StaceyinLA Posted December 24, 2011 Share Posted December 24, 2011 (edited) And you had no debts other than a mortgage, but you wanted to do a remodel, would you pay off the mortgage first then remodel the next year, or would you just do the remodel with the cash and pay your mortgage as always? ETA that this would be a yearly occurrence. Edited December 24, 2011 by StaceyinLA Quote Link to comment Share on other sites More sharing options...
parias1126 Posted December 24, 2011 Share Posted December 24, 2011 I think I would pay off my mortgage first. As long as you plan on staying in the same home for years to come which I'm assuming you are since you are considering paying off the mortgage, a remodel can always happen later. I think I would feel more content and at ease going through with a complete remodel knowing my mortgage has been paid off. Quote Link to comment Share on other sites More sharing options...
lexi Posted December 24, 2011 Share Posted December 24, 2011 My hubby voted to pay off the mortgage. He's in finance so I threw this question his way. He's in charge of that dept at our house! Quote Link to comment Share on other sites More sharing options...
justasque Posted December 24, 2011 Share Posted December 24, 2011 I think I would pay off my mortgage first. As long as you plan on staying in the same home for years to come which I'm assuming you are since you are considering paying off the mortgage, a remodel can always happen later. I think I would feel more content and at ease going through with a complete remodel knowing my mortgage has been paid off. :iagree: Quote Link to comment Share on other sites More sharing options...
Myeightkiddies Posted December 24, 2011 Share Posted December 24, 2011 Paying off the mortgage saves you money. It will also give you more money in the long run to use toward projects. If anything unforeseen should happen, you won't have the mortgage expense. Quote Link to comment Share on other sites More sharing options...
Audrey Posted December 24, 2011 Share Posted December 24, 2011 Paying off the mortgage early will save you many, many thousands in interest. Quote Link to comment Share on other sites More sharing options...
dangermom Posted December 24, 2011 Share Posted December 24, 2011 The mortgage for sure! Quote Link to comment Share on other sites More sharing options...
eternalknot Posted December 24, 2011 Share Posted December 24, 2011 (edited) I'll dissent. How many years of bonuses would it take to fully remodel the home? I think a mortgage can be a smarter debt to have, depending on one's tax situation (bracket, write-offs), retirement situation (close?), and insurance situation. I don't know your specifics, but I don't think paying down a mortgage is always the wisest choice - whether or not it makes one debt-free. Life is also unpredictable, and a remodeled house has a better chance of selling (assuming you're not upside down on the loan) should something come up. Even one partially remodeled. Do you have a professional you use for taxes or accounting that you could discuss your specifics with? Edited December 24, 2011 by eternalknot Quote Link to comment Share on other sites More sharing options...
HiddenJewel Posted December 24, 2011 Share Posted December 24, 2011 It depends on what the purpose of the remodel is. If it is to make the house more livable for your current family dynamic, the remodel makes more sense. Quote Link to comment Share on other sites More sharing options...
Lisbeth Posted December 24, 2011 Share Posted December 24, 2011 Mortgage first. I would be tempted to do it the other way, but I would fight myself. Quote Link to comment Share on other sites More sharing options...
Unicorn. Posted December 24, 2011 Share Posted December 24, 2011 Depends. How much longer do I have to pay off the mortgage. A year, 10 years? What is the interest rate on my mortgage, is it high, or really low? If I only had a couple of years left on the mortgage, or had a really low interest rate, I would go w/ the remodel, otherwise I would pay off the mortgage. One thing I wouldn't do, is count on getting that bonus every year. I would look at each one as a one time thing. You just never know what can happen. So I wouldn't start a big remodel w/ the thought that next year's bonus will go toward paying part of it off. I would wait until I could pay for the whole thing at once, w/ no debt. Quote Link to comment Share on other sites More sharing options...
Impish Posted December 24, 2011 Share Posted December 24, 2011 Mortgage. In this economy, I wouldn't count on a bonus, or even employment to remain steady year after year. Call it 'financial CYA'. Quote Link to comment Share on other sites More sharing options...
