If you have the cash, but not the job security, is it better to...

buy off your mortgage and live like a monk
?. Or keep the cash flow in the bank and hope for better times?

Also, assuming a significant part of the mortgage is paid off, refinance and have a lower mortgage payment.

You can probably carry the house and other debts until you get a job even if its a couple of years.
and you keep the tax advantages of the mortgage debt.

dependents decide to go to college.

What happens if you're without a job even if your home is paid off,
do you have enough money to meet the other necessary expenses you must pay - like transportation, utilities, real estate taxes, food, health care. If you don't than you could wind up losing the house from the default of real estate taxes for example. The aggressiveness of real estate tax sales appears to vary greatly across the country.

Likewise is your mortgage fairly priced given your home value today. If you home has depreciated since you bought it, you're making a gift to the mortgage holder by paying off. They'll may get to the point where they will cut the principle and interest rather than foreclose if the foreclosures start hitting your region.

You really have to look at the numbers in terms of your costs, your assets etc.
We do a current scenario, an ugly scenario and an all hell breaks loose scenario.

But maybe it's time to consider the scenarios.

and financial aid.

They will expect you to tap your investments including home as your share of the college tuition bill.
You'd need to talk to a financial aid advisor about whether you're better off for aid for the kids if your wad is sunk in your home.
I understand they expect home equity financing which will pretty much undo your 'safe in your house' strategy.

But now that you mention it, it sounds like it really doesn't make a difference, then if we have cash or no mortgage. It will be gone within four years anyways.

I'm between college ages now. The two oldest out of school. Youngest is still 6 years away.
They have some flexibility for unemployment if you really think you'll be in that situation.
I recall that you wind up doing a financial statement and you have to cough up x% of your net worth.
I didn't think it excluded real estate.

Pray your kids pick reasonably priced schools.
I had one Ivy and one state school.

an abundance of good jobs. But this is such a boring place to work.

I guess I'll be selling perfume bottles over the counter.

I'd pay off the mortgage. You save a lot of money in the long run and you don't have to worry about coming up with that cash every month.

You won't earn the same percentage in interest in a bank account that you will spend if you keep the mortgage. Passbook accounts earn 3% tops, right? What's the interest on your mortgage? Seven? Five?

He owned three homes. He sold two and he holds the mortgages, paying off his own two mortgages with the buyers' down payments. He's making 15% on $800,000! And if the buyers default, he can sell the properties out from under them.

Still, you have to think in terms of interest earned and spent. Your money is worth far more if it heads off future interest payments at the pass!

No matter how much you hate the beast, it does seem to come through for some people.

account as long as i keep $10,000 in it. my mortgage is at 6%. i could pay it off but i want the tax deduction. i do pay extra on the principal every month.

my house is worth about $800,000 and i only owe $89,000.

if he has no job and no money in the bank, where is his cash flow coming from.

He said he has job insecurity which I read that his job is materially threatened.

In a right to work state, they can fire you for just about anything.

I hate Republican euphemisms.

but it's rarely enough to house you too. If his mortgage is paid off, that won't matter. It's less expensive to feed a person than to house them.

and which state is he in. Some states have miserable unemployment benefits.

It's much easier to scrounge enough to feed yourself than it is to pay rent or mortgage, which takes a large chunk of most people's income.

kept me from the required three job applications a week.

PHD students aren't registered students, so I don't qualify for educational loans either.

You then pay tuition and re-register before you defend.

University of Toronto.

Not a bad deal. Actually, a GREAT deal, except for this glitch...

once the house is in the clear job security is less scary

more on the deposit/investment than you are paying in interest and costs on the mortgage then in strictly financial terms it is better to pay off the mortgage.

Problem is that reduces or eliminates the ability to save for a rainy day - and possible loss of future income.

I'd pay off the mortgage. If you find yourself unemployed for a period of time you will likely be able to find some kind of McJob that will enable you to meet your expenses and remain in your home. That may not be true if you have to meet those expenses plus a mortgage or rent payment.

