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Written by stephen
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Monday, 16 February 2009 21:53 |
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My son and I own a lot in Grass Valley. He lives in the little back house and rents out the front. Because of falling interest rates, the payment on our interest-only loan has recently dropped and we were discussing whether to make additional payments to principle or keep the cash. I don't know if our different points of view reflect generational differences or changing times or personal philosophy, but I am sort of old school. I would like to pay off the loan as fast as possible and burn the mortgage. Jeff has a different perspective. He considers interest payment an expense and the property as an asset and I don't know if actually paying off the property matters that much to him. At two hundred dollars a month principle, it would be a hundred years before we could pay off the lot, but still, time passes. When it comes down to it this is not really an economic decision except for the fact that we, like millions of others, are paying a hell of a lot of interest. The way I see it, that's more money to banks and bankers. My European friends tell me that property tends to be so expensive there, that nobody expects to pay off their homes; they simply buy and sell equity. This is really not that different from feudal times when the aristocracy owned everything and after paying a tithe in crops or service the serfs got a place to live and another day in the fields. Can someone please explain to me again why it is so important to get banks lending again?
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Last Updated on Monday, 16 February 2009 21:54 |
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