April 9, 2011

Of Mortgage Debt

I'm curious, how many of you have your place paid off? Show of hands. How many are working on it? How many of you never even consider it?

About 15 years ago, my mother was in the market for a house. She could well afford it, so Dan and I encouraged her to buy it outright. The realtor talked her out of it. The reasoning was that without a mortgage, she wouldn't get a write off on her income taxes.

Anyone who's ever looked at an amortization schedule, knows that with a 30 year mortgage, one ends up paying approximately triple the purchase price of the home. For a $250,000 home, one pays back not only the $250,000 borrowed, but also an additional $500,000 in interest. That's assuming it takes the full 30 years to pay it off. It can be considerably less if the principal is paid off early. Our question about my mother's situation was, would she get $500,000 worth of write offs on her taxes? The answer to that was no. Yet neither my mother nor the realtor got it, and my mother did indeed get a mortgage she didn't need.

I think about it on a more personal level. If it were you, what would you rather do with $500,000? Give it to the mortgage company for the privilege of a pennies on the dollar tax write off? Or use it for something else?

There's an odd logic out there about debt. Debt is considered normal. Debt is considered desirable. But who does it really benefit? When considering whether or not to buy something on credit, my first husband would only look at whether or not we could afford the increase in the monthly credit card payment. I tended to look at the true cash outlay for the item, including interest, and how long it would take to pay it off. When I realized that the monthly minimum payment was less than the interest owed, I also realized that even if we never purchased another item on credit, that minimum payment would guarantee a lifetime of increasingly deeper dept.

Our mortgage is the first debt Dan and I have had together. This is because were willing to make sacrifices and do without things many folks take for granted, not because we could afford to pay cash for everything. And no, we have nowhere near a $250,000 home. We don't have that kind of income, which is why we bought an old fixer-upper. Of course, this means that any extra monies have to be put into repairing and upgrading the house, rather than making significant payments on the mortgage principal. On the other hand, if we'd bought a home that didn't need repair, our mortgage and monthly payments would be a heck of a lot higher.

Our number one goal is to get our mortgage paid off. We do pay extra on the principal each month, but I wish very badly that we could just be done with it. I confess that debt is a source of insecurity for me. Debt gives other folks rights over our money and over our lives. Not only does our home not truly belong to us, neither, in a sense, does our income. In the end, they have the right to take it from us, without regard to our circumstances nor the situation it might leave us in.

From time to time we talk about a money making blitz to pay it off. Right now Dan's job gives him days off at a time. The trade-off is less pay, but more time to get things done around here. It's why we can make the progress we do. If he has 3 or 4 or 5 days before going out again, we can get a lot done. There's a trade-off with my time as well. I don't bring in a monetary income, but the garden, animals, and general running of the household fall to me. Little if any of that would get done if I worked full time.

This has been on our minds more and more lately, as the outlook for this nation's economy gets gloomier and gloomier. I know we all wish it were just a matter of electing the right people to get things back on track, but I believe that's a vain hope. The problem, I believe, is the modern consumer/profit mindset, which was always doomed to fail because human nature is never satisfied.

So, where exactly is this post going? Nowhere I reckon. I just think that mortgage debt is the biggest obstacle there is to making an honest go at family farming or homesteading. It takes the better part of most folks' income to keep the piggy bank fed. All we can do is to chip away at it, a little at a time.

48 comments:

  1. The fact that I have a mortgage bothers me immensely; we are nowhere near being able to pay off our mortgage, although we are working our way out of other debt, and living so we don't incur more.

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  2. Last year we took most of what we had in savings (where it was earning diddly-squat) and paid down our mortgage AND refinanced (free of charge) so that we will have our 30-year mortgage paid off in 15 years or so -- just 5.5 years from now. That way we will be able to afford Brian's college tuition and hopefully keep the house when we retire.

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  3. P.S. Our mortgage is our only debt....

