Good time to pay off mortgage... or not?

[hbardiamond]

I have been trying for the last 3 hours to find an answer to the following question:

What will happen to regular consumer loan balances, such as a person's mortgage, which has a fixed 30 year interest rate, if the dollar crashes or otherwise at least hyperinflates?

Such as in Zimbabwe, people were carting around grocery sacks of cash to buy a loaf of bread. Heck, sell a couple loaves of bread any you could pay off a $100,000 mortgage. Would banks allow this or would the government intervene and increase the amount of mortgages owed?

Would the gov't change our currency to the new world currency and hence change our loan balance accordingly by setting how much we would then owe in the new currency? Anyone have any ideas?

Would it be good to keep mortgages that have a fixed rate high and wait for the dollar to crash or pay them down? I know that it isn't a good idea to have a vault full of US cash right now, so then would it be better to have a high debt that could easily be cashed out when the dollar crashes? Seems like that is what the US plans to do with our national debt...

 

[Mike Mitrosky]

I have been trying for the last 3 hours to find an answer to the following question:

What will happen to regular consumer loan balances, such as a person's mortgage, which has a fixed 30 year interest rate, if the dollar crashes or otherwise at least hyperinflates?

Such as in Zimbabwe, people were carting around grocery sacks of cash to buy a loaf of bread. Heck, sell a couple loaves of bread any you could pay off a $100,000 mortgage. Would banks allow this or would the government intervene and increase the amount of mortgages owed?

Would the gov't change our currency to the new world currency and hence change our loan balance accordingly by setting how much we would then owe in the new currency? Anyone have any ideas?

Would it be good to keep mortgages that have a fixed rate high and wait for the dollar to crash or pay them down? I know that it isn't a good idea to have a vault full of US cash right now, so then would it be better to have a high debt that could easily be cashed out when the dollar crashes? Seems like that is what the US plans to do with our national debt...

I don't think you can find an answer 100% either way because nobody can predict the future... We could have inflation, deflation, etc.. All depends on what the federal reserve wants to do. I know its not much help.. just my 2 cents

 

[hbardiamond]

I have been trying for the last 3 hours to find an answer to the following question:

What will happen to regular consumer loan balances, such as a person's mortgage, which has a fixed 30 year interest rate, if the dollar crashes or otherwise at least hyperinflates?

Such as in Zimbabwe, people were carting around grocery sacks of cash to buy a loaf of bread. Heck, sell a couple loaves of bread any you could pay off a $100,000 mortgage. Would banks allow this or would the government intervene and increase the amount of mortgages owed?

Would the gov't change our currency to the new world currency and hence change our loan balance accordingly by setting how much we would then owe in the new currency? Anyone have any ideas?

Would it be good to keep mortgages that have a fixed rate high and wait for the dollar to crash or pay them down? I know that it isn't a good idea to have a vault full of US cash right now, so then would it be better to have a high debt that could easily be cashed out when the dollar crashes? Seems like that is what the US plans to do with our national debt...

I don't think you can find an answer 100% either way because nobody can predict the future... We could have inflation, deflation, etc.. All depends on what the federal reserve wants to do. I know its not much help.. just my 2 cents

Thank you for the reply. I guess I'm predicting the US will have to print its way out of debt especially if oil starts trading in a new world currency as is being seriously discussed. Nations will start dumping dollars and this will cause further hyperinflation with all those dollars in the marketplace. So assuming hyperinflation (as opposed to the deflation that should have started with the housing bubble burst and bank failures before tarp and the bailouts) would it be a good idea to sell assets to pay off set rate debts or hold assets, wait for the dollar to crash and then pay off mortgages with all the dollars that will be flying around?

If anyone thinks deflation is still an option let me know why you think that. Because in that case it would definitely be better to sell of assets now and pay off debt.

 

[AllieBaba]

I think it's worthwhile to pay it off...if you aren't paying off a mortgage that is more than the current value of the house.

 

[AllieBaba]

If you're paying more for a house than it's worth, and it's eating into your budget, sell the fucker and get into something more reasonable.

I'm like the last person in the world with sage economic advice to give...but I've been tuning into radio and tv economic shows lately.

 

[eagleseven]

Hyperinflation eliminates both savings and debt, so that holding debt is advantageous during periods of hyperinflation.

If you seriously think there will be hyperinflation, and are willing to make that gamble, don't make more than minimum payments on that mortgage. But do understand, it is a gamble.

