Mortgage question? How much money would I have if I invested $500/month for 30 years?
$ 200,000 mortgage@30 years=$ 568,000 spent
interest only=$ 1000/month+$ 500 invested/month(balloon payent due at 30 years $ 200,000)
With the traditional amortized schedule I would own my house outright.
With the interest only loan I would have to pay $ 200,000 at the end of 30 years but my side investment would have grown @12% to $ 1,768,000 which I could pay off $ 200,000 and have a million and a half.
Why do people pay off their houses with a 15 year mortgage or bi-weekly payments? Wouldn’t I be in better shape with scenario 2 in case I get sick, disabled, or lose my job with liquid cash? Is the traditional way really better in case something unexpected happens?
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P.S. I would own my house outright with scenario 2 also!
$ 200,000mortgage @6%
$ 500 a month @12% Roth IRA tax free distribution
I am basing the mortgage at 6% which is current.
12% may be pretty high but that is the average return on mutual funds. A roth ira means tax deferred growth with a non taxable distribution because my invetsments come from after tax dollars. Even if I get only 8% average I would end up with over $ 700,000 TAX FREE! At 6% it would be $ 500.000 TAX FREE. What would I do with a house free and clear if I’m sick and can’t work. What if a natural disaster comes like the New Orleans flood. Worse yet what if I become financially disabled and can’t make mortgage payments for half a year even if I have over $ 150,000 in equity. Would somebody loan me the money if I’m not working. If the real estate market is down could I sell my house quickly without dropping the price by tens of thousands. How is your equity plan safer than mine. I’m open to good ideas if they make sense. Enlighten me please.