Another 30 year mortgage when property is paid - Posted by kray

Posted by John on September 20, 2004 at 21:28:07:

I will try to answer your question.
When you have a paid for property lets say a 100k sfh.
It is like putting 100K in a jar and burring it in the back yard. When you dig it up you have a 100K.
You have unproductive equity that sits there. Where as if you remortgaged that property you could have at least 90k or more cash to invest in R/e or other business ventures. At todays rates mortgage rates are still very low which would cost 5.5% interest on the mortgage. That 90k could then be used to generate a return of 10,20% or more return that would pay the payments plus give monthly positive cash flow. All this said, it depends one the persons situation and tolerance for risk.

Another 30 year mortgage when property is paid - Posted by kray

Posted by kray on September 20, 2004 at 20:04:13:

Today I heard money expert Ric Edelman tell one of his callers to go out and get another 30 year mortgage after the caller pays off his current mortgage which the caller mentioned it should be payed off quite soon.

Please someone explain to me why should the caller get another mortgage after he will own the property free and clear and only have taxes to pay on it every year.

Re: Another 30 year mortgage when property is paid - Posted by jasonrei

Posted by jasonrei on September 21, 2004 at 22:39:13:

What the others said-

  1. Deduct mtg interest
  2. Use the cheap mortgage money for other investments

Re: Another 30 year mortgage when property is paid - Posted by E.EKA

Posted by E.EKA on September 21, 2004 at 15:32:58:

Well, you can ask Ric himself or ask US :slight_smile:

I think it’s important to take the advice in context. It depends on what the caller’s issue is. It could be a reverse mortgage where the caller pulls out cash from the equity. Equity is just about useless if you can’t spend it. Also, with a mortgage you may lower your tax rate/liability as well as have access the cash you need.

Re: Another 30 year mortgage when property is paid - Posted by Lyal

Posted by Lyal on September 21, 2004 at 07:58:16:

Kray,
Depends what you use the money for. If you go buy a new truck, big screen TV, boat etc. it’s a stupid idea. If you invest (wisely) in real estate and create a return in excess of what your mortgage interest rate is (not hard to do at all), you are money ahead.
Lyal

Re: Another 30 year mortgage when property is paid - Posted by kray

Posted by kray on September 20, 2004 at 20:10:53:

Today I heard money expert Ric Edelman tell one of his callers to go out and get another 30 year mortgage after the caller pays off his current mortgage which the caller mentioned it should be payed off quite soon.

Please someone explain to me why should the caller get another mortgage after he will own the property free and clear and only have taxes to pay on it every year.