To pay, or not to pay off a mortgage
by Duane J. Silbernagel
I was asked this question by a client of mine this week, and thought it’d be very relevant to giving some general guidance and ideas. How do you go about evaluating whether it makes sense to pay off the house, or invest?
First, one needs to analyze internally the comfort level of paying off the mortgage. If one has to have absolute certainty in their life, maybe paying the mortgage off is the best bet. Why? Money and mortgage payments are simply math problems. If one needs absolute certainty (which you cannot get in the markets), pay off the mortgage. In doing this, you know – for certain – that monthly obligation is gone. You can quantify with accuracy, how much money that “saved” you in the long run (it’s saving you the interest rate you’re currently paying). Money saved is just as good as money earned (the bank will not discriminate).
If this doesn’t describe you, you’ll want to start analyzing the opportunity cost. If I invested the money today, what after-tax returns can I potentially get compared that to the interest rate you’re currently paying. Make sure you factor in any tax deduction you receive on your mortgage interest, if applicable to your personal situation. Also keep in mind that investing in securities involves risk and the potential to lose money.
There are some mortgage specifics that come into play also: Do you have a pre-payment penalty? Are you paying mortgage insurance?
Other points to consider are as varied as each person(s) individual situation:
* What are the household dynamics?
* Do you have an emergency fund established?
* Do you have children going to college that you were planning on helping? If so, what’s been done to prepare for this?
* Do you have other debts (credit cards, car loans, etc) with higher interest rates? If so, maybe you look at paying those off first.
* Do you have the discipline to actually invest the funds?
How long do you plan to live in the home?
* Do you have the discipline to use the funds (saved or otherwise) constructively?
* What insurances do you have in place? Disability, Life, Long-Term Care insurance policies are put into place to cover a specific risk that could happen to you. A review of the insurance portfolio is necessary in this scenario also.
What is the solution? The answers will vary as the plethora of individual factors play in.
As a financial advisor, I’m a firm believer in Occam’s Razor (maybe it’s my civil engineering background). If you’re not familiar with Occam’s Razor, it essentially states:
when multiple outcomes exist, the simplest one, is correct.
In the end there will likely be a scenario that makes the most sense for you.
If you’d like to find out more about me, have an idea you’d like me to write about or would simply like to contact me, visit my website: www.duane.wrfa.com.
Thank you for reading.
Duane J. Silbernagel
Waddell & Reed, Lincoln City
This article is meant to be general in nature and should not be construed as investment or financial advice related to your personal situation. Waddell & Reed does not provide legal or tax advice. Please consult with a professional regarding your personal situation.
Duane Silbernagel is a Financial Advisor in Lincoln City, Oregon offering securities through Waddell & Reed, Inc., Member FINRA and SIPC. Insurance products are offered through insurance companies with which Waddell & Reed has sales agreements. He can be reached at (541) 614-1322, via email at [email protected]
Waddell& Reed is not affiliated with www.newslincolncounty.com website and is not responsible for any other content posted to this website.
Every workday, over 160 million Americans head for work. A huge proportion head for work in their own private vehicle. They’re running up the mileage of their car, they’re burning what was, until a month ago, very expensive gas (and it’ll likeLY go back up) paying higher insurance rates due to more miles driven and wearing out their tires, including themselves!
Why do we do this? The answer is simple. Habit. Habit: If it’s not resisted, habit soon becomes a COMMANDMENT!
Oregon Cascades West Council of Government’s Transportation Options Outreach Coordinator Tarah Campi is traveling the state trying to convince people it doesn’t have to be this way. Campi is the featured speaker at the Lincoln City Chamber of Commerce Lunch Forum on Friday, February 13th at Surftides Inn, 2945 NW Jetty Avenue.
The presentation is titled “Carpool Karma.” Campi will explain how the program is connecting communities and helping people save money by sharing the ride. She says thousands of dollars in prizes will be awarded when people explore transportation options at DriveLessConnect.com between February 1st and May 1st.
The Chamber luncheon will begin at 11:45am and lunch is $10. The public is always invited to attend Chamber Lunch Forums and should RSVP to the Chamber by calling or emailing the Chamber by 5pm Wednesday, February 11th.
For more information contact the Lincoln City Chamber of Commerce at (541) 994-3070 or by e-mail: [email protected] or visit the website at www.lcchamber.com.
An 83 year old Waldport man, injured when a car hit him at the front entrance of Newport’s 1010 Medical Building last week, has died of his injuries.
Police say John Giles was walking to the building entrance when a car, going in high speed reverse, slammed him through the double doors, severely injuring him.