Carpe Posted December 24, 2011 Share Posted December 24, 2011 I'm firmly in the mortgage crowd. Shouldn't you be in bed Imp? Quote Link to comment Share on other sites More sharing options...
jhschool Posted December 24, 2011 Share Posted December 24, 2011 Mortgage first! You are lucky to be able to afford such a luxury. If anything happens (God forbid) your mortgage will be paid off earlier and you won't lose your house. For instance, dh's life insurance would only be enough to pay 5 years of mortgage and expenses. After that there would still be 20 years of mortgage and expenses left. I would have to go back to work full time. Since I took off work (grad school) to raise a family, I haven't worked in 14 years. I wouldn't be as employable as dh, and I would not be able to get a job that paid the mortgage and all our expenses. DS would have to go to public school and I would have to have several jobs just to keep our heads above water. DS would have to drop all paid activities. What would I do with a remodeled house then? I would be in much better shape with the mortgage paid off early and only having to make enough money for expenses. I know this is a worse case scenario but you have to think of such things. Good Luck and I'm So Jealous! :) Quote Link to comment Share on other sites More sharing options...
G5052 Posted December 24, 2011 Share Posted December 24, 2011 I'd do a basic master bath remodel because we have multiple issues there that are getting worse. We need the shower and floor completely redone, and the whole thing repainted. The rest of the house is still livable. Anything leftover I'd put towards the mortgage. So probably both here! Quote Link to comment Share on other sites More sharing options...
OrganicAnn Posted December 24, 2011 Share Posted December 24, 2011 Is your retirement adequately funded? Are you saving what you want to for your kids college? Do you have 6 months or a year of salary saved as an emergency fund? How many years left on the mortgage? Towards the end of a mortgage, most payments go to principal and very little to interest. So you don't save that much interest by paying down. You save the most by prepaying at the beginning of the mortgage. So if you have everything funded adequately (not completely funded, but an adequate level). Will one year's bonus completely pay for the work or not? I think I would put half in the bank for the remodeling and put half toward the mortgage. Then any time you have some extra money, add it to the fund. When you've built up enough to do the remodel, you can do it without guilt. Quote Link to comment Share on other sites More sharing options...
butterflymommy Posted December 24, 2011 Share Posted December 24, 2011 And you had no debts other than a mortgage, but you wanted to do a remodel, would you pay off the mortgage first then remodel the next year, or would you just do the remodel with the cash and pay your mortgage as always? ETA that this would be a yearly occurrence. Do you mean, pay off the mortgage completely, or pay off a chunk of it? And if you have cash on hand to remodel with, how would this be different money than a bonus (it's all money)? I read somewhere that paying off a mortgage is not always the best thing to do since you can deduct the interest from your taxes. But this is the only factor I can think of off the top of my head that would make it a better decision to put the money elsewhere. You could also refinance to, say, a 15 year mortgage if you are at a 30 year one-- this too will save you thousands of dollars. Quote Link to comment Share on other sites More sharing options...
Teachin'Mine Posted December 24, 2011 Share Posted December 24, 2011 I see reasons for doing it either way. I think I might put half towards the mortgage and do some of the remodeling with the rest, or put the half for remodeling in savings and wai for next year's bonus to do the same and then remodel. How awesome either way. :) Quote Link to comment Share on other sites More sharing options...
DawnM Posted December 24, 2011 Share Posted December 24, 2011 I too am wondering what you mean by pay off the mortgage. Are you saying you could pay it off IN FULL with this bonus? I would do that in a heartbeat. We owe too much right now on our house to even think of such luxuries :D But we are out of other debt and have $$ in our savings. HOWEVER, we are doing remodels on our house. It is somewhat to make the house more presentable though as we had planned to sell it until the market tanked. We are going through with our original plan to fix it up with cash as we go along. This week DH is flooring the basement! :D:D He has done all the work on that basement himself and it has taken years (he has very little free time) so we are thrilled. Dawn Quote Link to comment Share on other sites More sharing options...
