<p>What are these high dividend stocks paying 8-12%???</p>
<p>Mostly energy stocks, but some stable DOW stock dividend yields have been around 6%:
[Highest</a> Dividend Yields of the Dow - CNBC By The Numbers - CNBC.com](<a href=“http://www.cnbc.com/id/30712137]Highest”>Highest Dividend Yields of the Dow)</p>
<p>AT&T
Merck
Verizon</p>
<p>The yields have fallen since stock prices have risen.</p>
<p>Hunt (reply #6) wrote:
</p>
<p>That’s not all that’s good. You have the peace of mind that you own the house outright, and nobody can take that away from you.</p>
<p>There’s no quantifiable calculation for peace of mind, and it’s the most underrated factor in the grand mish-mash of tax calculations.</p>
<p>
</p>
<p>Exactly. And since the OP’s wife sounds very risk-averse (not investing in stocks), this peace of mind will probably be more beneficial to her than others.</p>
<p>I’m all for paying off your mortgage under certain circumstances, but to do it to free up some cash to pay for your daughter’s education is not one of the top reasons I’d do it.</p>
<p>
I agree with an earlier poster to payoff the mortgage and get a HELOC. Try to setup a HELOC with a local credit union, you might not have to take initial withdraw with them.</p>
<p>Interesting posts. </p>
<p>We have 15 years left and 85,000 left on the mortgage. Living expenses up to two years. Retirement and savings ?? (afraid to look!)</p>
<p>I agree with the thought process kids can get loans, we can’t get retirement. We didn’t buy over our heads so even a reverse mortgage in our golden days would only yield so much.</p>
<p>So my question becomes (because our EFC is ALOT!) what is an acceptable loan amount for our children to take out (even if it is us paying the payments)?</p>
<p>SimpleRules:
</p>
<p>I went thru all cases with MIT FA calculator and this is what it comes to:
- Current EFC with cash in bank and mortgage: $68000
- Current EFC with mortgaged paid off: $54000
- EFC in case I loose the job with cash in bank and mortgage: $24000
- EFC in case I loose the job with mortgaged paid off: $7200</p>
<p>So paying off the mortgage is really beneficial for FA at MIT.</p>
<p>Not it’s not ucbchem. The realized interest deduction is net of the interest income.</p>
<p>Another thought about paying off the house…</p>
<p>Eliminating the mortgage reduces the amount of cushion necessary in case of loss of income as the outflow of cash (mortgage payment) is reduced. Could be as much as 25% of your cushion. However, if you are relying on that cash flow to fund college tuition, don’t factor that in to your cash cushion requirements until the last tuition check is mailed in.</p>
<p>Do not take investment advice from strangers on the internet.</p>
<p>We don’t know what your house is “worth”, i.e. not what you paid, but what you could get for it today or tomorrow or a year from now if you needed to sell. We don’t know property values where you’d be going if you needed to move for a job once you lost the job you are concerned about. We don’t know how old you are; if you are in good health; if you have disability insurance; if your own parents are still alive and if so, what medical conditions run in your family. We don’t know if you have long term care insurance (or if your parents do) or how much it would cost to provide in-home care in case you or your wife became incapacitated.</p>
<p>All we know is that you have enough money to pay off your mortgage, and that you’re hoping that you’ll get more money in FA for your D if you lose your job AND have erased your cash cushion.</p>
<p>Your house could be declining in value by 5-8% a year for the next few years. In which case for you to stick your cash in a declining asset seems like a dumb thing to do. A lot of economists are talking about us entering a period of deflation once the current economic situation stabilizes. So if your long term plan is to sell your house for retirement and move somewhere else, you may get much less for the house than you think possible. And your dough is gone. And you won’t be as good a credit risk at age 70 or whatever as your high earning potential D will be a year from now if she needs to take out loans to help bridge the gap between what you can pay out of pocket, what she gets in aid, and how much she needs.</p>
<p>If I were a bank, I’d rather bet on your 22 year old MIT grad paying back the loans than a 70 year old retiree. But that’s me.</p>
<p>OP- you need to sit down with a financial planner (find one who charges by the hour, not a percentage of your assets) and make sure that you’ve handled the basics like retirement, disability, etc. before you go liquidating your nest egg in the hopes of qualifying for more aid.</p>