At about that same time, Edward Roesing, 79 of Tidewater, got into his car that had been parked directly across from the front entrance. Roesing started it up and began to pull out of his parking space but it suddenly went out of control. At high speed it bounced off a building column and then, still in reverse, went straight for the double door entry way to the building. It was at that very instant that Giles was just about to go through the first set of doors. The car’s rear end hit him from behind. Giles was catapulted through the second set of doors and landed in the visitors area mortally injured.
After talking with driver Roesing, they cited him for reckless driving and assault. Now with the death of Mr. Giles, the District Attorney will have a lot more to deal with.
Traffic crash in Lincoln City. Highway 101 at SW 14th. Injuries. Both southbound lanes are blocked.
North Lincoln Fire Captain Jim Kusz says 1 female is injured. Still assessing.
Wreck cleared. Traffic back to normal. Police say cause of the accident was the driver of the sedan crossing 101 from SE 14th to SW 14th and broadsiding the Jeep that was headed southbound on 101. Driver of the sedan was cited.
CENTRAL COAST FISHING
Week of January 29th
In the Creel: Offshore bottom fishing continues to be exceptional. In fact, last Sunday both the weather and the fishing were red-hot. Overall during the past week, charters and private boats have been bringing in quick limits, and the ocean has been mostly cooperative. The bays have been good fishing, too, with lots of greenling and perch being caught. As far as the rivers are concerned, winter steelhead may think it’s summer. Flows are low and clear and water temperatures are rising, so steelhead angling remains fair to good. Dungeness crabs continue to be elusive, and razor clams are hiding offshore below the not-so-low daylight tides. Get your copy of ODFW’s 2015 Oregon Sport Fishing Regulations, here.
Salmon River: Winter steelhead fishing is fair to good in many coastal basins and the Salmon River typically follows this trend. As river flows continue to drop and clear this week, the middle to lower river should produce the best results. The Salmon is open to harvest of wild winter steelhead through March 31st. Anglers are advised to read the new regulations (see above) as there are harvest restrictions and new deadlines in effect. For instance, the deadline for steelhead fishing is at the confluence with Prairie Creek which enters the Salmon River west of the Van Duzer rest area at the same point where Sulpher Creek joins the Salmon.
Siletz River/Bay: Steelhead fishing is fair with a high proportion of wild fish mixed into the catch this season. As river levels continue to drop and clear this week, anglers should focus on the middle to lower river when fishing from a boat and above Moonshine Park from the bank. Typical steelhead tactics apply such as side drifting, bobber and jig/bait, or casting spoons or spinners. River conditions should be good through the weekend.
Yaquina River/Bay: The winter steelhead fishery is fair in the Big Elk. River conditions are low and clear this week and anglers should focus on the deeper holes and runs in the middle to lower reaches. Anglers are advised to watch for private property. Typical steelhead fishing tactics apply but the Big Elk is bed rock dominated and does have a lot of snags.
Alsea River/Bay: The winter steelhead fishery is fair to good throughout most of the river. This week should see flows continue to drop and clear. Fishing from the lower north fork down to around the Mike Bauer plunking shack should be productive. Casting lures, bobber and jig/bait or drifting beads along the bottom can be effective techniques in the Alsea this time of year.
Central Coast Lakes: The 2015 stocking schedule for Central Coast lakes is expected to be announced in March and we’ll let you know as soon as it’s available. Fishing for the various warm water fish species can still be productive during the winter months but anglers may need to target different areas of the lakes, typically deeper than when fishing in the spring or summer.
Saltwater angling and shellfish harvesting…
Truck set ablaze outside Oceana Natural Foods Coop
From Newport Police
Some very fast “quick draw” Newport Firefighters saved Oceana Natural Foods early this morning after a delivery truck, parked right next to it at the curb, was set ablaze by an arsonist.
When Newport Police officers arrived, the entire front end of the Freightliner box-style delivery truck was fully engulfed in flame.
Witnesses reported seeing a young male next to the truck minutes before it caught fire. Then he was seen running from the scene a short time later.
He was described as a white male, 20 to 30 years old, approximately 5 feet 9″ tall, wearing a black jacket – possibly with a white stripe.
Newport Firefighters arrived on scene and extinguished the fire preventing serious damage to Oceana Natural Foods. Evidence discovered at the scene indicated that the truck was intentionally set on fire.
The Newport Police Department is requesting help in identifying the subject seen running from the area of the truck. Anyone with information is asked to contact Officer Brad Purdom at 541-574-3348.