Don't forget that once the mortgage is paid off you get to keep all that money every month....

Homeownership is subsidized through Schedule A deductions. We paid off our mortgage about eight years ago and I love the feeling.

But if the income is negligible, then so are the taxes, right?

but interest (only interest, not principal) paid on your mortgage, along with the other stuff you can claim on schedule A, may add up to enough to cross the threshhold where schedule A is more beneficial than the standard deduction. And if the money is not in a tax-deferred account like an IRA then the interest is considered income and will have to be added to other income to determine your taxes. If you use tax software like TurboTax, you might try a couple of dry runs where you tweak various numbers and see what happens to your taxes/refunds.

And if you have the standard deduction, you've gotta pay a lot of interest to break it.

If I had the cash, I'd pay off the mortgage.

you can't even rent an apartment for that. i pay my homeowners and taxes myself.

It all depends on what you mean by no job security. If you lose your job, and you know getting another one will be extremely difficult, what good will having no cash do for you? You could sell the house and live on the street, I guess...

I thought you've been around here for a while? Or was that someone else?

About a month. I don't post as often as other people do! I have been lurking since around the beginning of the Iraq war, though...

homeless...you will be tempted to use cash to live on..but you could lose your home...if you HAVE to eat you will do odd jobs and make enough to at least survive..but a mortgage is a great big chunck of money every month!

We are selling our house and buying a much less expensive one. We want to pay off debts and live much more simply on much less money. I am tired of keeping up with the Jones.

Harder than it looks. But, I love the house, even if the community stinks.

Who knows? I could move into a neighborhood worse than this one. Hard to believe.

want to live well in retirement you have to live under your means while you're working.

...and interest rate.

Its probably almost (probably/almost ... not exactly definite) wise to pay off credit cards and high interest loans ... mortgages are a different story.

with high real estate inventories, the mortgage lender will bend over backwards to NOT foreclose.

You can negotiate with them.

but thanks.

so you can work with them.

Their cost to carry per month is something like 1-2% of the loan principle for insurance, taxes, maintenance.... they have to pay it if they foreclose. They'll have a fire sale to move it and sell below appraised value to eliminate the costs. People in declining markets renegotiate the terms including principle reductions.

You can always get a small loan between good times. Better times WILL come, I promise you that. With no mortgage, think how much you can invest when things get better. Absolutely pay off your mortgage, especially if you know you will be staying where you live now. Later, if you need the tax deduction, you can always get a bigger loan. My sister is 54 and her DH is 60. They paid off their mortgage about 5 years ago and have never regretted it. He started painting and now they have a home business deduction to make up for the mortgage interest deduction they had before.

I know this feeling all too well from working in trading. You tend to horde a little bit because ya never know when the shit could hit the fan. I tend to pay off debts fast because I am still only in my second year. If I get canned, it could be tough to recover into another good job. I also borrow and spend strictly based on my salary - not the bonus. Bonuses can be good for down payments on homes, but the mortgage should be supported by your salary - no spending should EVER be dependent on expected bonuses as said bonus could be zero with you out on your ass!

Bonuses? Don't they only give those out to people that work in the stock market on Wall Street? Bonds salesmen, maybe?

New Yorkers need to wake up and realize they have a way of life that the rest of us lost too many years ago.

Since you are currently employed you may well be able to ferret away a sizable amount again before/if you lose your job. Even if you cannot you will have lower overhead and it's easier to find a lower paying job to stay afloat if the need should arise.

(1) How much do we really save on taxes? and (2) What college the kids will pick.

Banks can crash with your money.

Seeing how we lost some small stock investments a while back, <just like everybody else> it might not be a bad idea at some point just to clear the debt and buy the mortgage, but it sounds like we have to wait until we make it through the college years for the kids.

Good luck. :D