All Forum Posts by: Lucas S.

That is very funny. Do you have to provide a Birth Certificate? Apparently it is not a requirement for lots of things these days :-)

The main advantage of a 15 year loan are:

1) lower interest rates
2) forced savings for less-disciplined people

However if you are certain you are going to sell or pay off the home in a short amount of time you could consider an ARM as they will give you the lower interest rates with a 30 year term. Of course as everyone knows the rate will likely adjust up on the next adjustment, and if you don't sell you could get stuck with higher interest. From personal expirience I purchased my home on a 5/5 ARM which is fixed for 5 years then adjusts every 5, becuase I planed on paying off my house in 5-6 years (8 months left!!).

I think you need to decide if you are the kind of person who wants a paid off house for security or if they want to keep as much cash in investments (stock market / realestate/other) to try to maximize returns (historically you would make out better doing this). I personally think a paid off primary residence is a huge security for me (especially if thinking about extreamly early retirement), and then I would consider leverage on other properties. Carrying debt is overrated as well. You only get the full morgage interest write off if you are able to itimize already without it.

I would amend Ned by saying: You are trading higher returns on investment for more risk and more work.

Yes if everything goes well your cash flow will be higher with 5 leveraged properties vs 1 paid off property, but you will also have 5 times the work for that additional return. The more hands on your are, the better your return is going to be because you arn't paying someone else for the work.

I personally value my time a lot, and so I would rather take a slightly lower return (and risk) in order to save myself a lot of time.

Personally I would vote for being out of non-investment debt before trying to take on any investment debt. Gives you more cash flow and security.

One big factor I don't think you mentioned would be your current living situation? Can you invest that money and get a co-op that you can live in and reduce your monthly living expenses?