patrick.net

DooDahMan says

NuttBoxer says

Well now I'm certain it's you.

Someone needs to send Logan M a message showing him how every single non-perma-bear on this website is being abeled LOGAN now!

NuttBoxer says

DooDahMan gives some of the worst financial advise I've ever read. I'd speculate it's a Logan clone account,

It sounded reasonable till I looked up Logan Mohtashami. Looks like Logan has a lot of stuff going on, maybe too busy to make up and post from phoney stuff here.

Fascinating, I found a podcast site where Logan is the guest interviewee. The podcast is dated December 20, 2021 with title "Logan Mohtshami on his 2022 Forecast". You can listen or read the transcript.

Here's a paste from the transcript (December 20, 2021):

Logan Mohtashami: So there are a lot of factors that can actually send bond yields lower next year. And if that happens, we’re going to have mortgages — mortgage rates — under 3%. And we’re going into the spring season with inventory near all-time lows, and then mortgage rates this low again. So, I think that’s the main thing I want to talk about in terms of the 10-year yield. Until that level cracks, we don’t talk about a 4% mortgage, right? Even this year, with all the talk about growth, inflation, and the Fed, the 10-year yield is exactly where it should be. So, kind of think about mortgage rates in ranges, not targeting a nominal mortgage rate level.

Something I learned as a result of the Great Recession: banks don’t carry residential mortgages on their books…they sell as mortgage backed securities. So if the Fed crashes housing with raising rates, the banks are insulated. This makes me think the Fed is less nervous because the banks will be safe unlike last time.

porkchopexpress says

banks don’t carry residential mortgages on their books

Yes, as far as selling mortgages which get placed in mortgage backed securities (MBS). The Federal Reserve has bought about $7 trillion in MBS since 2009.

From Investopedia: " What's the Relationship Between MBS and a Bank?
Essentially, the mortgage-backed security turns the bank into an intermediary between the homebuyer and the investment industry. A bank can grant mortgages to its customers and then sell them at a discount for inclusion in an MBS. The bank records the sale as a plus on its balance sheet and loses nothing if the homebuyer defaults sometime down the road. "

.

porkchopexpress says

This makes me think the Fed is less nervous because the banks will be safe unlike last time.

What banks went under? As far as I can tell, only the ones they planned to sacrifice. I was a Washington Mutual customer, closed my account before they went under. I remember clearly their management saying JP Morgan had forced their acquisition, despite other banks including Morgan, being in worse financial shape.

rent isnt going down, just saying guys.

i still want to sell my house in CA, but kind of considering just renting it out to pay mortgage and lets face it... in 10 years it'll be worth a lot more.

I bought my house for $160k in 2010, my mortgage was supposed to go until 2040. How ever I paid it off in just 10 years. My Mortgage was $1500 a month, actually more with rising taxes, and an out of control insurance market, that raises rates with impunity because they can. But I'll stick with $1500 a month. But as you'll see later it should be more.
Now I count that $1500 a month I'm not paying in Mortgage as Rental income I'm paying myself. Over the remaining 20 years, I'll be paying myself $360,000. My house will be paying me more than double than I paid for it. But if you factor to rent my house in today's market, I should really be calculating $3500 to $4500 a month.

That's $840,000 my house is going to give me almost a million dollars even if the value of my house loses value, it still paid me $840,000 free and clear.
This isn't counting the increase in value that it's worth since buying it, I know is the opposite scenario than the original inquiry. Regardless no matter how much you paid for it and how much it's worth then or now, pay it off is the best thing you could do. Especially if it's losing value.

Tenpoundbass says

no matter how much you paid for it and how much it's worth then or now, pay it off is the best thing you could do.

+1,000.

FortWayneAsNancyPelosiHaircut says

rent isnt going down, just saying guys.

i still want to sell my house in CA, but kind of considering just renting it out to pay mortgage and lets face it... in 10 years it'll be worth a lot more.

The only risk I see in that is California sucks for landlords. You're only one CDC emergency away from losing rental income for 2 years.

HeadSet says

Tenpoundbass says

no matter how much you paid for it and how much it's worth then or now, pay it off is the best thing you could do.

+1,000.

And why is that? The lender gives you a 2.75% rate (my primary), inflation runs at 8.5%. Why would I use my cash to pay off the mortgage? my PITI is enormously lower than the rent would be for the house.

Paying off the mortgage means i allocate my cash to something that gives me little return or benefit. Instead I can invest the money and be ahead long term. For instance....these huge stock market correction is a fantastic buying opportunity.

Bitcoin says

Paying off the mortgage means i allocate my cash to something that gives me little return or benefit. Instead I can invest the money and be ahead long term. For instance....these huge stock market correction is a fantastic buying opportunity.

You're not factoring in Rent inflation you wouldn't be paying.
Inflation wont write you a check like not having to pay a huge monthly expense like Rent or Mortgage.
To realize the savings you calculate the remaining payments you would have made to the banks over the time left that you paid off.
That will add to a hell of a lot more than some 8% unrealized saving/earning potential.
With inflation you either buy or you don't, you can't consider buys you didn't make as income. Unless your doing so to avoid or offset your outflow.

When your house is paid off just think of all of the money you're not putting toward your mortgage, you'll have to play with on investment opportunities.
Doubling up your mortgage every month for the next 5 years, will pay off your house.
That might not be doable for people in a Jumbo mortgage, but those swinging a little piddly $225 or less Mortgage, pay the damn thing off.
Especially when you consider people with far worse off economic position than yourself is having to cough up $3500 or more in this economy to pay Rent.
$3500 would be about two mortgage payments for your average Burbdale median mortgage. $3500 is nuts, that rents are anywhere near that but they are.
So paying that $3500 now puts you in a better spot in 5 years.

The Democrats want to tax unrealized income. I wonder if people who paid off their houses would be taxed one day by the Evil Libs as rental income?

I see what you are saying: pay off your mortgage and you will have basically a pay raise because now you are not paying x amount for the mortgage going forward.
Plus, think about what you are actually paying for your house (interest over the lifetime of the loan). You might pay twice than the purchase price considering the interest you pay off to the bank.

I understand all that. What I am hung up on is this:
Lets say I have a few hundred K and have to decide, do I pay off the mortgage or do i invest it.
If you pay it off, you have opportunity costs of x amt of cash * expected return per year.
Since my locked in rate is below 3% and inflation is so high, dont I get ahead by investing the cash in the market conservatively (say index funds) because the return on investing in the SP500 historically speaking is much higher than 3%.

I would eventually like being in the position to have the capital to invest in business or assets. I'll never throw my money at this crooked market.
My buddy that just jumped in the market last month, is now singing the blues. He thought GAFAM or FAANG was a sure bet.

Tenpoundbass says

I would eventually like being in the position to have the capital to invest in business or assets. I'll never throw my money at this crooked market.

Okay, from that perspective I understand your strategy. Bascially, " i dont care what others tell me the stock market will make, i play it safe and pay off my house"

I guess, in my case, its like If I dont believe that the stock market will make me signficantly more than 2.75% annually than I am fucked long term because all of my retirement is in stocks and some is in crypto.