Hey, at least you get to keep the appreciation (if the home price rises)
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That just seems like renting with extra paperwork.
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The Japanese have been doing that for generations. Property ownership in Japan is so god awful expensive generations live in the same house. Elderly grand and great grand parents live with their families not warehoused in a facility waiting to die like here in America. Of course Japanese culture reveres their ancestors.
Not anymore.
Sometimes they keep their dead loved ones so they donāt have to give up their pensions.
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Thatās messed up.
You (again) with your broad knowledge and experience made me curious.
ā16.9% of all Japanese households were three-generation households in 1975 (MHLW, 2014) compared to 5.1% in 2019 (MHLW, 2020b).ā
You are correct
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I pretty much have an infinity mortgage. I have no mortgage, but I have property taxes that are forever.
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About two decades ago Tokyo was planning a celebration of all their centenarians ā¦ that is when they found out.
Taxes and homeowners insurance
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Homeowners insurance is insignificant. I own the house outright. I donāt need homeowners insurance. So I have the cheapest crap possible.
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I had no clue what an āInfinity Mortgageā was and the OP article is paywalled.
A lot of us think in terms of a traditional mortgage: Fixed Rate, Fixed Term.
Apprently there are two types of Variable Mortgages: ]
- Variable Rate, Fixed term and
- Variable Term, Fixed payment
Under #1 if interest rates go up, the payment goes up on some adjustment period.
Under #2, payments remain the same, however the period of time of the loan gets extended or reduced based on interest rate fluctuations at some schedule.
The āinfinityā symbol on the statements results when the current payment isnāt enough to make any deduction against principal and is āinterest onlyā. Since the principal isnāt being reduced, the software canāt calculate a payoff date as there isnāt one.
Now that I understand what the OP is talking about - let me just say āscrew that noiseā.
WW
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Theyāre giving away houses in the countryside.
At 73 years old, I have a 30-year mortgage. It is highly unlikely I will live long enough to see it paid off. The good news is that my interest rate is only 2.86%. In the scheme of things, that is chump change.
I could have paid cash for the house, but with 2.86% interest I calculated it would be a big mistake to tie up that kind of cash in my house. Iām getting much better than 2.86% return on my investment portfolio, and my house continues to increase in value with a minimum cash outlay.
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Thatās a fixed 2.86% rate? If so, you have an interesting situation.
Mortgages consist of two parts Principle and Interest (P&I) and Escrow (property taxes and homeowners insurance). P&I services the loan and Escrow are expenses you will have anyway.
Refinanced our mortgage in 2020 for remaining balance (no take out of any equity) for 30 years. Meaning it will be paid off in 2050. And we had a pretty high Value to Loan ration.
Our mortgage P&I is now just under $500 a month and will remain fixed throughout our upcoming retirement.
WW
Yes. I got in when rates were at their lowest.
My taxes and insurance are sunk costs. I would pay that, even if I owned the house outright. As I stated earlier, my interest payment is chump change, and it continues to decrease each month. My principal payment is simply a money transfer from my checking account to my house equity. It continues to increase every month.
So while my payment stays pretty much the same (escrow is reevaluated yearly), the amount going towards interest is decreasing, while the principal being transferred from my checking account to home equity is increasing.
An interesting twist. In Texas, we had already paid off our Mortgage early, and we were mortgage free for several years. At retirement we moved back to Colorado to be with my wifeās family. We could have paid cash for our new house, but after weighing all the options, the 2.86% interest was simply too good to pass up.
Oh, I get you.
My wife and I have a slight disagreement with dealing with the house going into retirement. We have enough non-retirement funds to actually just pay off the mortgage P&I leaving direct payment of what was the escrow.
My Position: Pay it off and be done with it. One less hassle and saves about $6,000 per year.
Her Positon:
- It will help maintain our excellent credit score having some debt for credit purposes meaning future borrowing (if needed) would be at a lower rate.
- We could invest the money for a hirer rate of return than what we are paying in interest.
My counter isā¦
The credit rating thing might be valid, I donāt know. But in terms of interest v. investment. If you have a nominal rate of return of 5% over time and you are paying 2.7% on the loan, you really only see a return of 2.3% and that is before factoring inflation. With inflation you actually loose money.
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But at the end of the day we will research it. We will present our arguments logically and supported by data.
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Then weāll do it her way.
WW