 

[hbardiamond]

Thank for the two opposing replies. Those are the two delimmas I'm dealing with. With all the debt Obama and the congress are getting this country into right now in unsustainable amounts does anyone think there is any other way for the US to reduce its debt especially if the dollar is dumped by the oil trade besides hyperinflation? If not maybe that is the plan, coast along until after the 2010 elections and maybe even the 2012 election but then when this false recovery proves itself false and the bills for the new healthcare system start to come due, print the heck out of the dollar and hyperinflate ourselves out of debt... Am I way out there?

 

[The Rabbi]

If you're paying more for a house than it's worth, and it's eating into your budget, sell the fucker and get into something more reasonable.

I'm like the last person in the world with sage economic advice to give...but I've been tuning into radio and tv economic shows lately.

How do you sell the house if you're upside down in it? You'd have to bring cash to the table. And while that isn't unknown, it is not the norm.
Who cares what the house is worth today? You aren't speculating in the value of your home. You're living there. If you plan to be there for another 3-5 years at least then it makes sense to stay.

 

[JakeStarkey]

Although the economy deflated about 2% in the last year excluding the medical sector's 6% inflation, I am betting on inflation beginning by summer next year. Don't worry about the feds resetting the value of loans to protect banks and mortgage companies ~ any government that tries that will be voted out of office the next election (lock, stock, and politician) and the politicians know that. I do think, though, with the amount of dollars in the system and the very real possibility of oil being tied to the euro rather than the dollar, we will have several years of double-digit inflation. The trick is to protect the dollars you do have. And do wait to pay off the mortgage in ever-inflating dollars. What a deal!

 

[AllieBaba]

Well, as I said, I'm a personal economic embryo.

 

[Mike Mitrosky]

I have been trying for the last 3 hours to find an answer to the following question:

What will happen to regular consumer loan balances, such as a person's mortgage, which has a fixed 30 year interest rate, if the dollar crashes or otherwise at least hyperinflates?

Such as in Zimbabwe, people were carting around grocery sacks of cash to buy a loaf of bread. Heck, sell a couple loaves of bread any you could pay off a $100,000 mortgage. Would banks allow this or would the government intervene and increase the amount of mortgages owed?

Would the gov't change our currency to the new world currency and hence change our loan balance accordingly by setting how much we would then owe in the new currency? Anyone have any ideas?

Would it be good to keep mortgages that have a fixed rate high and wait for the dollar to crash or pay them down? I know that it isn't a good idea to have a vault full of US cash right now, so then would it be better to have a high debt that could easily be cashed out when the dollar crashes? Seems like that is what the US plans to do with our national debt...

I don't think you can find an answer 100% either way because nobody can predict the future... We could have inflation, deflation, etc.. All depends on what the federal reserve wants to do. I know its not much help.. just my 2 cents

Thank you for the reply. I guess I'm predicting the US will have to print its way out of debt especially if oil starts trading in a new world currency as is being seriously discussed. Nations will start dumping dollars and this will cause further hyperinflation with all those dollars in the marketplace. So assuming hyperinflation (as opposed to the deflation that should have started with the housing bubble burst and bank failures before tarp and the bailouts) would it be a good idea to sell assets to pay off set rate debts or hold assets, wait for the dollar to crash and then pay off mortgages with all the dollars that will be flying around?

If anyone thinks deflation is still an option let me know why you think that. Because in that case it would definitely be better to sell of assets now and pay off debt.

Bob Prechter is adamant that we will have severe deflation because most money today is credit and not actual notes. I mean over time I can understand the hyperinflation model but I remember Bob Prechter from back in 1987 when he very correctly predicted the stock market crash.

Theres somewhere on the order of $1 Quadrillion or so worth of derivatives sloshing around the world and as this stuff unravels the quantity of money is going to decrease.

Heres a link on him but google him and check him out to get a feel for what Im talking about FSU Editorial: "Prechter: Why The Fed Will Not Stop Deflation" by Michael Nystrom 08/31/2007

Theres a lot of variable and a lot of "what/if" scenarios...

 

[eagleseven]

Thank for the two opposing replies. Those are the two delimmas I'm dealing with. With all the debt Obama and the congress are getting this country into right now in unsustainable amounts does anyone think there is any other way for the US to reduce its debt especially if the dollar is dumped by the oil trade besides hyperinflation? If not maybe that is the plan, coast along until after the 2010 elections and maybe even the 2012 election but then when this false recovery proves itself false and the bills for the new healthcare system start to come due, print the heck out of the dollar and hyperinflate ourselves out of debt... Am I way out there?

