Date: Tue, 2 Jan 2007 04:00:57 -0600
From: t@toddh.net (Todd H.)
Newsgroups: misc.invest.financial-plan
Subject:  Re: Should I put my money in mortgage?
Message-ID:  <84ejqe83fr.fsf@ripco.com>
References:  <1167283495.457357.94660@h40g2000cwb.googlegroups.com> <84y7onynhi.fsf@ripco.com> <1167670601.962563.195250@a3g2000cwd.googlegroups.com> <1167676552.746367.197460@a3g2000cwd.googlegroups.com> 
	iQBVAwUARZotWfl/I4+O31e5AQGSQgH8DPh8eYP43f9bQsXmCZKVJyF/upJAroWO
	q5ubZXxSUL5LheSq5G9C8ntPrpMKvn1nnIYYQPxcCT1iTDKfgFQfnQ==
	=XvX9

"Elizabeth Richardson"  writes:

>  wrote in message
> news:1167676552.746367.197460@a3g2000cwd.googlegroups.com...
> > Person 1 borrows 250K at 5.75% for a 15 year mortgage. His payments are
> > 2076.03 a month.
> [snip]
> 
> > Person 2 also borrows 250K at the same rate but for a 30 year mortgage.
> > His payments are 1458.93 a month.
> 
> 
> And so how old are Persons 1 & 2? How far from retirement? How much of the
> 401k you recommend building will have to be used to pay the mortgage? To my
> way of thinking, paying a mortgage with retirement funds simply doesn't make
> good financial sense.

Actually it does.  If I get to the finish line of retirement with,m
say, 50k post-tax money in my 401k account than I would had I
contributed to the 401k less and made principal only payments on my
mortgage, and all I have to do is cut a check from the 401k account to
stomp out that remaining, say 15k of mortgage out there, heck, I've
got 35k more money to play with in retirement.

> I think the object is to reach retirement with no mortgage.

But...there are a couple ways to do that.  If your 401k can yield
better than your fixed rate mortgage, you're better off funnelling
that added monthly contribution in that 401k direction rather than
toward principal only payments of the mortgage.  That is, unless
you're very near retirement, and you think the market is going to tank
over the next few years, and not make more than the fixed rate
mortgage.

--
Todd H.  
http://www.toddh.net/