Julie Smith Posted December 24, 2011 Share Posted December 24, 2011 What do you want to remodel, and why? For example a bathroom remodel is a bit of a priory for us. This is because the previous owners where tall drunk men with very bad aim. You can smell it. If you are taking a bath it's best to use scented bath something and light a candle to mask the smell. We will be remodeling the bathroom soon, .... I hope. Quote Link to comment Share on other sites More sharing options...
QuirkyKapers Posted December 24, 2011 Share Posted December 24, 2011 If you could pay the mortgage off in full, I would do that. Quote Link to comment Share on other sites More sharing options...
FairyMom Posted December 24, 2011 Share Posted December 24, 2011 Mortgage. In this economy, I wouldn't count on a bonus, or even employment to remain steady year after year. Call it 'financial CYA'. Yeah, this. Quote Link to comment Share on other sites More sharing options...
CalicoKat Posted December 24, 2011 Share Posted December 24, 2011 And you had no debts other than a mortgage, but you wanted to do a remodel, would you pay off the mortgage first then remodel the next year, or would you just do the remodel with the cash and pay your mortgage as always? ETA that this would be a yearly occurrence. Nope! I'd invest it. Your house is probably worth a lot less than when you bought it. Any money you put into it could potentially be lost when you go to sell. Soooooo....... call your bank and refinance. Get a lower rate to reduce your mortgage. Then call your financial planner/investor and get your money into a fund that has a quarterly dividend. I'm so glad we didn't pay down our mortgage. Instead of losing it all, we're losing some. Our home devalued $100,000. We thought that home was our final home, truly. Then DH's job was outsourced and the bubble popped. Quote Link to comment Share on other sites More sharing options...
Quiver0f10 Posted December 24, 2011 Share Posted December 24, 2011 I think I would pay off my mortgage first. As long as you plan on staying in the same home for years to come which I'm assuming you are since you are considering paying off the mortgage, a remodel can always happen later. I think I would feel more content and at ease going through with a complete remodel knowing my mortgage has been paid off. :iagree: Quote Link to comment Share on other sites More sharing options...
JFSinIL Posted December 24, 2011 Share Posted December 24, 2011 Depends. Are you talking of remodeling an out-dated, less than functional kitchen or bath? That I'd do first, so I could ENJOY it for the maximum amount of time. Otherwise - mortgage. Quote Link to comment Share on other sites More sharing options...
PrincessMommy Posted December 24, 2011 Share Posted December 24, 2011 Same thing happened to us and we paid off the mortgage. It was wonderful to own the house outright. Then we saved money to do upgrades over the years. Quote Link to comment Share on other sites More sharing options...
ma23peas Posted December 24, 2011 Share Posted December 24, 2011 Financially, pay off mortgage. Utility, do the remodel. Whichis more important to you right now? The way I see it, our mortgage is at 3.9%...investing in anything right now will not earn that. We did a remodel to our house, it cost just over 40k, but raised the value of the home by 90k..we added a new kitchen, four rooms and a bathroom...if I had not contracted the work myself there would have been no gains...gc's wanted 100k to do the remodel. If you are up to doing it yourself you stand to earn a lot of equity...we used the money gained to finance a pool build which I also contracted...it will take us three more years to pay it off, but who wants a pool after your kids are grown? We use it for laps and physical fitness primarily...for us that was an investment. Being mortgage free does not appeal to us as much as the remodel and pool do, we are paying our mortgage off in 15 years as it is. Quote Link to comment Share on other sites More sharing options...