The 1 billion people in China seem to agree with you, along with all the American and European investors rapidly diversifying into gold and natural resources.

My Chinese friends tell me that, in 10 years, Americans will be moving to China for jobs.

*shudders*

 

[hbardiamond]

Although the economy deflated about 2% in the last year excluding the medical sector's 6% inflation, I am betting on inflation beginning by summer next year. Don't worry about the feds resetting the value of loans to protect banks and mortgage companies ~ any government that tries that will be voted out of office the next election (lock, stock, and politician) and the politicians know that. I do think, though, with the amount of dollars in the system and the very real possibility of oil being tied to the euro rather than the dollar, we will have several years of double-digit inflation. The trick is to protect the dollars you do have. And do wait to pay off the mortgage in ever-inflating dollars. What a deal!

Thank you. That is what I was thinking. You don't think there is any possibility of the US converting to a new world currency if our dollar crashes under hyperinflation and other countries dumping the dollar?

 

[hbardiamond]

I don't think you can find an answer 100% either way because nobody can predict the future... We could have inflation, deflation, etc.. All depends on what the federal reserve wants to do. I know its not much help.. just my 2 cents

Thank you for the reply. I guess I'm predicting the US will have to print its way out of debt especially if oil starts trading in a new world currency as is being seriously discussed. Nations will start dumping dollars and this will cause further hyperinflation with all those dollars in the marketplace. So assuming hyperinflation (as opposed to the deflation that should have started with the housing bubble burst and bank failures before tarp and the bailouts) would it be a good idea to sell assets to pay off set rate debts or hold assets, wait for the dollar to crash and then pay off mortgages with all the dollars that will be flying around?

If anyone thinks deflation is still an option let me know why you think that. Because in that case it would definitely be better to sell of assets now and pay off debt.

Bob Prechter is adamant that we will have severe deflation because most money today is credit and not actual notes. I mean over time I can understand the hyperinflation model but I remember Bob Prechter from back in 1987 when he very correctly predicted the stock market crash.

Theres somewhere on the order of $1 Quadrillion or so worth of derivatives sloshing around the world and as this stuff unravels the quantity of money is going to decrease.

Heres a link on him but google him and check him out to get a feel for what Im talking about Editorial: "Prechter: Why The Fed Will Not Stop Deflation" by Michael Nystrom 08/31/2007

Theres a lot of variable and a lot of "what/if" scenarios...

Thank you, I will check out the link. I'm not familiar with derivatives or how they work. I will study up. At first thought I would think if the Fed did not want to stop deflation they would have let the banks fail and would have increased interest by now and stopped printing money??? I will definitely read your link. Thanks again! (post made me take your link out...)

 

[Thinman]

If your mortgage is 100k in todays dollars and then we get hyperinflation, you still owe 100k and your payment stays the same and , hopefully, your paycheck stays the same. But a loaf of bread is a hundred bucks. The more hard assets you own, the better off you are, real estate, precious metals, in an inflationary economy.

 

[Fatality]

i will never pay off the mortgage, i will make payments till i sell.

other than that i cant believe that people are even asking the kinds of questions in the op, its so fucked up that we are even at the point of asking what will happen when our dollar is shit.

 

[strollingbones]

pay it off....i have owned my own home for years....it is a nice feeling...except for property taxes they suck.

 

[Mr Natural]

It's never advanatageous to have debt of any kind.

If you can pay it off, pay it off.

Remember, debt is a four-letter word.

 

[Intense]

I have been trying for the last 3 hours to find an answer to the following question:

What will happen to regular consumer loan balances, such as a person's mortgage, which has a fixed 30 year interest rate, if the dollar crashes or otherwise at least hyperinflates?

Such as in Zimbabwe, people were carting around grocery sacks of cash to buy a loaf of bread. Heck, sell a couple loaves of bread any you could pay off a $100,000 mortgage. Would banks allow this or would the government intervene and increase the amount of mortgages owed?

Would the gov't change our currency to the new world currency and hence change our loan balance accordingly by setting how much we would then owe in the new currency? Anyone have any ideas?

Would it be good to keep mortgages that have a fixed rate high and wait for the dollar to crash or pay them down? I know that it isn't a good idea to have a vault full of US cash right now, so then would it be better to have a high debt that could easily be cashed out when the dollar crashes? Seems like that is what the US plans to do with our national debt...

What would stop them from a 98-99% Tax Rate? Not You or I.

 

[Intense]

pay it off....i have owned my own home for years....it is a nice feeling...except for property taxes they suck.

The Property Taxes will Probably inflate more than the Dollar.