Thursday, Jan. 29th – Lincoln County
Summary: Yesterday was nearly a clone of Tuesday with sunshine penetrating thin upper-level clouds and high temps climbing to around 60F. Winds were light and variable, albeit mostly out of the northwest. A smidge of haze developed along the beach after sunset, but otherwise skies cleared overnight and the mercury dropped to the mid- to upper-40s. A wind switch to easterly occurred early this morning, which had the effect of keeping fog to a minimum (unlike the Valley) and taking all the steam out of an already very weak weather system just offshore. At daybreak, it was clear as a bell and winds were out of the east at 5-10 mph.
Past 24 Hours High/Low…
Lincoln City: 57F/49F
Depoe Bay: 62F/47F
Forecast: High temperatures are consistently running about 10F above normal for this time of year, and today will be no exception as we take another shot at 60F. Mostly sunny skies and unseasonably warm temps are in the cards for the next few days, through Saturday at least. Patchy fog is possible during the nights and mornings with lows around 45F, which is about 5F above normal for late January. Outlook is for the thermometer to remain in the 45F to 60F range through the extended period, but some wet weather is on tap for late Sunday into Monday, and then a chance of showers Tuesday and Wednesday along with partly sunny skies. Long range forecasts show a ‘No Winter Winter’ for the Central Coast as above average temperatures linger into Spring. Additional evidence for this unusually dry and warm Winter can be found in the Cascades snow pack which is currently just 15% of the 30-year average.
Travel: The Siuslaw River Bridge on Highway 101 at Florence will be restricted to a single lane from 9:00am to 3:00pm today as ODOT installs bird netting; bridge traffic will be controlled by flaggers with delays of 20 minutes or less. In the Coast Range today, patchy fog, partly sunny, highs 50-55F. Valley destinations are expecting patchy fog, partly sunny and a high of 55F. The Columbia River Gorge forecast calls for mostly cloudy skies, blustery east winds gusting 40-50 mph, temps near 50F. For the Cascades, there are spots of ice on Willamette Pass but bare pavement elsewhere this morning; partly sunny with the freezing level at 6,500 feet.
Cascades Snow Pack: Currently 32”, a loss of 1” since yesterday; an overall loss of 8” in the past seven days; 15” less than this date last year; 85% below the 30-year average Snow Water Equivalent (total amount of moisture in the snow pack).
Ski Report – New Snow/Base/Condition…
Willamette Pass 0”/18”/closed
Mt. Bachelor 0”/43”/firm packed
Mt. Hood Ski Bowl 0”/3”/closed
Mt. Hood Meadows 0”/30”/loose frozen granular
Marine: Light NE winds 5-10 knots again this morning and seas are running 5 feet at 17 seconds. As of 8:00am, Depoe Bay and Yaquina Bay bars are unrestricted. Summer-like conditions are expected today with northerlies 5-10 knots gusting 15 and a mixed swell; one is 3 feet at 17 seconds and the other is 4 feet at 11 seconds. Tonight, N wind 10-15 knots gusting 20 with swells 4-5 feet at 10-15 seconds and 3 foot windwaves. NE winds tomorrow, 5-15 knots and seas 6 feet at 14 seconds. Outlook is for NE winds 5-10 knots on Saturday, S winds 10-15 knots Sunday, and a SW breeze 15-20 knots on Monday. Swells of 6-8 feet are projected through the period.
On the Beach… Mostly sunny, light breeze, surf 4-5 feet (low).
* For a safe and enjoyable time on the Central Coast, the Oregon Parks & Recreation Department offers these Beach Safety Tips.
01/29 Thu 07:31 AM 8.91 H
01/29 Thu 02:42 PM 0.60 L
01/29 Thu 09:20 PM 6.40 H
01/30 Fri 02:11 AM 3.57 L
In Short: Mainly clear, patchy fog, light winds, then continued fair.
From Community Environmental Legal Defense Fund
Improve your understanding of the features in our government, long-time in the making, that today make it so difficult for the voice of the people to be heard, much less taken into account, by our elected leaders. These same features allow corporations to exercise power at the expense of the peoples’ health, safety, and well-being and that of our environment and ecosystems.
In this free three-hour workshop on Monday, Feb. 2, 6-9 p.m. at the Newport Public Library Meeting Room, learn how communities across the country are working to regain their constitutional right to live in a healthy and safe environment.
The instructor is Kai Huschke, Northwest Representative of the Community Environmental Legal Defense Fund. Kai will lead you through the following:
* Why we have a corporate dominated, state-assisted structure of law (which allows aerial spraying of pesticides, fracking, and sludge-dumping on agricultural land.
* What happens when communities try to find justice within that system.
* What communities are doing to reclaim their rights for the sake of health and democracy for people, communities, and nature.
* How Oregon counties are creating “community bills of rights” to protect their communities and move them towards sustainability.
* Although not required, donations will be gladly accepted.
For further information and to sign-up, please call 541 961 6385, or write [email protected]