I'm no financial expert, but I expect that apart from one of those special TSP Home Buying Loans to, say, make the 20% down payment to avoid having to pay mortgage insurance (which only helps the bankers sleep well at night), borrowing from one's TSP to pay off one's mortgage early, doesn't really seem to me like a smart move, barring health or other extraordinary factors, because:
-- You would be taking money with a potential for growth and placing it into a less "fungible" asset. Some folks call a house a "dead asset" for a reason. (It's not like any "Zestimate" or other supposed growth in your home value is paying directly into your checking account, or towards your mortgage principal, is it? Apart from some "reverse mortgage" or similar, the only way you'd be able to "cash in" might be an equity loan, which is solidly in that column with all the red ink).
-- You would miss out on any interest deduction you might enjoy in your taxes.
That said, if you've still got a long row to hoe with a 30 year note dangling out there long beyond your hoped for retirement date, you might do well to refinance now, with rates still pretty damned low, to get into a 15 year mortgage (which typically offers lower rates) , and then do two things: arrange biweekly payments (gives you an extra payment per annum) and arrange to pay a little extra every 2 weeks towards principal. This is how we basically turned a 15 year mortgage into about a 12 year one.
We actually did do one of those TSP Home Buyer loans to make the nut on a good down payment (to dodge that previously-mentioned PMI), and it just so happened that the markets then tanked the following month, so I guess much of that $45K over ten years, with 3% paid back to MYSELF into my TSP, worked out to be "free money". That'll be paid off next Spring, after which I'll likely plow much of that bi-weekly payment into the TSP directly myself.
I hope this helps...Like I said, just paying off the house with your TSP funds seems a bit to me like slaughtering Ol' Bessie the milk cow to have a quick cheeseburger, that'll only give you a good poop in the end.
"Mike Tucker tuckerm83@yahoo.com [TSP_Strategy]" <TSP_Strategy@yahoogroups.com> wrote:
>Agreed - this is a great way to pay off your mortgage sooner, and is what my wife and I are doing now in anticipation of retirement in 10-12 years.
>
>Sent from my iPhone
>
>> On Apr 30, 2016, at 8:05 AM, Nelish nelish@gmail.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:
>>
>> Another option for you to consider paying more towards principle.
>>
>> For example if you mortgage is $1,200.00 a month divide that by 12 months in a year. This give you $100.00 add that to your mortgage. This gives you $1,300 a month payment and will reduce your loan amount.
>>
>> Here is a like which provides much more detail:
>>
>> http://www.mtgprofessor.com/calculators/Calculator2a.html
>> Thanks
>>
>>
>>> On Apr 29, 2016, at 7:24 PM, sticksandstones66@yahoo.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:
>>>
>>>
>>> Thanks for your advice. I'm starting to see that its nice to have your house paid off , but there are always other options.
>>>
>>
>>
Posted by: Bill Connelly <oldbuoy@comcast.net>
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