Felt inclined to share my 2c if anyone's interested. I was initially baffled that a site of traders has so many opponents of utilizing capital at 3% interest, with tax breaks included! But on second thought it's fairly telling. In order for taking money out at 3% interest rate to be a good move for you, you need to have the skills to be able to grow capital at better something better than 3% without being risky to do so. If you're emotionally uncomfortable or against the idea on principle, that may very well be where the worry or aversion is coming from; if you know deep down that you aren't 100% confident in your ability to easily grow capital without substantial risk. And if you don't have the skills to make capital work for you at a rate better than a measly 3% IN AN ENTIRE YEAR without putting it at risk to do so; I'd really take a step back and get on developing that this year. Granted, I can sympathize with a few reasons previously cited. If you're already far enough along the income curve that the marginal utility of your next dollar doesn't mean more than a psychological comfort of having less debt / less to take up your time and attention, I can totally understand that view. Or if you're already in some sort of entrepreneurial situation (rentals, whatever) and you don't want your DTA ratio to get too high that's prudent as well. But to oppose debt on principle is just not rational, especially for someone frequenting trading boards. Even for the most technically unskilled traders or investors, there is a myriad of ways both within the stock market and without to deploy capital at near 0% RoR which can easily outperform a 3% carrying cost, even in the intermediate term. One more important thought, if you're worried about a spouse having to manage things they have no interest in, you can just liquidate the capital and repay your mortgage in full in the event of death, illness, or whatever. In fact, for every financially-minded individual with a spouse who is not like-minded, we should write up a plan to restructure and simplify our estate in the event we're unable to manage it anymore. It is a thoughtful and kind thing to do. I've see a few friends go through a major family death recently where things weren't organized well at all beforehand and it can add a large additional strain on a family in a time that is already very difficult.
"Reverse mortgages", which are really just a fancy name for a home equity loan targeted at seniors, so there are presumably companies out there willing to lend to retired folks. I think these tend to be predatory just because so many industries catering to senior's finances are. However if you stop and think about it, it really doesn't make sense to sit on a paid off house eating cat food and being miserable the last 10 years of your life when you could enter into a hybrid loan/annuity that would ensure you got to live in your house until you died but sucked the value to 0 at that point.
You can under some circumstances, in some countries, yes. Without proof of income, it's going to depend far more on the duration of the perceived/likely term, and on the proportionality between the amount of the mortgage and the accepted valuation of the property. In general, since the 2008 crash and the period of defaults and repossessions that followed it, lenders have generally been a little less concerned about the value of the property and very much more concerned about borrowers' incomes and future prospects, though, so I think it's probably fair to say that it's considerably harder, overall, to get such mortgages now than it was historically.
As an addition to @Xela post, it also depends on the locality of your property. If you are in a region/city with a strong or rapidly rising housing market it is ridiculously easier to get a mortgage based purely on the value of a property even if the rest of the country was shit. I used to work for 1 of the largest mortgage finance lenders dealing in secondary mortgages and alternative financing, and they were giving out collateralized loans like hotcakes. You should see how much money they netted per month. Of course it's relative to the market they were serving.
Yes you can under certain conditions. There are small minority owned banks in SoCal who will write mortgages to someone (often immigrants) who are unable to prove regular income in the US. You do have to satisfy certain financial terms, like ~50% LTV, proof of other assets.... What I found is if you can afford to pay cash for your home purchase some bank will be more than willing to loan you the money no matter your monthly income. Like my banker friend used to tell me: You need to borrow when you don't need the money. If and when you need the money no one will loan you any.
I just wish that I was in either of the two categories That is indeed true in the NYC. Even 2008 was a short rest, the prices went down by 10%-15% in good areas. My main reason to buy was silly, I have a dog and at some point we got kicked out of a rental due to it going "no pets". So I bought. Coincidentally, it was in November 2008 - I managed to squeeze the corporate lawyer that owned the place before me.
Anyone on a trading/investing forum who can't beat the 3.5-4% rate on a mortgage should have their trader's card revoked and be banned for life. I took out several hundred thousand dollars 10 years ago and have netted hundreds of thousands. I can at any time pay off the debt, but why?? Rates are at a 100+ year low! The advice to pay down your mortgage and not borrow against house equity is appropriate for a Suze Orman or gardening forum, not here. Sophisticated investors borrow at low rates and turn it into income. I thought ETers are all sophisticated?
Cash is King Rates are still near historic lows Even if you pay it off you are not reducing your monthly nut the full amount as your taxes, insurance and hoa dues make up probably at least 40% of your mortgage payment. The way I see it i would rather have 200k in borrowed cash generating some kind of income than have a 200k asset paid off that at anytime could depreciate in value from a housing bust.