DawnM Posted December 24, 2011 Share Posted December 24, 2011 Are you saying you remodeled four rooms and a bathroom or are you saying you added an additional 4 rooms and a bathroom for $40K? Dawn Financially, pay off mortgage. Utility, do the remodel. Whichis more important to you right now? The way I see it, our mortgage is at 3.9%...investing in anything right now will not earn that. We did a remodel to our house, it cost just over 40k, but raised the value of the home by 90k..we added a new kitchen, four rooms and a bathroom...if I had not contracted the work myself there would have been no gains...gc's wanted 100k to do the remodel. If you are up to doing it yourself you stand to earn a lot of equity...we used the money gained to finance a pool build which I also contracted...it will take us three more years to pay it off, but who wants a pool after your kids are grown? We use it for laps and physical fitness primarily...for us that was an investment. Being mortgage free does not appeal to us as much as the remodel and pool do, we are paying our mortgage off in 15 years as it is. Quote Link to comment Share on other sites More sharing options...
MariannNOVA Posted December 24, 2011 Share Posted December 24, 2011 What about the fact that you lose the tax benefit if you pay off the nmortgage? Just saying THAT would be a huge consideration here. Quote Link to comment Share on other sites More sharing options...
Mommyof4ks Posted December 24, 2011 Share Posted December 24, 2011 I would pay off he mortgage, because the thought of never having to worry about having a place to live would win for me! Quote Link to comment Share on other sites More sharing options...
catz Posted December 24, 2011 Share Posted December 24, 2011 It depends on what the purpose of the remodel is. If it is to make the house more livable for your current family dynamic, the remodel makes more sense. :iagree: If you're in your house long term, and you are in a good position with your mortgage I think doing the remodel makes sense. The more years you can enjoy your remodel, the better IMHO. Quote Link to comment Share on other sites More sharing options...
lynn Posted December 24, 2011 Share Posted December 24, 2011 (edited) If you are able to pay off the mortgage in full, then yes I would choose this. Edited December 24, 2011 by lynn Quote Link to comment Share on other sites More sharing options...
Desert Rat Posted December 24, 2011 Share Posted December 24, 2011 I'm with eternalknot. Paying down a mortgage is a great thing. But, you are living in the home right now. Make the improvements that you don't need to go into debt for now so you can enjoy them now. We put off fixing our master shower for 8 years. It was only meant to be a couple, then other things kept coming up, then a majorly long layoff. We got a bit of money 6 months ago and that's what we did. Fixed that shower. It is like a spa. I still get excited every time I step into it. Worth every penny and I have no regrets. FWIW, we have 4 years left on our mortgage and we could have taken off 4 months of term with the money we spent on the shower. It felt so good to do the shower that we poured a patio, too. Quote Link to comment Share on other sites More sharing options...
SailorMom Posted December 24, 2011 Share Posted December 24, 2011 Do the remodel. We just had this happen, and i now have a fabulous kitchen. Interest from the mortgage is tax deductible, and you most likely have a much lower interest rate than you will ever get for any kind of remodeling loan. Quote Link to comment Share on other sites More sharing options...
butterflymommy Posted December 24, 2011 Share Posted December 24, 2011 What do you want to remodel, and why? For example a bathroom remodel is a bit of a priory for us. This is because the previous owners where tall drunk men with very bad aim. You can smell it. If you are taking a bath it's best to use scented bath something and light a candle to mask the smell. We will be remodeling the bathroom soon, .... I hope. The previous owners of our house thought it would be a great idea to carpet everything, including bathrooms. So I get to enjoy decades of lingering pee smell in those nasty bathroom carpets. Next thing to fix on our remodel list. Quote Link to comment Share on other sites More sharing options...
jennsmile Posted December 24, 2011 Share Posted December 24, 2011 And you had no debts other than a mortgage, but you wanted to do a remodel, would you pay off the mortgage first then remodel the next year, or would you just do the remodel with the cash and pay your mortgage as always? ETA that this would be a yearly occurrence. I would tithe 10% and if I had enough remaining to pay off the house I would. I don't know your numbers but I would love a paid for home and then every month you could take your mortgage payment and put it toward your remodel. Quote Link to comment Share on other sites More sharing options...
