I think I'm about to be a home owner!!

[Razor]

Congratulations and best of luck with your house!

[Nightbat]

A typical mortgage payment is what, 70-80% interest?

70-80%???


Holy hell

over here it's around 6%
so a €200k home will cost about €12k a year in interest
(admitted: a €200k 3-bedroom home here will buy you a small mansion where you guys are, but still...
someone is making a lot of money over the backs of people needing a place to sleep)

[Vass]

70-80%???


Holy hell

over here it's around 6%
so a €200k home will cost about €12k a year in interest
(admitted: a €200k 3-bedroom home here will buy you a small mansion where you guys are, but still...
someone is making a lot of money over the backs of people needing a place to sleep)

I think he's referring to total paid @ end of term. But amortizing mortgages are structured that way in the early going. At the end it's nearly all principle.

[RacerX]

Congrats, Jeri!

I was gonna buy something here locally last year but got priced out of the market!

[Cygnus X1]

I sometimes get into these debates with geniuses that like to buy more house than they can afford, and subsequently have some kind of permanent mortgage going on.
Tax advantage means nothing over the fact that there is no payment due!
I'd rather have a house with no mortgage, than deal with all of the associated headaches of someone else owning my home.
In my small mind carrying debt is never an advantage.

I gave the same idiocy to starting and owning my own business.
I saved the money (with the help of my wife), actually bought inventory from our investments (cash, really),
and then decided retail wasn't all that hot of a job for me (or us).
Meanwhile two other friends started up.
One a franchise (paying to get a job IMO), and another some cherry looking SBA loans.
They ducked out poorer than they started and keep flipping to try to get ahead.

When I closed the store I had inventory that I was able to recover cash from, the profits were mine,
and luckily got out of the lease gratis.
Took that money and paid off the remainder of the 15 year mortgage and went back to the working world.
Now I stick every possible dollar into retirement funding and HSA (self insurance).
Whenever we need something we have savings, and equity to pull from.
Cars are bought with cash.
Unexpected large expenses are on a home equity line.
Money we would have reserved for a mortgage goes right back into the equity, which we have
never needed to use much.

No one can convince me their debt and deductions are a better choice.
If I lose my job I'm set for quite a while.

[Vass]

I sometimes get into these debates with geniuses that like to buy more house than they can afford, and subsequently have some kind of permanent mortgage going on.
Tax advantage means nothing over the fact that there is no payment due!
I'd rather have a house with no mortgage, than deal with all of the associated headaches of someone else owning my home.
In my small mind carrying debt is never an advantage.

I gave the same idiocy to starting and owning my own business.
I saved the money (with the help of my wife), actually bought inventory from our investments (cash, really),
and then decided retail wasn't all that hot of a job for me (or us).
Meanwhile two other friends started up.
One a franchise (paying to get a job IMO), and another some cherry looking SBA loans.
They ducked out poorer than they started and keep flipping to try to get ahead.

When I closed the store I had inventory that I was able to recover cash from, the profits were mine,
and luckily got out of the lease gratis.
Took that money and paid off the remainder of the 15 year mortgage and went back to the working world.
Now I stick every possible dollar into retirement funding and HSA (self insurance).
Whenever we need something we have savings, and equity to pull from.
Cars are bought with cash.
Unexpected large expenses are on a home equity line.
Money we would have reserved for a mortgage goes right back into the equity, which we have
never needed to use much.

No one can convince me their debt and deductions are a better choice.
If I lose my job I'm set for quite a while.

If you lose your job and all your cash is locked in your house, unless you're a termite you are not eating.


All I can say is there is a reason why Apple has billions upon billions in cash but also has debt outstanding. I know that "common wisdom" says no debt is best, but common wisdom is wrong in this case. There is a mountain of difference between carrying a credit card at 19% and a mortgage at 4%.

Iron law of finance- if someone offers you a loan at 0%, borrow as much as you can for as long as you can. As rates move above 0%, do the math and stop when your return on the borrowed money is too tight to the debt service.

Also housing prices correlate nearly 100% with inflation- so every day in relative terms your debt gets smaller in current dollar terms. That's why if you have massive debt, you love inflation (sound familiar, Fed watchers?) You pay the debt back with inflated (less valuable) dollars.

Take the excess and put it in something that will grow, over time, faster than your nominal interest rate on the loan. Boom, you're working and so is the product of your labor, the money you earn.

[joshulator]

How about doing a 30 year loan, but paying it off as if you were doing it in 15? That way if something happens to the job, at least what you owe monthly is less than if you just signed straight up for a 15 year loan?

[DonP]

How about doing a 30 year loan, but paying it off as if you were doing it in 15? That way if something happens to the job, at least what you owe monthly is less than if you just signed straight up for a 15 year loan?

I think I said that already.

[Cygnus X1]

Forgive us.
We are all clouded by the Vass-ness of it all.



I'm just glad I'm not paying a bank for my house, and have that former payment at my disposal to save, or invest, or whatever.