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  4. I was actively paying off my meager mortgage debt until I realized that was our only debt. Paid cash for my car. So with two daughters 3 & 4 years away from community college I have decided to not pay down the principal.There's no college fund so it will be schoolerships & loans.
    When the last child is done then I'll restart.

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  5. When our construction loan converted to conventional, the mortgage banker told me that if we would pay a 13th payment every year, we could pay our 30-year mortgage off in 19 years. I've been adding that extra payment every month and I have been stunned to see how it shows up in the principle. It still seems like drops in a bucket.

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  6. Nancy, I think that's a wise way to approach it, i.e. get all other debts out of the way first. Those usually have the killer interest rates!

    Wow Michelle, free of charge refinancing, that's a fantastic deal. Good point about college tuition and retirement!

    Pelenaka,I agree, it's better to pay cash than incur another debt like that. As eager as I am to have our mortgage paid off, I figure otherwise we'd be paying rent, and that never goes away!

    Sharon, I've heard about that too. Isn't it amazing what a huge difference it makes? I once sat down and figured out how much extra we'd have to pay on the principal to pay the house off in 10 years, but it was a little more than we can manage. Especially with so many repairs and upgrades needing to be done.

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  7. We have become an "I want it all, I want it all now, and heck, I deserve it all" society. I've been trying to explain to my daughter that working people can't really have it all, not really. It's all an illusion through massive debt.

    As far as I can see, most people I know will never pay off their mortgage. They pay little off their mortgage then they go out and buy bigger and better, going into debt more deeply. They assume their mortgage will never be paid off so never worry about actually doing so. Unfortunately they don't see this as just renting from the bank!

    Hubby and I had our last mortgage payment the month we sold our house in Calgary (last summer). We had doubled our payments and put every extra penny that came our way on to the mortgage debt (we had also bought a very small and affordable house).We moved out to Nova Scotia and paid cash for our farm. The last debt (hubby's bottom-of-the- line car) was fully paid off in December. We are very grateful for having no other debt. We have a credit card but it carries no balance and is used for online purchases etc.

    The freedom given to us by deferring our gratification over the last 10 years has opened doors to us that would normally have remained closed.

    Having said that, I don't know that I would change anything if I were in your position. You seem to be doing things right. You have certainly been an inspiration to me.

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  8. No mortgage,no car payments. Although I have had both in the past. Of course it's better not to have them, but I can't say other than grumbling once a month it kept me up at night. Of course the economy was different, as it always is through the years, although no picnic in the early 90's the two fisted deregulation of banking checks and balances hadn't happened either. We weren't uncomfortable with our payments which were actually lower than renting, managed to save a tidy sum and built equity up a little faster when we could. I don't know if that was a bad mind set or a good one and I'm certainly not one to judge how other people want to live their financial lives or what their mindset is. If you are kind to children, people and animals, don't mind lending a hand to lift someone up, live thoughtfully on this earth and are generous when you can be, you're all right in my book As to the right people to get things back on track, that's a whole nuther nut. The current climate of politics and lack of compromise pretty much means no matter what people are in, nothing will get done with the my way or the highway attitude.

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  9. we have no mortgage or other debts. no millstone around our neck, though it meant buying only a small cottage at the time and putting everything into renovating. which is fine, we have a dry, warm and cozy home, that's all I need. when I see what's happening all around us I am glad we did! people built huge villas with I don't know how many rooms, running with the "celtic tiger" - and not seeing that the bubble had to burst at some stage. I am not an economic, but every idiot could see that it wouldn't last forever! now of course everybody blames the politicians and bankers over here, but they forget to admit that they shouldn't have taken on huge mortgages (did you know that mortgage literally means death pledge?)for houses they don't really need, a new car once a year etc... it's all about common sense and if people loose theirs - they get the "payment" at some stage .... now there are thousands of families who pay rent for their re-possessed homes and pay off debts for the rest of their lives:(( no, thanks!

