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lookout123 · 01-08-2005, 11:42 AM

Beestie, i meant that i'll be in the red for the short term, as i chose to drain savings to pay for it. i will mortgage it next month and return the money to my investments (keep in mind i pay no sales charges). just playing numbers games for best possible terms, really.

Griff, i definitely wasn't encouraging excessive debt. i wouldn't take out a larger than necessary mortgage unless i had that same amount invested in relatively conservative vehicles. that way, if the need arises, one can always pay the mortgage down without fear. example, if your home is free and clear and you were to take a loan for 50% of the value and invest that into a nice blend of conservative investments returning an average of 8-10% annually and you were only paying out 5% on the mortgage balance(which is tax deductible, so in a 15% tax bracket you are really only losing 4.25%), your money would be working more effectively for you. if you run into hard times you can A) pull monthly expenses out of investments, B) liquidate investments to pay off debt completely eliminating payment altogether. that scenario is equally valid in any job and housing environment.

That doesn't mean you should do it, though. All financial plans have to fit your comfort level. If you have a fantastic financial plan in place with wonderful investment vehicles working for you, but you can't sleep at night because of concern over the mortgage, it wouldn't be the right plan for you. Like i tell my clients "I have many great investments available, that doesn't mean they are all great for you. the goal is to fit the investment to the person."

i should also add that i don't really invest in property for investment sake. i am going to build a new home over the next 24 months then sell the one i'm in now. i believe the big housing bubble is going to deflate over the next couple of years as people who got in over their heads start to drown, creating opportunity for others who were a little more restrained about the housing markets. IMO

01-08-2005, 11:42 AM	#30
lookout123 changed his status to single Join Date: Apr 2004 Location: Right behind you. No, the other side. Posts: 10,308	Beestie, i meant that i'll be in the red for the short term, as i chose to drain savings to pay for it. i will mortgage it next month and return the money to my investments (keep in mind i pay no sales charges). just playing numbers games for best possible terms, really. Griff, i definitely wasn't encouraging excessive debt. i wouldn't take out a larger than necessary mortgage unless i had that same amount invested in relatively conservative vehicles. that way, if the need arises, one can always pay the mortgage down without fear. example, if your home is free and clear and you were to take a loan for 50% of the value and invest that into a nice blend of conservative investments returning an average of 8-10% annually and you were only paying out 5% on the mortgage balance(which is tax deductible, so in a 15% tax bracket you are really only losing 4.25%), your money would be working more effectively for you. if you run into hard times you can A) pull monthly expenses out of investments, B) liquidate investments to pay off debt completely eliminating payment altogether. that scenario is equally valid in any job and housing environment. That doesn't mean you should do it, though. All financial plans have to fit your comfort level. If you have a fantastic financial plan in place with wonderful investment vehicles working for you, but you can't sleep at night because of concern over the mortgage, it wouldn't be the right plan for you. Like i tell my clients "I have many great investments available, that doesn't mean they are all great for you. the goal is to fit the investment to the person." i should also add that i don't really invest in property for investment sake. i am going to build a new home over the next 24 months then sell the one i'm in now. i believe the big housing bubble is going to deflate over the next couple of years as people who got in over their heads start to drown, creating opportunity for others who were a little more restrained about the housing markets. IMO __________________ Getting knocked down is no sin, it's not getting back up that's the sin Last edited by lookout123; 01-08-2005 at 11:46 AM.