plansrme Posted December 24, 2011 Share Posted December 24, 2011 I love my new kitchen and my new landscaping every single day. Seriously, it has been 2 years on the kitchen, and since last summer on the landscaping, and literally every day since, both have brought me joy. Every time I pull into my driveway and see that beautiful new sod (dormant now--but still, love a tidy dormant zoysia lawn in winter), and when I walk downstairs and see that floor, those cabinets and my Island That Ate Chicago, I am happy that we made the decision that we did. We still are on track to pay off the mortgage before the oldest starts college, possibly earlier, and having a paid-for house will make me happy. But day in and day out, our remodeling results have been there for me in a way that a mortgage note marked "paid in full" just wouldn't be. Our house is easier to clean; traffic patterns are better. It makes such a difference in all of our day-to-day lives. Terri Quote Link to comment Share on other sites More sharing options...
Tigger Posted December 24, 2011 Share Posted December 24, 2011 Mortgage. In this economy, I wouldn't count on a bonus, or even employment to remain steady year after year. Call it 'financial CYA'. :iagree: While the bonus may indeed happen every year, it also may not - the opportunity to pay the mortgage off may disappear, so I'd do that first, then look at remodeling, since that's something that can be more easily put off if you don't have the debt of the mortgage. Quote Link to comment Share on other sites More sharing options...
mcconnellboys Posted December 24, 2011 Share Posted December 24, 2011 Because of the iffiness of our current economy, I would pay the mortgage off first.... Quote Link to comment Share on other sites More sharing options...
SweetMissMagnolia Posted December 24, 2011 Share Posted December 24, 2011 I think I would pay off my mortgage first. As long as you plan on staying in the same home for years to come which I'm assuming you are since you are considering paying off the mortgage, a remodel can always happen later. I think I would feel more content and at ease going through with a complete remodel knowing my mortgage has been paid off. :iagree: Quote Link to comment Share on other sites More sharing options...
tomandlorih Posted December 24, 2011 Share Posted December 24, 2011 IMHO, totally not worth paying $10,000 in interest to save $3,000 on the taxes. If you run those numbers.. you'll see what I mean. I agree with those who say if the remodel is very important(like pee smelling carpets, eeeww) to do that with part of the money. BUT... I really agree with those who say that the economy and job market is so uncertain that you should cover yourself by paying off the mortgage. This is a HUGE emotional stress off your mind. Speaking from personal experience. My husbands job has been up in the air for the last 2 years, starting out with a 99% chance that he would have been let go and miraculously he wasn't, and every month after that going.. will it be this month? (Recently it has stabalized and he's okay now as long as the business doesn't go under.) BUT I said that to say that, while I would have been sad that he had to go look for another job, because that is so hard in this economy, I WAS NOT worried about losing the house or putting food on the table because we havce no mortgage. HUGE, HUGE for my state of mind. =D My $ .02.. LOL Congratulations on such a wonderful Christmas present!! and I hope it continues for many years! Quote Link to comment Share on other sites More sharing options...
Allearia Posted December 24, 2011 Share Posted December 24, 2011 Well I would do the remodel if it will really help the livability of your house. I have been working very hard the past few months for money to turn our garage into a very nice family room space we will be using as a schoolroom but will also give more room for having company, classes, etc. Our house is very small, this remodel is a lot cheaper than moving. It is also a lot cheaper than private school ($20K+ for each kid in the Bay Area). We also need to remodel the bathroom, we have been puttng that off since we bought the house, and the kitchen is terrible (my mom said it had less storage and counter space than the tiny trailer they lived in when I was a kid). I am not going to wait 20 years until I pay of the mortgage, sorry. I would not use the money to be extravagent, just a normal remodel (we will tile the floor of the new room ourselves, paint, etc.) Like some others mentioned though it may depend on if you owe more on the house than it is worth. We don't have that situation, in that case I may say to work on the mortgage. Quote Link to comment Share on other sites More sharing options...
