You are right, at her age, her income is only likely to increase. You also bring up a great point about refi, she can also do that if circumstances warrant.
30 and 40 year mortgages have been created by financial institutions to make you slaves for them, along with the company you work for.
Someone mentioned they are opposed to paying off a home. I believe that both sides of that arguement is valid. I personally am attempting to pay my home asap. Please do not mention the tax benefit.
If the payment due is $1,000 and you send in $1200, doesn't the extra $200 come right of the principal ?
I think you could do a 30 year, and send in the overpayment that would equal a 15 year loan amount, and be done in the 15 years, if you had the discipline to do it, or am I wrong ?
Problem with the 15 years is the girl is on the edge of getting this 180-200k mortgage, and cutting the term to 15 years equals higher payments and less house, or no house if the payment jumps from $1400 to $1700 for example.
We are talking 50 year old, 1100 sf homes as it is, and some think her income isn't enough already ( more like 50k than 60k). I'm not sure if she has enough to do 20% down to avoid PMI, she probably has 10% as my guess.
I started the thread for her, so will email it to her when the dust settles.
I think you could do a 30 year, and send in the overpayment that would equal a 15 year loan amount, and be done in the 15 years, if you had the discipline to do it, or am I wrong ?
Problem with the 15 years is the girl is on the edge of getting this 180-200k mortgage, and cutting the term to 15 years equals higher payments and less house, or no house if the payment jumps from $1400 to $1700 for example.
We are talking 50 year old, 1100 sf homes as it is, and some think her income isn't enough already ( more like 50k than 60k). I'm not sure if she has enough to do 20% down to avoid PMI, she probably has 10% as my guess.
I started the thread for her, so will email it to her when the dust settles.
I'm still wondering you can't just make overpayments on a 30 year loan, and retain the flexibility that a 30 gives you, and just accelerate it at your will and turn it into a 15 year deal with no refinancing and shit ?
Is there a reason this wouldn't work, short of the discipline to do it ? This girl would do that, most would not.
The 30 could be good for other reasons as well,IMO. Say in ten years interest rates are 14% and we have high inflation. Fuck it then, you don't want to pay this 5.75% loan at an accelerated rate, its good debt at that point, pay the minimum !
u actually will never be able to borrow money at this rate again ever in any of our lifetimes so it is completely dumb to pay ur loan off early...U can even be using the extra money u were to pay on the loan and put it in the stock market and easily make more than 6 % i mean come on....The fifteen year payment is jus ridculous....the person who told u to take it is absolutely wrong...I have been doing mortgages for a long time and every person goes through trouble at some point in there life...I agree if u want to pay off the house early make the extra payment to princiapl...One EXTRA full mortgage payment per yead knocks off 7-10 years off a 30 yr mortgage !!! FACT !!!......but also if u have a rough couple of months u can allow urself to go back to the 30 yr payment.
MAKE SURE THOUGH that u clearly state on your payment stub that u want the EXTRA APPLIED TO PRINCIPAL...if u DONT, THEY HAVE THE RIGHT BY LAW to take the extra payment off of the END OF THE LOANS INTEREST!!!!...seriously....not many people know this.
Alot of companys are good enough to point out that u must write it in...BUT IF U DONT AND THE COMPANY IS A SCAM (like 90% OF ALL BIG BANKS) then u will be paying off INTEREST instead of PRINCIAPL!
GL
-murph
applying to other than principal is fraudulent,IMO, but I don't doubt that some shit companies might do it, esp. if it is legal.
These low interest rates are the wild card ( IMO) that create a bottom for lower end homes/condos. They can't drop much below the point that paying rent exceeds a mortgage payment. the market seems ready to get buyers for rental purposes at that point.
I wouldn't object to the girl ( call her Elvira= fake name) buying a duplex and renting out the other side. Problem is all these things tend to date to 1900 construction and are inner city ghetto stuff.
These low interest rates are the wild card ( IMO) that create a bottom for lower end homes/condos. They can't drop much below the point that paying rent exceeds a mortgage payment. the market seems ready to get buyers for rental purposes at that point.
I wouldn't object to the girl ( call her Elvira= fake name) buying a duplex and renting out the other side. Problem is all these things tend to date to 1900 construction and are inner city ghetto stuff.
Elvira cant live in the badass part of Hartford (Frog Hollow) just not her thing. I could and have lived ghetto.. more like barrio (Mexican).
Elvira ain't right to live ghetto with blacks and PR's. I could do it without a problem. I'd be friends with Deron and Juan and be a likely guest in their homes and a friend. You have to adapt to ghetto, I can, if I have to.
Elvira wouldn't adjust total white girl that would be displaced in a bad hood.
Elvira ain't right to live ghetto with blacks and PR's. I could do it without a problem. I'd be friends with Deron and Juan and be a likely guest in their homes and a friend. You have to adapt to ghetto, I can, if I have to.
