Invest or pay off mortgage

[JaneV2.0]

I recall reading a story several years ago about a woman who did this, allowing the purchaser to live in her basement until her death, for rent of $500 equivalent per month (this had happened quite a while ago when $500 was high for rent, especially a basement) if I recall correctly. He was a young man and she was quite old and the purchase price very low, so he thought he was getting an amazing deal. She ended up living well past 100 and the man, his children now grown adults after being raised in the basement, finally got the house at age 60 or so. Personally I don't think I'd take a chance on that deal...

That was Jeanne Calment--one of my role models. She lived to be 122, I think, and smoked until she got too blind to light her own cigarettes.

[Spartana]

In the United States, that kind of arrangement is offered by banks/mortgage lenders and is called a "reverse mortgage". They pay you (not sure if it's a lump sum or monthly payments) for as long as any mortgage holders are in the house. When the last one leaves, the property goes to the lender and they can do whatever they want with it.

Hi Steve - Welcome back after your long hiatus!

Besides the reverse mortgage which, as you stated, is basicly a loan the bank gives you for a certain percentage of your homes value (usually 30% but depends on your age) that doesn't have to be paid back until you die and house is sold, the US also has a thing called a "Life Tenancy" or "Life Estate". It's pretty much like Marion's example and is a deed that allows a person to stay in their home until they die but it is actually deeded and owned by someone else - usually a family member'

From Wikipedia:

In common law and statutory law, a life estate is the ownership of land for the duration of a person's life. In legal terms it is an estate in real property that ends at death when ownership of the property may revert to the original owner, or it may pass to another person. The owner of a life estate is called a "life tenant".

As for the OP, I'd pay off the mortgage before investing once I had an emergency fund in place. I've been mortgage free for more than a decade and it is absolutely the best IMHO!

[Marion]

In France, it's quite popular (despite Jeanne Calment's example because you are not free to leave your possessions to who want after you die. For instance, if you are single with no children when you die, your money will go to your parents and siblings, you cannot cut them off your will. The life estate or reverse mrtgage (called 'viager') allows you to circumvent some of that.

[Marion]

In any case, I think it's always wise to have no debt and to own the place you live in.

[SteveinMN]

Hi, Spartana!

I had never heard about that "life tenancy", even when I bought the house that I rent to my mom. Interesting concept. Wonder if that would do anything for us. I must ask a property lawyer (I must know a couple of them by now...)

[Spartana]

Hi, Spartana!

I had never heard about that "life tenancy", even when I bought the house that I rent to my mom. Interesting concept. Wonder if that would do anything for us. I must ask a property lawyer (I must know a couple of them by now...)

Lots and lots of info online - as well as lists of pros and cons. My Dad wanted to do this with my sister and I for his wife once he passed away. Deed us the house and property but deed her a Life Tenancy so she could live there until she dies - then it would fully revert to us. She passed away before him so it never happened but, while it seemed good on the face of it, there were some serious drawbacks too. Here's a site I think answers some questions better then Wikipedia does. Probably has your info about how it works in your state too since all states have different rules: http://theonlinelawyer.blogspot.com/...tate-deed.html

[mermaid]

Thanks for all the responses! That apartment in central Paris sounds sweet

pinkytoe, so true about Austin market being hot right now. We would like to stay in this house for a long time (although sometimes I dream of moving somewhere cooler, but we have so many friends and family here).

Friday, I had a realtor make a cold call to me: we have a buyer wanting a house in your area, what would it take? I told him that if we sold our house we would just have to find another because we love our neighborhood!

I have poked around MMM forums a bit, but I hadn't seen the argument about investing with $ not used to pay off mortgage there yet -- heard it years ago during a previous boom!

[bekkilyn]

Last December I quit my corporate job and went back to graduate school to get my MAT to become a math teacher. I also paid off my house in full early this year. Not having $850 going to the mortgage company each month has been a big stress relief now that I am currently making no income and living off savings while in school and also paying for school out of my own pocket. (No student loans for me!)

Technically, I could get a minimum wage job and still be able to pay my necessary expenses, but would never be able to do that while living under the burden of a mortgage or rent. While it's possible I could come out a bit ahead financially by investing more rather than having paid for my home, the additional worry and stress and being stuck in a job situation I hate because of living expenses would negate any of that benefit. I am definitely in the "pay off mortgage/get debt-free ASAP" camp!