I totally agree. My father-in-law bought his house in the early to mid-1960s with a mortgage somewhere around 3.5% . Inflation went crazy in the mid 70s, with mortgage rates getting close to 20% in the early 1980s. I started dating my wife in the late 1970s, and his mortgage lender was doing their best to convince him to tap the equity in his home with a cash-out refinance, or pay off his home early. I remember telling him he was making money with interest rates being in the teens, and him only having a 3.5% rate. Luckily he did nothing.
Interest rates went down for almost 40 years, and they have nowhere to go but up. I don't think investors will want to keep funding this country's excess at such low interest rates, so I think higher interest rates are in our future. I plan to downsize my current home and will finance my next home, taking the cash and investing it.
Quote:
Originally Posted by padgett
"Pay off all debt, your home if possible"
I disagree. a 2-3% fixed mortgage is a great hedge against inflation.
|