Mortgage is almost paid off: Will I miss any benefits of having a mortgage?

[Clay]

In December (next month) my mortgage will be paid off, or I should say it can be. My plan has been to pay it off by the end of the year and I'm setup to do that.

SO what benefits of having a mortgage am I over looking? I haven't been able to long file taxes in years so I can't deduct the interest, so that's not a concern.

I just want to make sure I'm not overlooking something (other than extra $$$$$$$$ )

thanks!
Clay

 

[hoosierdoc]

Escrowing property taxes. Pay it off and be happy

 

[1911ly]

A friend of mine always kept a small mortgage on his house for tax reasons. I don't know if that is still the option.

Maybe get a home equity loan? Maybe that qualifies? I would consult a tax accountant.

 

[hoosierdoc]

There is no tax benefit. You pay $100 in interest to save $30 in taxes

the mortgage exemption on property taxes doesn't net that up enough either

 

[HoughMade]

When I pay off my mortgage, I'm really going to miss...

...

...

...

Nope. Couldn't come up with anything.

Congrats!

 

[snorko]

As mentioned above, you will lose the mortgage exemption for property taxes. Hoosierdoc is probably correct in that it will not be worth it but you could call your County Treasurer and ask them what your RE taxes would be without that exemption. But yeah, likely not worth it.

 

[Thor]

My house has been paid off for years...you may be surprised how easy it is to start actually saving money. Congratulations on the financial freedom.

Now if we could just get rid of the property taxes...

 

[PGRChaplain]

No Advantage to paying Intrest. Congrats!

 

[Expat]

My house has been paid off for years...you may be surprised how easy it is to start actually saving money. Congratulations on the financial freedom.

Now if we could just get rid of the property taxes...

Has anyone said Taxation is Theft lately :-)
Yeah, property taxes makes me feel like I still don't own my property. I have to pay rent to the gubmint or I will be evicted.

 

[Cameramonkey]

I would only worry about a morgtage if you want cash for something. Double check this with a financial planner, but I believe that a lower interest rate that is partially paid back with the tax exemption would be the lowest cost to borrow money.

But if you dont need the cash, just pay it off and move on. There is no inherent value in having a mortgage. Except maybe helping your credit score?

 

[spec4]

If you have an escrow account with your lender, make sure it is either credited to your payoff or a check is sent to you. Have you been receiving your tax bill? If not, be sure to contact the county and have it sent directly to you.

As my income increase I would always pay extra on my mortgage to get it paid off earlier. For me, I wanted the security of not having a mortgage to worry about in case of loss of income. The tax deduction aspect only works if you have other deductions that, combined, will be more than the standard deduction. As I understand the proposed tax bill, standard deductions will double. If this happens, there will be a whole lot of people who will no longer take deductions. I'm all for it.

 

[Dirtebiker]

A friend of mine always kept a small mortgage on his house for tax reasons. I don't know if that is still the option.

Maybe get a home equity loan? Maybe that qualifies? I would consult a tax accountant.

your friend was using false logic.

 

[CountryBoy19]

Since the inception of the property tax cap (1% on primary residence) the mortgage (and most other) property tax deductions are basically null and void in most cases.

Here is how property taxes work.

They take the assessed value of your house, subtract the deductions (most people have homestead & mortgage, some have additional). They multiply that by your county tax rate (likely at least 1.5% but more like 2-3%). Then, if it's still over the 1% cap, they add a "supplementary deduction" to bring your property taxes down to no more than 1% of the assessed value.

A realist example of this would be $200,000 assessed value. -homestead deduction ($45k max) - mortgage deduction ($3,000) = $152k taxable * 2% tax = $3,004 (still over 1%)
So they add in a supplementary deduction of $52k to get the tax to 1%.

Lets play that out without the mortgage deduction.
$200k - $45 = $155k * 2% = $3010 ... oops, we need a supplementary deduction. But instead of the $52k supplementary you get a $55k supplementary (to offset the loss of the mortgage deduction). Voila!!!

And all this time you thought that "mortgage deduction" was somehow saving you money on your taxes. The only time it ever did save money was prior to constitutional tax-cap days and then, it wasn't much... IE, $3,000 deduction on the VALUE of your home equates to about $30-90 dollars actual tax savings.

This is how the state is raping you; they made the property tax caps sound like such a great thing but they didn't change a darn thing except force counties to push assessed values higher... You aren't actually saving anything on your taxes. And it has made deductions completely negligent. They no long matter. The only purpose for the homestead deduction is so they know its your primary residence (1% cap) vs other residential property (2% cap).

 

[Tactically Fat]

You'll miss the benefit of paying $700-1250 / month to a mortgage company?

Throw 90% of that $ into retirement/investment, baby!

We've got about 11 more years on our mortgage at current pace.

 

[Clay]

awesome! thanks everyone!!

My property taxes have never been in escrow, so I always get the bill and that will continue, and for the last few years I haven't been able to claim the interest so I'm not loosing anything there either! Looks like the house will be paid off in a couple weeks

 

[KittySlayer]

Escrowing property taxes. Pay it off and be happy

But don't forget it is now your responsibility to pay your property taxes twice per year. Half by May 10th and half by November 10th. Make sure the county treasurer is sending you your tax bill for payment, because even if you don't get the bill you still owe the money. Our treasurer sends one mailing and you have to hang onto the fall coupon for payment. If late there are penalties and interest and sometimes the loss of some exemptions. Mark your calendar!

You might check with your house insurance agent to make sure you don't have some funky mortgage coverage as well as making sure you are billed (and pay for) the premiums and the bank is no longer listed as an interested party on your house insurance.

Also evaluate your life insurance. Are you paying for too much life insurance? If you die there is no need to pay off the house. If you think about it when you retire your house should be paid off and since your income has ceased you should have plenty saved in retirement funds for you and your wife. So if you die in retirement what cash flow are you trying to replace with life insurance? Basically it is a more expensive lottery ticket with better odds. Maybe keep a small policy so the family can bury you.

Congrats!!! Mine is getting closer every month.

 

[Bapak2ja]

No Advantage to paying Intrest. Congrats!

Agreed. Congratulations.

 

[miguel]

If you miss paying the mortgage ever, you can write a monthly check to the Miguel Gun Acquisition Fund. I will give you a receipt and even charge interest to make it feel like a mortgage.

Seriously, enjoy being mortgage free, it is a great feeling!

 

[longbow]

Pay if off!

I'm seven months behind you on being mort free! It will be a good feeling!

 

[RugerRog]

Congratulations! I concur with the others. Pay it off, and enjoy the freedom.