| put $ in IRA or pay down home? |
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William Pettingill
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Location: Idaho
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| put $ in IRA or pay down home? |
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November 8, 2009
Should I (& my wife) put our 2009 IRA monies in our Mutual funds IRA or pay down the mortgage principal on our home. We have 29 years left on a fixed 5.875% Loan. ($322k loan)I am self employed, make apprx. $80,000/ann. We have no debt but our home and monthly personal & business expenses. I am pretty well diversified and had some major health problems last year and lost some income due not being able to work. I am 58 years old and plan on working as long as I can although I will slow down in approximately 7 or so years. I have apprx. $250k in current investments and approximately $35k just sitting in a checking/savings account at less than 1% interest.) Yuk! However, we weathered this latest recession fairly well. I'd appreciate any advice. Thanks
Should we put our 09 IRA $$ into our Mutual fund IRAs or pay down the mortgage? We have 29 years left on a $322k fixed 5.875% Loan. I'm 58 & plan on working f/t for apprx 7 years & then do p/t. last years contribution didn't affect my taxes.
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Mon Nov 09, 2009 7:21 am |
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littleroc02us
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I noticed you said 29 years on your mortgage left and you stated that you are 58? Did you just buy a house? I guess my suggestion would be to refinance for a 15 year mortgage and use $20,000 of your savings for a huge payment on the mortage. Leave the retirment money alone, you will want that to continue to grow as the market has surely picked up since March.
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Mon Nov 09, 2009 2:10 pm |
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William Pettingill
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quote:
Originally posted by littleroc02us
I noticed you said 29 years on your mortgage left and you stated that you are 58? Did you just buy a house? I guess my suggestion would be to refinance for a 15 year mortgage and use $20,000 of your savings for a huge payment on the mortage. Leave the retirment money alone, you will want that to continue to grow as the market has surely picked up since March.
Thank you for your reply. Here is some additional Info. My loan is set up to pay it as a 30 year or 15 year mortgage. We wouldn't be pulling any retirement money out of our IRAs or investments. I am just wondering if I should take the money that is sitting in my bank and designated for IRAs and use it to pay down the mortgage or invest it in the IRAs. I feel like there is a correction coming in the stock market and I know I can wait until April 15, 2010 to invest in the IRAs. I actually have enough right now to pay down the principal AND do the IRAs. I just don't know if I should put the $ in the IRAs right now. (Sorry for repeatng myself) I kind of look at paying down the house as earning the equivalent of (or not having to pay the equivalent of) the 5.875% Mortgage rate. Your thoughts?
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Mon Nov 09, 2009 4:43 pm |
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littleroc02us
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quote:
Thank you for your reply. Here is some additional Info. My loan is set up to pay it as a 30 year or 15 year mortgage. We wouldn't be pulling any retirement money out of our IRAs or investments. I am just wondering if I should take the money that is sitting in my bank and designated for IRAs and use it to pay down the mortgage or invest it in the IRAs. I feel like there is a correction coming in the stock market and I know I can wait until April 15, 2010 to invest in the IRAs. I actually have enough right now to pay down the principal AND do the IRAs. I just don't know if I should put the $ in the IRAs right now. (Sorry for repeatng myself) I kind of look at paying down the house as earning the equivalent of (or not having to pay the equivalent of) the 5.875% Mortgage rate. Your thoughts?
My honest opinion, is that I'm a little concern about your principle balance. So is the $322k balance what the house is worth? Is that too much house for you right now? Why is there no equity in the home? Did you not put anything down. Also, will there be penalties for early withdrawl of the IRA? And what other retirement money do you have? I just have a lot of questions.
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Mon Nov 09, 2009 4:57 pm |
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William Pettingill
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| put $ in IRA or pay down home? |
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Hi:
Again! Thank you for your advice.
Best Wishes!
Bill
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Sun Nov 15, 2009 6:10 am |
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oldguy
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quote:
or pay down the mortgage? We have 29 years left on a $322k fixed 5.875% Loan. I'm 58
Bill - I would not prepay a <6% 30 yr mortgage.
I'm retired, I put a 30 yr mortgage on one of our houses when I was age 64 - and I am considering yet another refi on a house. I have been a landlord over the past 35 yrs - I have kept my houses leveraged, ie, I refinanced whenever rates were favorable and I re-invested the equity in mutual funds (index funds). The houses have appreciated nicely over the past 35 yrs and have made lots of money for us - however, the money that I took OUT of the houses and invested in funds grew at a far greater rate. I always look for 'long and low' capital - I use 30 yr loans, low rates, and I always use Fixed Rate loans even tho ARMs have lower rates. I do this to mitigate my risk and avoid exposure to rate fluctuations - ie, my risk is my investments so I want to be absolutely certain of my money supply.
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Sun Nov 15, 2009 8:49 pm |
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coaster
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Agreed with Oldguy. Always look to the net. And take taxes into consideration, too. That makes your mortgage cheaper.
~Tim~
Eye Candy : Why Whimsy
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Sun Nov 15, 2009 9:03 pm |
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signupmakemoney
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| Reply to paying off house or getting an IRA |
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Depending on your age, I believe it would be smarter to pay off your home because that is a huge amount of interest you will save during your lifetime.
If you are older, I really don't know what the best move is, low risk investments is all I can think of.
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Tue Nov 17, 2009 10:01 pm |
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Waxman
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My opinion, for what its worth. I sold my wifes house and made a $20k profit about 8 years ago. I put that money directly toward the principal of my new house. I am very happy with that choice. If you get rid of some of that principal on the big end, you will save thousand in interest over the life of the loan. I was quickly able to pay off the house just making principal payments after that. The no mortgage freedom is awesome.
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Thu Mar 04, 2010 5:24 pm |
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