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  10. I hate debt. Plain and Simple. That is not to say we didn't have any. Years ago when there was the first hint of things going south with the economy and we were both working full time, I drained the bank and savings and paid off everything. It hurt to have nothing in the bank. But now we are able to be debt free and I am able to stay on the farm to homestead. We had to make many sacrifices to live this way, but it works for us. I even try to pay the insurance in one sum so I can save the $5 monthly service fee for making payments. It all adds up to me.

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  11. We are in the 22nd year of a 30-year mortgage. We've paid extra principal when we could over the years, so we'll finish 2 years early. We had MASSIVE consumer debt (a result of being young marrieds with low-paying jobs and early children, we maxed out those easy-to-get credit cards) that we've finally gotten out from under and paid off. We haven't had a credit card in 5 years. Now our only debt is the mortgage, and the monthly payments are lower than renting a little 2-bedroom apartment in this area.

    We're not currently trying to pay it down, because we're looking to sell and move in the next 18 months, and are using our "extra" money to make the house as attractive to buyers as we can.

    We drive used cars (always have - never had a car note) and live fairly frugally.

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  12. The piece of your post that jumped out at me was the tax break aspect of the mortgage interest. And how people would rather pay the bank than their fair share of taxes.

    It's not that I love to pay taxes, but the bottom line is there are services that we all use which must somehow be paid for. I am happy to support paved roads, good libraries, good schools, well trained police and firefighters, clean drinking water, healthy sewage management. My only complaint is accountability that my taxes go to those things and not to fraud and waste. (yes I live in Kwame Kilpatrick country)

    That said...we are close to the end of our mortgage. However, I can't imagine maintaining this property and home as we age (now in our late 50's). But that's another topic altogether.

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  13. You are exactly right.... at least I should say that I agree with you completely. Wish that I had realized this much earlier in life.

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  14. normally our only debt is our mortgage. But as you know from my blog I did go out and buy a new car...for that I put up 2/3rds and got a loan for the rest...a 3 year loan was the shortest term I could find. We only did that because the bank gave us an incentive to do it (negotiated a lower price on the car with the dealer for us) and we intend to pay off the car loan early. We do use credit cards, but pay them off in full each month. And once we sell MIL's house we'll go back to paying extra on our mortgage.
    I really don't like the mentality that our country is in. I have too many friends who when they have a little extra go out and buy some silly trinket that they'll just want to upgrade in a few months (biggest TV, or cell phone). What really upsets me is that even though my mom doesn't think like this...her husband does.

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  15. We have no mortgage and I pay cash for my cars/trucks. I do have a loan I made that I am paying off...it drives me crazy. I hate making that payment every month. I pay extra on the principal every month and it should be paid off next year. I will never carry debt again...the emotional strain is overwhelming.

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  16. "All we can do is to chip away at it, a little at a time." That's how we are dealing with it. When we moved to our land, we took out a personal loan to buy it and pay for the well and septic. And we have a 15 yr mortgage on the house. But if you just chip away at it as you can, before you know it, you're finished! The important thing is once you pay off one debt, use the same monthly payment and add it to another debt payment. Then it just snowballs and disappears quickly. When we paid off my truck, we added extra money to my husband's car payment - now the loan balance is dropping like a rock. It will be nice to have them both paid off - then I might be able to "retire" :-)

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  17. Lets face it if you want a home you have to have a mortgage. We've been lucky enough to pay ours off but only a couple of years before we retired. We tried to add more to the principle each month and that added up toward the payoff but if you have a young family that's pretty hard to do.

    I've sure enjoyed the rest of the comments on this issue. You bring up such interesting subjects Leigh.

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  18. Amen! No, our home is not paid off, neither are the two rental properties we own. However, we have a plan and (Lord willing) in 3 years or so we're selling all three properties, taking the proceeds, and buying property/moving out of state. The mortgage will be far less, paid off sooner, and we'll be able to give our children chunks of land, putting them in a better position than we were ever in.

    Mortgage for tax write off. Ha!

