OT: Not Paying Off Your Mortgage

[Louis]

Originally Posted by bigbill

My mortgage is less than what I was paying in rent.

Perhaps, but compared to renting home ownership comes with quite a few other expenses over and above the mortgage.

[robt57]

Originally Posted by Louis

Perhaps, but compared to renting home ownership comes with quite a few other expenses over and above the mortgage.

Indeed, all you gotta do is look at my Home Depot yearly patronage.

[Ralph]

About a year ago, some relatives asked me to help them investigate a relatively unknown mortgage product called a "reverse to purchase" mortgage. They were in their early 70's, one in poor health, and needed a different home....one with no stairs and smaller....less upkeep. Their current home was mortgage free and worth $400,000-$425,000. They wanted to stay in their community in their home town, liked their life there, Doctors, etc....and also needed some money out of their home to supplement their income. They were considering a "reverse to purchase" to buy a different home. (from AIG)

Basically....they way it worked was....sorta like an insurance product. Based on their age and life expectancies. They would have been required to put down about 55% of the purchase price based on their ages....on a roughly $325,000 home they were considering. The balance of the sale of previous home they could keep. They would never have to leave the home until last one died, or left the home. No mortgage payments, etc. But mortgage balance is growing. And they W/B required to pay taxes, insurance, and keep it up as normal. When the last one left the home, the heirs could sell the home. If there was any equity at that point, heirs could have it. They could also sell the home at any time, and pay off the mortgage, if their condition changed, just like a normal mortgage. With a mortgage on 45% of the new home accruing interest and the whole home appreciating at traditional rate, heirs should still likely inherit something, but that wasn't one of the goals. Actually....an example of historical appreciation rates of homes in their area showed they should start GAINING equity paying back insurance costs at about year 10 (if they were in the home then). With equity growing from there.

Cost to do this was about $8000 roughly. A lot...but maybe not if it solved a big problem. I didn't see anything wrong with doing this for someone in their particular situation. Repeat....someone in their situation. It gave them the home they needed for that stage of their lives, and let them stay in the community they liked.....with cash out of previous home, and no mortgage payment.

[Alstra]

Depends on really! If you get a good plan with fixed rates then you're fine even if it's for 30 years. I was having the same dilemma with my hubby on whether we should go in such a stressful situation such as paying a mortgage possibly for the rest of our lives. We sat down and started calculating the overall expenses and our financial ability to maintain such monthly rates that most banks were asking for. We couldn't figure it out no matter how hard we tried. It was then that we took matters to a mortgage broker Liverpool . He was calm and friendly and showed real interest in our family benefits compared to any other cold bank agent we saw prior to him.