[golfing eagles]

Originally Posted by Arctic Fox

May we assume, then, that you have remortgaged your home (at the current 30-year fixed rate of around 4%) and put all of the money into the stockmarket?

In other words, may you assume I'm an idiot???? No, you may not

[Arctic Fox]

Originally Posted by Arctic Fox

May we assume, then, that you have remortgaged your home (at the current 30-year fixed rate of around 4%) and put all of the money into the stockmarket?

Originally Posted by golfing eagles

In other words, may you assume I'm an idiot???? No, you may not

Yes, funny how the math changes so quickly, and that "no brainer; should get close to 8% over thirty years" suddenly isn't the panacea that it was several times earlier in this thread.

[golfing eagles]

Originally Posted by Arctic Fox

Yes, funny how the math changes so quickly, and that "no brainer; should get close to 8% over thirty years" suddenly isn't the panacea that it was several times earlier in this thread.

The math has not changed at all. Let's try this again ---
the 100 year average yearly returns on investment in the stock market is just about 8%. There are up years and down years, but it is still an 8% return averaged over 100 years. If you are looking to invest for 1 or 2 years, don't count on 8%, you may be down 40%. But a thirty year investment is more than likely to approximate the last 100 years.

Next, I hope you see the huge difference between mortgaging a property you already own to put it in the market for 30 years and deciding whether or not to pay off a NEWLY INCURRED expense of a bond. A $500,000 mortgage, 30 years at 4% will cost you about $2400/month, so you would needs steady up years just to generate the cash flow to cover that. A $25,000 bond at 6% for 30 years costs $150/ month, so you are comparing apples and oranges

Now if I already had a $500,000 mortgage, was working and could easily meet the payments, was 25 years old and came into a $500,000 lottery ticket, that money would be going straight into a targeted date fund and remain untouched for 30 years.

Yes, the math is the same.

[Barefoot]

Originally Posted by golfing eagles

Again, an individual decision. I preferred paying 6% simple interest and collecting 8% compound interest to the tune of $229,101 in profit. If I live that long, I'll die the next day and have one heck of a wake. You're invited---there will be unlimited lobster!

The chance of me surviving a 57 year who plans to live for 30 years are slim.
I'll take my lobster now, steamed please.

[Chatbrat]

Broiled, stuffed with crabmeat & roe

[Chi-Town]

When buying here there was little mention that the bond was paid off. I noticed in the sales sheet that it was listed on the features section, but not knowing anything about buying a house with a bond I never considered it a sales point. It was like OK, that's nice.

I would never pay off a bond early thinking that you would get it or a portion back in the sell price.



Sent from my SM-N910V using Tapatalk

[Arctic Fox]

Originally Posted by golfing eagles

I hope you see the huge difference between mortgaging a property you already own to put it in the market for 30 years and deciding whether or not to pay off a NEWLY INCURRED expense of a bond. A $500,000 mortgage, 30 years at 4% will cost you about $2400/month, so you would needs steady up years just to generate the cash flow to cover that. A $25,000 bond at 6% for 30 years costs $150/ month, so you are comparing apples and oranges

If you choose to use as an example a huge mortgage then, of course, the numbers will be unsupportable.

[golfing eagles]

Originally Posted by Arctic Fox

If you choose to use as an example a huge mortgage then, of course, the numbers will be unsupportable.

And I thought size doesn't matter

[ColdNoMore]

Originally Posted by golfing eagles

Are you sure it's not 4:0?????

Recognizing that 'most' of the time in life, timing is everything...I'm going to have to dissent in this particular instance.

While you beat me to the keyboard, the recognition of what you posted became obvious to me...a long time ago.

Therefore, in the spirit of compromise I'm willing to go...



3.5:.5

[golfing eagles]

Originally Posted by ColdNoMore

Recognizing that 'most' of the time in life, timing is everything...I'm going to have to dissent in this particular instance.

While you beat me to the keyboard, the recognition of what you posted became obvious to me...a long time ago.

Therefore, in the spirit of compromise I'm willing to go...



3.5:.5

fair enough. Still a record

[Boomer]

Originally Posted by Villageswimmer

Ours was 6.125%. Yes--not THAT far from 7%. The rates do not change throughout the 30 yr bond life. Look at your amortization schedule. See what the real cost will be. Don't make a decision based on posts here.

Originally Posted by Boomer

You are right. There is no right or wrong answer. It's whatever makes sense to the individual owner who has to think it through. There is a lot of info on districtgov.org and it is all probably there somewhere, but lazy me just called and asked the balance and the interest rate.

- - - - -
Hi again, Villageswimmer,

I finally took the time this afternoon to delve into districtgov.org where I found the amortization tables. We are in District 7 where our interest rate is 4.25. Our amortization is not quite but almost to the point where half of it is going to the principal. We are the second owners.

We knew about the bond when we bought and knew we would not pay it off because we knew we would not keep the house forever.

Until this thread, I had no idea there could be such a difference in the interest rates on the bonds. When we chose the house, we knew the remaining bond amount, but did not ask about the interest rate. We really like our location in District 7, but had no idea the interest rate on the bond would be rather significantly lower than some.

When it comes to the bond, buyers need to know what they don't know, and as this thread is showing, there is more to it than to pay or not to pay it off. Buyers who want to know more about the bond and all it entails might want to track down those tables and rates by district on districtgov.org.

[Arctic Fox]

Originally Posted by golfing eagles

A $500,000 mortgage, 30 years at 4% will cost you about $2400/month, so you would needs steady up years just to generate the cash flow to cover that. A $25,000 bond at 6% for 30 years costs $150/ month.

I guess we're just viewing it from opposite directions.

You ask why spend $25k to pay off a 6% loan when you could invest that money in the stock market at 8%.

I ask why you would keep paying 6% when you could borrow against the house at 4%.

So how about this for the best of both worlds: borrow $35k against the house - monthly repayment over 30 years would be slightly less than currently paid on the 6% bond - use $25k to pay off the bond, leaving you $10k "free" cash to invest in the stock market.

[golfing eagles]

Originally Posted by Arctic Fox

I guess we're just viewing it from opposite directions.

You ask why spend $25k to pay off a 6% loan when you could invest that money in the stock market at 8%.

I ask why you would keep paying 6% when you could borrow against the house at 4%.

So how about this for the best of both worlds: borrow $35k against the house - monthly repayment over 30 years would be slightly less than currently paid on the 6% bond - use $25k to pay off the bond, leaving you $10k "free" cash to invest in the stock market.

Sold! Many more ways than one to skin a cat

[Nucky]

Originally Posted by golfing eagles

Sold! Many more ways than one to skin a cat

You are certainly rite. I like interest coming to me and live to not pay interest to anyone for anything ever.

[RickeyD]

Originally Posted by Arctic Fox

I guess we're just viewing it from opposite directions.



You ask why spend $25k to pay off a 6% loan when you could invest that money in the stock market at 8%.



I ask why you would keep paying 6% when you could borrow against the house at 4%.



So how about this for the best of both worlds: borrow $35k against the house - monthly repayment over 30 years would be slightly less than currently paid on the 6% bond - use $25k to pay off the bond, leaving you $10k "free" cash to invest in the stock market.

Until you need to sell your house. With the bond intact it is then assigned to the new owner. Take out a loan and you eat the whole bond.