<p>Agree with blossom. Go to a fee-only certified financial planner. </p>
<p>Stranger on the internet comment: from your analysis, I don’t see any upside to paying off your mortgage, given your goal to get more FA. If you stay employed, your EFC will make you full-pay at MIT even if you pay off your mortgage. If you lose your job AND you’ve paid off your mortgage, you’ll have no cash cushion. You might need to sell the house. Worst possible scenario: you lose your job and your house. That might put your D in an even better situation EFC wise, but you really don’t want to go there.</p>
<p>^ Good advice here. </p>
<p>“stranger on the internet”… :)</p>
<p>Blossom’s point is good, but to some extent that could be said for ALL advice that strangers give over the internet. You get what you pay for. So here’s some free (and probably worthless 
) advice from another stranger:</p>
<p>Wait until you lose your job, <em>then</em> pay off your mortgage…if you still feel up to it.</p>
<p>Also, are you willing to stay unemployed for the 3-4 years that your D is at MIT? </p>
<p>If not, when you get another job, your EFC will change again.</p>
<p>blossom :
Thanks for the insight. But there is a lot of merit in asking advice from strangers over financial advisors.
- All these people have no interest in making money out of this consulting while a financial advisor is always looking at ways to make money for him/her.
- The group of parent on this site have similar interests and might have gone thru similar situation which a financial advisor may not.
- Financial advisor will never give anyother advice than to invest in the market as for all the Financial advisors the money gets a hypothetical return of 8% to 10% which I don’t see in this case as DW will invest this money only in secured investments.
- The idea is to not qualify for FA because as long as I’ve the job we will not qualify for it (EFC is $54000). </p>
<p>I still see merit in these cases.
But in our case the home prices are still more than double the mortgage we have.
But in our case the plan is to live here.
DW and I are in early 40s and I think we are much less credit risk than our DD for the next 4 to 6 years.
We won’t be erasing our emergency cash cushion of 10-12 months which after paying off the mortgage should increase to 16 - 20 months.</p>
<p>SlitheyTove :
</p>
<p>We had the following three options:
- To prepay MIT 4 years tuition
Which seems a very bad preposition because in case of worst case of no job, no money and mortgage. - To move to Boston to be close to DD and rent out current home and buy another in Boston.
After finding good advice against moving to Boston here on this forum only, buying an appartment and using it for once a month trip seems waste and if real estate goes down then we loose on both properties. - Payoff the current mortgage.
Make us total debt free. We can fly to Boston once every month without any worries. In worst situation DD gets FA, we have the house and we can live for a long time on the cash cushion.</p>
<p>Parent of Ivy Hope - I’m sorry I just have to ask…why the need to see your college age student once a month? I would die if my parents came every month when I was in college. Factor in holidays, breaks and summer then add your visits - I don’t know, something is not adding up for me.</p>
<p>OP: I’d pay off my house if I were you! Sounds like no downsides to me, since you aren’t planning on moving, have a cash cushion and are risk-averse in the stock market. We owe about the same on our house but don’t have that kind of cash cushion or we would do the same thing. Believe me, when I finish paying off DS’s tuition (he is rising college junior) in two years, every penny extra I make will be socked into mortgage payment. I hope to have house paid off in 5 or 6 years. I just wish that property taxes were lower; they are about half-a-mortgage payment each month so even without mortgage payment we will have some housing expenses… :eek:</p>
<p>cherryhillmomto2:
That was the compromise made between DW and DD after DD got off Stanford waitlist and still adament to go to MIT. Previously DW was bent upon moving to Boston. Now this seems like a good solution.
For fall:
Go in August then again for parent weekend in October and then on Thanksgiving.
For Spring:
Go in January then again for spring break in March and for CPW in April.</p>
<p>anxiousmom: Yes paying off the mortgage seems like a reasonable thing to do keeping in view DW investment strategies. We wanted to do it 5 years back but I was able to find 5 years CDs at > 5% and our mortgage was 4.75% but after it matured the new CDs are only 2% to 2.75% which seems like a net loss.</p>