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  19. Sharon, good insight. I think folks just don't have the self discipline to wait to save up for things anymore.

    I don't reckon we'll do anything differently either. The biggest concern is the potential to have a mortgage payment on past retirement. Would love to not have that expense then!

    Theresa we're fortunate in that our mortgage payments are lower than rent too. I just feel fortunate Dan has a job so that we can make our payments. I agree about kindness, helpfulness and generosity! If we'd all live like that, the world would be a better place, politics included, ;)

    Bettina, we've had a similar situation here. What a heartbreak when the bottom dropped and so many folks owed more on their homes than the place was then worth. I agree so much of it is common sense. Or ought to be anyway.

    Jane, actually, if one compares the interest spent on debt versus the interest earned from the back, paying off debt is a winner hands down! I pay for our insurance that way too. Really adds up the savings, doesn't it?

    Debbie, sounds like a good plan, much like our fixing our place up for us! It's a difficult burden to be under huge debt. Really ties up the funds, doesn't it?

    Val, getting out of paying taxes seems to be the name of the game these days. Unfortunately, the ones able to do it seem the most able to afford the tax! I admit that we would take the write-off too if we could. Our itemizations are less than the standard deduction, so our mortgage isn't even good for that!

    Sgtempleton, thank you! And me too. BTW, you need a blog so I can come return the visit and comment. :)

    Renee, the problem is that spending money is just too much fun!

    Lynda it's funny how some people are more comfortable with debt than others. I'm very much like you when it comes to debt, and for paying cash.

    BrokenRoadFarm, that's excellent advice to anyone wanting to get their debts paid off. And you're right, it works really well.

    Barb, thanks! I appreciate that. Yes, it's a very sad truth that mortgages are so necessary these days. I think part of the problem is the house as investment mindset, which drives the price up. Not sure what the solution is.

    Q, gosh, that sounds like a great plan. We didn't have a home sale for a down payment, but we did have the blessing of an unexpected inheritance. Otherwise I'd hate to think of our monthly payments!

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  20. I swear we must have some strange "ESP" thing going on between us, Leigh.

    I was just going to sit down and write a post about the past couple of days...The topic of which strangely mirrors your own post.

    As I write this comment, I'm looking at the "word verification" below.

    Suckpott. (too funny)

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  21. We are offically debt free! It wasn't always like this, we had debt, mainly inccured via some major health issues with our Dd but we did just as you're doing, prepaying our morgage, this of course was after we paid off and cancelled our credit card and paid off a vehicle loan.

    When we bought our homestead we had a set price in mind and stuck to it. We made a lowball offer on this place and to our surpise it was accepted. This ment with the $$ we made on sale of our home( at the time), we could do the needed improvements( new roof, furnace, plumbing, wiring, etc...)to this place and still put down $22K, only financing a balance of $70K for 15 yrs. We prepaid and finally we closed out an IRA we had and paid off the balance in Nov. 2009. Paying it off was such aburden lifted and now I don't think we'd ever take out a loan again. We pay cash for everything!

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  22. I thought I'd add this; kind of off topic but somewhat relates as well.
    Now that we've been debt free for over a year we always check our credit report( yearly) and this year what we found was maddening. Our credit score was something like 845 when we got the loan for our homestead and at that time that was our only debt, but we'd recently paid off another loan( car) and a credit card. Anyway now that we are debt free and pay cash, our credit rating is steadily dropping. It seems unless you use credit and pay on time and pay off debt( without to mauch at any given time) you loose! Our score is now 720 and we are debt free and pay cash for everything! Another example of how resposible people are penalized*sigh* Remember this country needs to keep people enslaved in debt to survive.

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  23. In April 2007 we sold our Houston McMansion and bought a house 1/2 the price with cash. People told us we were crazy for not investing the money and getting a mortgage. We all know what happened to the market after the housing collapse.

