Paying Off the Mortgage

What happens when you have paid off your home loan? Let out a sigh of relief. Is that what you will be doing? The Americans call for a party and then burn the mortgage papers in a ritualistic manner to mark the end of a mortgage. After carrying the burden for 30 years, it makes sense to celebrate the debt free moment and the sense of real ownership. But, when are we going to be free of the burden of home loan? Has anyone successfully paid it off?

A few years back, there was a California home rush in 1999-2000. Everyone wanted a home. It is not only the married but also the singles were shopping for a home. In fact, a friend of mine invited me to join his group and buy a home in Sunnyvale. The mortgage payment will be higher than the present rent. But the individual share will lesser than our individual contribution to the present rent. On a later date, we can sell out the home earning a neat profit. I was not interested because a bigger group brought in varied outlooks and getting consensus on anything becomes a laborious process.

During that time, a conversation with a friend(who is older and wiser) steered into the subject of “homes”. Both of us were working as consultants for a networking company in San Jose. After work, I stopped over at his place on occasions. He made the best coffee and always supplemented it with snacks. He always stocked his house with the latest editions of Filmfare and CineBlitz. If there were any good movies available, I could watch it on his TV and Bose sound system! My friend never agreed on the term “investment” for buying a home. We lived in the home. Most of us sell our home either to get a bigger one or to move into another locality. This will always costs us more than the value of the present home. So, technically, you are again spending. But, now, you may have a shot at buying something of bigger value!

So, when do we get to chance to burn the mortgage papers? Or are we burning one and then signing on a fresh one?

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Tags: Musings,Mortgage,Home,Debt,California,Sunnyvale,San Jose,1999,2000


  1. One mortgage ends and the other begins...kind of a journey without end, no?

  2. @Sucharita - Yes. A vicious circle!

  3. its like you ride the tiger or the tiger rides you..cant just get off and go..

  4. @Sujata - Interesting analogy.

  5. Buying a house & maintaining it is a very expensive & time consuming proposition in US. I have managed the complete outsourced process for a US fortune 500 Co & can vouch for that. So this ritual doesn't come to me as a surprise though I was not aware of it earlier.
    The average US consumer is so leveraged that it takes him an awfully lot of time to pay it off while in India it just takes about 5 years. It turned out that in the recent US Mortgage bubble almost everyone took a loan whether they could afford it or not. And that lies at the core of the global mess that the whole world is embroiled in.

  6. @Vaz- I agree on your point on the global mess and the US housing scene.

    But, most of us have a loan of 15 years or 20 year term (for apartment or a home). At least, most of my friends have a tenure of 15 years or more. 15 years is a good amount of our lifetime.

    The only way we would repay it before time is when we get lucky - either a big capital gain from change of employment or we sell it in 2-5 years time. But even if we sell it, we might end up buying a new one which cost us more. :) So in effect, we never escape from the loan payment!

  7. Those with a habit of saving, can do 'part pre-payments' that will result in a reduced tenure or a lower EMI (Earnest Monthly Instalment, as it is called in India)


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