Comments on: Picture Paying Off Your Mortgage http://blog.redfin.com/seattle/2007/11/picture_paying_off_your_mortgage.html Redfin Seattle Sweet Digs Sat, 11 Feb 2012 00:35:59 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Marie http://blog.redfin.com/seattle/2007/11/picture_paying_off_your_mortgage.html/comment-page-1#comment-1146 Marie Sat, 01 Dec 2007 08:21:43 +0000 http://blog.redfin.com/seattle/2007/11/picture_paying_off_your_mortgage.html#comment-1146 They don't list the price of the home they purchased but I'm curious about the math here too. How much interest exactly did they save. When I play around with mortgage calculators I find that buy putting an extra payment toward the principal on an average priced Seattle house to cut just ten years off a 30 year mortgage will mean hundreds of thousands of dollars in interest saved. They don’t list the price of the home they purchased but I’m curious about the math here too. How much interest exactly did they save. When I play around with mortgage calculators I find that buy putting an extra payment toward the principal on an average priced Seattle house to cut just ten years off a 30 year mortgage will mean hundreds of thousands of dollars in interest saved.

]]> By: Ryan H http://blog.redfin.com/seattle/2007/11/picture_paying_off_your_mortgage.html/comment-page-1#comment-1143 Ryan H Fri, 30 Nov 2007 19:20:08 +0000 http://blog.redfin.com/seattle/2007/11/picture_paying_off_your_mortgage.html#comment-1143 I agree with Tom Ismon in the last post. But this story just made me wonder... I wonder how much better off this couple would be if they invested every penny put towards the mortgage into an investment that actually earned a rate of return (equity in your home doesn't grow, it just sits there - your home will appreciate the same regardless of how much you've got in equity). Additionally, I couldn't help but wonder how much better off they'd be if they rented out their home that was paid off, and put that new income towards a mortgage on their new home (probably could've completely covered it in Mighigan). Then they'd have two properties with the potential to grow in value, plus, if they had some sort of emergency, all of their cash wouldn't be stuck in their house. I agree with Tom Ismon in the last post.

But this story just made me wonder… I wonder how much better off this couple would be if they invested every penny put towards the mortgage into an investment that actually earned a rate of return (equity in your home doesn’t grow, it just sits there – your home will appreciate the same regardless of how much you’ve got in equity).

Additionally, I couldn’t help but wonder how much better off they’d be if they rented out their home that was paid off, and put that new income towards a mortgage on their new home (probably could’ve completely covered it in Mighigan). Then they’d have two properties with the potential to grow in value, plus, if they had some sort of emergency, all of their cash wouldn’t be stuck in their house.

]]> By: Tom Ismon http://blog.redfin.com/seattle/2007/11/picture_paying_off_your_mortgage.html/comment-page-1#comment-1142 Tom Ismon Fri, 30 Nov 2007 18:23:45 +0000 http://blog.redfin.com/seattle/2007/11/picture_paying_off_your_mortgage.html#comment-1142 I did it the other way. I am 62 and began retiring before I was 50. I started with nothing and found good real estate investments including my houses.If the long term yield exceeds the rate at which you borrow it is called positive leverage. I now have two homes with mortgages totaling 3.5 million which are worth 7 million. I tell my friends and relatives and stock brokers that a single family house long range is one of the best investments you can make. The math is simple. It goes like this. Long range the price of median home has gone up 8%(more insome areas, like my home town of Seattle). If you put 25% down your equity goes up 4 times faster.Meaning the equity of that median house purchase increases 32% per year. Do this for a few years in a row and you won't have to spend your winter's in Michigan. This positive leverage factor is the inverse of your ratio of down payment/price (1/4 inversed is 4/1). How do you think people get rich? They borrow cheaply and invest well. Debt is good I did it the other way. I am 62 and began retiring before I was 50. I started with nothing and found good real estate investments including my houses.If the long term yield exceeds the rate at which you borrow it is called positive leverage. I now have two homes with mortgages totaling 3.5 million which are worth 7 million. I tell my friends and relatives and stock brokers that a single family house long range is one of the best investments you can make. The math is simple. It goes like this. Long range the price of median home has gone up 8%(more insome areas, like my home town of Seattle). If you put 25% down your equity goes up 4 times faster.Meaning the equity of that median house purchase increases 32% per year. Do this for a few years in a row and you won’t have to spend your winter’s in Michigan. This positive leverage factor is the inverse of your ratio of down payment/price (1/4 inversed is 4/1). How do you think people get rich? They borrow cheaply and invest well. Debt is good

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