    In April 2010 we took my IRA, cashed it out and bought a small farm outside the city (in addition to our city house). We went from wanting to be debt free to questioning the wisdom of IRA / 401K savings. People again told us we were crazy for cashing out retirement savings and paying all the taxes and penalties. We'll see down the road, but I no longer feel comfortable having money in accounts with so many gov't rules. No where is 'safe', but you do the best you can to protect wealth you've worked so hard to save.

    p.s. we are debt free on all else as well

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  24. We've paid off our mortgage, in a sense. My father-in-law paid it off and now we're paying him back the same amount we used to pay the bank, but it's all principal.
    We have no other debt, never have had. Our graduate studies were on scholarships. Our undergrads were done in countries where they were as good as free. And credit card... ha! We're the ones the credit card cos call "dead beats". Too bad, suckers! Now how d'you write that smiley that sticks its tongue out?

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  25. This is an interesting subject. I know some people who have followed their dream and moved out to the countryside early in life. They all still have mortage debt on their properties. I also know people who own the same size properties at similar locations witouth having any mortage debt att all. They all have pretty much the same income level so what is the difference? At least here in Sweden (I'm swedish which explains my poor english) ,the key to owning your own house without a large debt is "climbing the property ladder". The people who stayed in the city for a longer time, and bought apartments in the central parts of town or small houses in the suburb, have been able to buy properties in the counryside (which are cheaper) for the money they earned by selling their house/appartment in town. The people who moved tho the countryside directly from rented appartments didnt have the same possibility. It's kind of a twistwd system but thats how it works here.

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  26. Eliza Faith, thanks!

    Tami, how funny. Both our identical topic and especially the word verification! Do you think somebody actually gets paid to come up with stuff like that?!? LOL

    I'm on my way over to your blog to read your post!

    Kelle, what a great story. Not settling for too big a price tag and having a decent down payment is such a help. I know not everyone would agree with using an IRA to pay off a mortgage, but I say brilliant! A secure home is a major retirement necessity!

    Your added comment about debt and credit rating is part of why the system is flawed and doomed to fail. It actually punishes people for being responsible with their money. It took us several years to build up "credit" in order to get loan approval for this place. Crazy!

    Anon, good for you for following common sense rather than what everybody else said. I absolutely agree with you about "investments" and "wealth management." It would be one thing if the rules were in place to protect the investor, but in reality, they allow everybody else to a cut via fees and penalties. And in increasing devious and complicated ways! If I had a choice, I'd take the little farm over the wealth. If there's no food to buy, who cares how much gold one has invested in.

    Katrien, from one "deadbeat" to another, I say that's an excellent way to go. And for you, it's wonderful that it can be principal only. It's too bad more parents don't help their children like this.

    Det Goda Livet / Tove, it's the same way here. In fact, since we had no previous home or apartment to sell, we almost had no down payment for buying a home. There are 100% financed mortgages, but that means so much longer to pay it off. In the end, I received an unexpected but small inheritance that enabled us to have a down payment.

    BTW, your English is very good indeed

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  27. We are not mortgage free either. However, we are on target to have it paid off in nine years, which compared to 30 year loan we acquired when we moved here in 2006, is a huge difference. We refinanced to a 15yr when the interest rates dropped last year and then did the math on how much extra principle we needed to add on a monthly basis to have the loan paid off in 10 years. Luckily we are still on target and the plan is any extra cash will also go towards getting rid of it.

    It was interesting reading everyone's responses to this post.

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  28. when I bought my current place, I put $75k down (from the sale of a previous pile of...). Effectively, I had 45% equity in my farm. I now have negative equity, as my real estate agent tells me that I'd be lucky to sell it for what I owed, not including all the costs of sale. It's very depressing. VERY depressing!

    Unfortunately, college for me included lots of loans, so I have that debt hanging over my head, as well. (I graduated when I was 40)

    At 57, I don't really see an end to it until (may be be a blessedly long time) my dad passes. I try to be responsible, but being a single person operation is very difficult.

