a conservative approach to paying off a mortgage early, you would still save over $41,000 of interest charges and over 5 years of payments.

Having the 5 years of payments or $68,000 to invest 5 years earlier makes pre-paying a mortgage a very worthwhile approach to saving and investing.

Another myth: You still get the lions share of the interest tax deduction each year during the pay off of the mortgage. When the mortgage is paid off, would you rather have the tax deduction or the full mortgage payment amount to do what you want with? No brainer there.