Shellers Posted December 24, 2011 Share Posted December 24, 2011 Pay off your mortgage. Quote Link to comment Share on other sites More sharing options...
happypamama Posted December 24, 2011 Share Posted December 24, 2011 It depends on the numbers. If I got enough to pay off my entire mortgage, or a very significant portion of it, such that I could then refinance to better mortgage terms, I'd use the money for that. Then I'd take the money I was saving on mortgage payments and save up for the remodeling. However, I'm in the early stages of my mortgage and owe quite a bit on it, so it's unlikely that a bonus would be enough to do that. If we got some unexpected money, like a few thousand or so, and we had everything else taken care of (ie right now one of our cars needs significant work), I'd go for remodeling over paying down a small amount of the mortgage. It would also depend on what type of remodeling. If it's the kind of thing where you get a lot of bang for the buck, like painting, or where it adds significant value to the house (which would potentially be good for me, because if DH's job situation suddenly tanked, and we needed to move, it would be better to be able to sell the house for more than we could now), I'd go for that over stuff like "I wish I had X but the Y I have is good enough." I would love to replace flooring in some rooms, but what I have is good enough for now; otoh, the house really needs paint in several rooms. Quote Link to comment Share on other sites More sharing options...
happyhomemaker25 Posted December 24, 2011 Share Posted December 24, 2011 Mortgage. In this economy, I wouldn't count on a bonus, or even employment to remain steady year after year. Call it 'financial CYA'. This was my first thought as well, but we lived unemployed for two years and now are in danger of losing our home. Having no mortgage would of made this so much easier. Quote Link to comment Share on other sites More sharing options...
Sandra in FL Posted December 24, 2011 Share Posted December 24, 2011 If the choice is between paying off the mortgage and remodeling (no retirement/college issues), I'd pay off the mortgage. You never know what's going to happen and one almost never recoups the money spent on remodeling (if God forbid, you should have to unexpectedly sell). Note: if the amount in question could buy a small rental for cash (say $70,000 here in Miami), I'd spend it on a 2-3 bedroom condo/townhouse. Prices are so cheap now, and if your mortgage is like mine (around 4-5%), I'd go for the investment property and put the income toward paying off the home mortgage. I'd never buy a house that didn't meet my needs or needed remodeling that badly (or that I couldn't live with) in the first place. Should something happen to dh, you could always live in the rental and sell your house. Quote Link to comment Share on other sites More sharing options...
Night Elf Posted December 24, 2011 Share Posted December 24, 2011 It depends. Are we talking about paying off the mortgage completely? Then yes, that is the smart thing to do. If we're talking about a drop in the bucket, like $2,000 on a $200,000 mortgage, then I would prefer using the bonus on something that we would be able to enjoy now. Quote Link to comment Share on other sites More sharing options...
KungFuPanda Posted December 24, 2011 Share Posted December 24, 2011 Don't forget to consider the cost of a remodel now vs. doing it when the economy recovers and people feel confident again. I didn't see this mentioned and it could be important when you crunch your numbers. Quote Link to comment Share on other sites More sharing options...
lea1 Posted December 24, 2011 Share Posted December 24, 2011 I would definitely pay off the mortgage. As another poster said, you can then save monthly the same amount as your mortgage payment and you will be able to remodel soon enough. There is such a peace of mind with not having a mortgage payment and owning your home out right. I agree with the others who said that, with this economy, it is a more prudent move to pay off the mortgage first. Quote Link to comment Share on other sites More sharing options...
Mergath Posted December 24, 2011 Share Posted December 24, 2011 If the house is in such a state of disrepair that it's unsafe, I'd do the remodel. If your mortgage is almost paid off, I'd put it all toward the mortgage. If you still have a huge amount left on the mortgage, I'd probably put half toward that and save the other half. With the economy in the state it's now in, none of us can really be sure of anything financially. Quote Link to comment Share on other sites More sharing options...
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