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  29. I definitely understand what you're going through. Both you and Tami made mortgage-esque posts after my rant, so I'm wondering if I stirred something up? I hope it didn't cause problems! =P

    We're concerned about the long term viability of cash as it's purchasing power continues to decrease. I read somewhere yesterday that purchasing power has decreased 37% since 1995. In 15 years!?! Kinda scary, especially since we don't know what the government will do with all the debt mess.

    Since we have to carry PMI insurance for the first two years once we purchase the house, we're planning on stashing the 20% needed to pay it down to drop PMI over the next year but not actually pay it down. Keep the savings in hand until making the payment will actually matter. And it'll provide me with more confidence. Dropping that $50 / month will only increase our payoff quicker.

    Our plan is to have 6 months of expenses covered in savings, save up that 20%, and then drop everything else into preps and gardening and food storage. Realistically, we'd like to get the house paid off in the next 5 years but depending on when we decide we want to build out in Wildwood, we'll probably save the money instead so we'll have the cash to build instead of getting (another) mortgage.

    Not having any debt is a long term goal, but it's not the highest priority for us right now.

    Good luck working out a plan!

    Emma
    City Roots, Country Life

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  30. Toni, that seems to be most of us. Being able to refinance at lower interest rates and having a plan to get to payoff within 10 years is excellent. We were fortunate to buy when the rates had plummeted quite a bit. The only "bad" thing was that since we put 30% down, we didn't qualify for the lowest rates!

    Laura, very depressing indeed. I think a lot of folks have run into that, but unless you're planning to sell within the next so many years, who knows, values might go back up.

    I have to say, I can't tell you how much I admire you for making the go alone! Not sure if I'd be able to do it.

    Emma, no worries, you didn't start an internet tirade, LOL. I've actually been working on this post for while. You mention a key factor actually, "comfort level." It's been interesting reading all the comments, because it seems that different things represent security to different ones of us. Working out a plan with that in mind is the best way to make actual progress on being 100% debt free, I think.

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  31. Leigh, you should have put down whatever would have given you the best rate, making sure there was no early pay-off penalty, then put the extra cash you had on principal. I know, too late now, but maybe it will help someone else.

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  32. Michelle, good point and hopefully that will help someone reading this and needing to make a decision. If we had known upfront about the interest rates, we would have made a different choice, but unfortunately, we didn't know about it until after we had already done the paperwork. Still, our monthly payments are way less than what we could rent for, so we'll count the blessings.

    We did make sure there was no penalty for early payout. That's in our contract but our mortgage has already been sold once, so who knows what will happen down the road?????

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  33. P.S. I think we did save on some other charges and costs though, by putting that much down. I can't recall exactly what at the moment, but for someone considering variables on a mortgage, it would be another factor to consider.

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  34. We would love to have our house paid off. It really bothers Lee to have that debt. But it is our only debt so that is nice at least. We were just discussing a few days ago about adding more money to our house payment every month to help get it down faster. Sometimes it's frustrating because we have so much work that needs done on our place which requires money on top of the house payment.

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  35. Hi Leigh,

    I am a bit late to comment here but as I live in Canada things are a bit different.

    We paid off our home in 13 years, there is no tax deduction for mortgage interest and we had a very open mortgage. We could pay up to double each month if we wanted and there was no early payment penalties. As the interest rates dropped and our mortgage came up for renewal we kept the payment the same or adjusted it higher as we got pay raises.

    We cut 12 years off the mortgage without penalties.

    We do however use credit wisely. For large reno projects we use the 12 months interest free plan that the local building store credit card has. We have always paid it off within the required time so haven't had to pay interest.

    I don't understand the housing market in the US, but here we are not allowed to finance a home 100% anymore, you must have a down payment and you can't overpay for a house, nor can you buy a home that you can't reasonably afford.

    The main difference tho is that there is no tax benefits whatsoever with a mortgage or interest.

    Val

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  36. Val, I think a lot of us don't understand the US housing market. Personally, I think the whole system has been corrupted by the "big bucks" mentality. You'd think the powers that be would have learned a lesson, and reformed the entire system after the US mortgage crisis. I think it should have been a requirement to receive mortgage bailout money, but it wasn't. Tax payers made up for the lenders' loses, and idiotically, the same practices continue, with more hoops for potential borrowers to jump through. Gee, that sounds like a bit of a rant, doesn't it? Which is to say, it sounds like Canada made much wiser use of the lesson learned.

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  37. I'm late catching up on blog posts, but wanted to chime in here. J and I have a mortgage on our home. It is the only debt we have, and we selected a level of debt that *either* of us could manage on our employment income, rather than one we could only manage together.

    In the UK, a mortgage is the only realistic way for most people to buy a home - at least, their first one. If you rent, you never get *any* of your money back - and you still don't own your place. The only other option would be to rent somewhere very small and save and save and save.... Most people would probably never get there.

    Of course, you can argue that it is the prevalence of easy borrowing (and the number of dual-income families) that has pushed housing prices through the roof. It is a myth that families are better off with both parents working; it may have been true *before* it became the norm, but now stratospheric house prices have simply slurped up all the available 'extra money' so you need two incomes to afford a family sized home. But that's a rant for another day.

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  38. Just thought I would put my two cents in here. I feel that debt has done alot of harm to the country and the way Americans think of debt. Not to long ago debt was to be avoided and you were unable to take out an interest only loan with no money down on a house(still cant believe people fell for those - one being my aunt). This easy money(financing) sent prices thru the roof as it removed people from the actual cost of the property, the mindset was I can afford the monthly payment, never mind I am paying $500,000 for a house that cost $75,000 to build. I could go on all day about how this mentality drives up costs on property, health care, etc...

    I myself started working when I was 14 at McDonalds saving. I bought my first car when I was 15 paying cash. Work thru college paying in cash. I have since bought several new cars since then paying in cash, most recent being a 2011 and a 2009. I do not have a mortgage because I rent which is changing soon as I just bought 10 acres and paid cash. The cabin I build will be paid in cash as well. Anyone can do it, it is hard and you go without many things but once you reach the goal of no debt all of a sudden your bank account continues to grow and when you want that new car, that new tv, etc.. the money is there.

    I will say ANY one in any situation can accomplish debt free life. I know some people are probably saying well hes a single guy with no responsiblites which is not accurate. My g/f stays home full time with our 2 boys 5 and 1. My full time job I make just above the poverty level for a family of 4(thank you college!Which the sate of our education system is a whole different topic!). I do however work 2 other jobs which allows us to have the money to pay cash for things. I myself am sick of working 3 jobs which lead me to homesteading, Im sick of working for other people.

    Im sorry that I rambled on about this so much, this is just one topic that really hits home for me. My mother lives pay check to paycheck as do my g/f parents who recently lost their house to forclosure.

    Everyone out there that does have a mortgage and feels helpless to pay it off. I just want to say you can pay it off quicker than you think. Those little extra payments add up and save 10's of thousands in interest paid to the bank.

    ~end of rant

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  39. Alison, I didn't realize I hadn't responded to your comment. We have the same situation here in the US. Very few folks can buy without a mortgage, and I think you're right about house prices. The other thing that has done this, is perceiving houses as investments rather than homes. Folks are all too willing to sell to turn a quick profit, which drives prices up to where many of us cannot them.

    J Smith, I never could understand the mindset that debt is good and desirable. Good point that folks are totally removed from the true cost and value of things they don't pay for directly. You are one of the few folks I know who was able to pay cash for your land! That is so admirable. Our only debt is our mortgage, but we bought cheap (house badly needing repair, hence all the remodel posts :), and were able to put 30% down. We pay extra on the principal with a goal of getting this place paid off ASAP. Yes it's possible to pay it off early. The savings on the interest alone ought to be a motivator!

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  40. Reading this post is well timed for us. We are just starting to consider the purchase of our first house. We currently rent. We have about 20k to put down and are looking for something under 80k. Luckily we live is a rural part of the midwest where housing is cheap. We could also wait another couple years and have more like 50k. However, we'd also be losing 10k or so to rent. Would it be better to put that money into house equity? I guess we still have some thinking to do.

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  41. You sound like us. :) Except we didn't have an additional $30K coming within the next several years, so I can see why you're considering waiting.

    Our kids are grown and out of the home, so we felt some time pressure if you will, about getting started on our land. I don't know how many time my DH would say "we aren't getting any younger." We actually looked for 3 years though, before we found what we were looking for. One tidbit, because we put 30% down, we did not get the lowest interest rate, even though our credit score was sterling.

    Other ways to look at it, you could buy now and pay any extra down on the principal as you have it. You can chop years off the life of your mortgage that way. Money lost as rent is never regained. In the meantime, you can be getting established on your place, goals, house, gardens, etc.

    Sounds like you're taking time and care to think it all through. That's the main thing. :)

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  42. This might be a long post...apologies up front.
    In 2003 my husband and I bought a home with the 'One income mentality'. My husband is from Spain so he had a much better understanding and practice of saving and of "debt". I was wanting to purchase a larger home with the intention of paying the mortgage with two incomes but he was adamant that we only count on one. As it happened, I became ill and required surgery that inflicted even more injury than the initial complaint; I was now with chronic pancreatitis.
    If he had not insisted that we purchase and live our lives acclimated to only one income we would have lost our home during the 2008 banking cartel fiasco.

    Leigh, you don't need to apologize for the thoughts that you have ( a profound understanding I would call it ) of this American "system". Raging against such a corrupt system is what they don't want us to do. Just accept it as "normal".
    Money/Paper and Coin are a lot like pornography, once stripped of it, the penniless flounder in such raw poverty that it is difficult to watch without feeling disgust and contempt for those that exploit their dire circumstances.

    I disagree with this valueless "system" and leave you and your readers with this relevant declaration from MLK: https://www.youtube.com/watch?v=zXEIYpnlxbw
    Keep up the ranting, Leigh....I am not afraid of, nor offended by, the truth at all. :)

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  43. Jamie, you bring up a very excellent real life example, one that folks assume won't happen to themselves. Enslavement to mortgage debt is not an admirable position, no matter how big and fancy the house looks. Thankfully, more and more folks are realizing the idiocy of the current economic system. MLK might not have realized it at the time, but his eloquent pride in being maladjusted is just as relevant today as it was when he spoke it.

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  44. I realize that this blog post is now 4 yrs old, however this is exactly where I find myself. My husband and I have decided to sell our home and buy land outright... and we will have to rent a house for three years to save to build a house, but we will be mortgage free!! To me this is totally worth the sacrifice of renting and moving again, and building from scratch... to be mortgage free is a dream I am willing to work very hard to obtain!
    Love the blog, so glad I found it

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  45. Elaine, welcome! And thank you for taking the time to comment, even on an old post. I think you and your husband have made a very wise decision, one that you will never regret. It takes self-discipline to not indulge in the instant gratification mindset. If we had been younger when we started, we would have done the same. Our mortgage remains our only debt, one we still wish we didn't have!

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  46. We're about to take on a mortgage in order to buy our farmette, but we hope it's a means to an end. I'm a saver, and I will work hard to pay the principal down quickly. B/c our kids are getting older, I'm getting a part time job that will really help with paying it off early. I feel deeply the same insecurity that you feel, regarding a mortgage. We lost our last home to foreclosure, and it's a difficult spot for me. Our loan will be pretty small, for a house/farm, so we're hopeful it will be a quick payoff, and that making some money from the farm will help too.

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    1. You all sound like us when it comes to debt and mortgage. So sorry to hear about your last home. I hope that isn't a sticky point in getting a new mortgage.

      We're still working to get our place paid off, but it is going to slowly to suit us. We just do the best we can and chip away at it.

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