Elvira wouldn't adjust total white girl that would be displaced in a bad hood.
take this:
http://www.realtor.com/search/listi...3574b439&lid=1097544446&lsn=3&srcnt=65#Detail
should rent for $1,000 or so.
You can buy it for $600
http://www.realtor.com/search/listi...3574b439&lid=1097544446&lsn=3&srcnt=65#Detail
http://www.realtor.com/search/listi...3574b439&lid=1097544446&lsn=3&srcnt=65#Detail
should rent for $1,000 or so.
You can buy it for $600
http://www.realtor.com/search/listi...3574b439&lid=1097544446&lsn=3&srcnt=65#Detail
Please ask all Bear Sterns shareholders about that 6% you speak of.
Why does everyone act like, people make money in the stock market like it is being handed out like candy.
Not trying to disrespect you or your knowledge Murph, but one fundamental rule that people fail to account for in the market is that, you make a profit when you sell, not what the paper returns shows.
Also, you say rates will never be this low. What were mortgage rates in 2002 and 2003? Homeowners were getting 30 year fixed between 6-6.5%, I could be mistaken, but that is what I recall.
as far as the stock market goes...u are correct TODAY....a loan last almost a lifetime and therefore is unpredictable for us to forecast other than from the past. Which each year as u know the stock market somehow finds a way to rebound and come out ahead...so the average of stocks as a whole is always increasing EVEN in this time of slow recession and we can only hope for it to improve and it will.
As far as interest rates, u are correct....actually in some stages of that drop u are aware of it got as low as 5.25 (pretty much felt like where we are today.) but u have to remember TWO THINGS...We are in a recession ONE....and will come out of it at some point. and TWO before this 2003/02 time, the interest rates were very high sometimes being in double digit range (especially 10 years ago +) u couldnt get a rate on a mortgage for under 12-15% ..that was for 800 credit scores.
So yes in the current time u are correct, but a mortgage is the biggest responsibility people will ever take on in there lives (until another mortgage) and it last pretty much forever. ....sure u can pay them off, but then int he time of 8-15% return in the market, it is literally common sense to borrow at the lowest rate u will ever get on any product/money/home/etc which would be around 5-6%.....
EVEN if u do not INVEST and take out the savings from your mortgage, MY recommendation is to take the money and use it well and invest atleast for yourself...AT WORST set up a ROTH IRA/ CD with good return/ High YIELD savings plan....SOMETHING.....because u will never have this advantage again to set urself up with 30 years of savings....SURE u eventually will pay the debt off (U HOPE...but it RARELY HAPPENS..because of death/re-financing(most people do it every 3-5 years)/debt pay off/sale and re-purchase/etc....The CYCLE never ends.
I dont care how good of a deal u have...people naturally come into bad times into there life and somehow need alittle room to wiggle with and therefore that is why it is smart to take advantage of your home while u still can....Literally people WITHOUT a mortgage are just plain ignorant.....Maybe they dont need money, sure ....but there is no sense in starving and living off retirement income at bare bones needs just to save your home for when u die....10-1 the people who get the house are going to sell it anyway, so take the money out and INVEST IT FOR THEM.....that is seriously the key...I am NOT telling u to burn the money on gambling/toys(cars.etc)/and other needless items...I am saying to invest. Right now the tunnel looks dark SURE...but we all know there is only one way out of the whole america is dug into and that is up...
I would be pleased to share my thoughts on this subject more if u would like me to continue.
ONE THING FOR THE GUY WITH HIS SISTER BUYING THE HOUSE:
What I mentioned with the EXTRA PAYMENTS not being applied to prinicpal is no where near fraudulent....EVERYONE who has signed a mortgage document (that huge stack of papers at closing) has seen this clause...It was buried in there of course, and most of the time meaningless since MOST PEOPLE dont know better, or dont pay attention to what they are doing or where there money is going.
The Companies ALL DO THIS....sure it seems wrong , but I didnt mean that some banks that were shady do this...IT IS IN THEIR GUIDLINES for your payments....THAT IS WHY MOST of ur bills have the line for extra prinicpal...then if that isnt there u are SUPPOSED to write it clear as day on the check line(like where u write birthday ) or u MUST make out a seperate check to pay off prinicipal from the normal one u pay in.
Sure most people are saying...no my nice bank 5th3rd or Charter One or Bank One or Chase or Flagstar or HSBC or my credit union...etc wouldnt do that......LOL BULLSHIT........
These are the SAME companies we ask why interest rates are soooo high on credit cards, and why there are SOO MANY HIDDEN FEES on our statements, or changes made without our autorization.
To provide a better example would be to owe 80$ to Bank One Credit card, and write them a check for 100$....they do not return the 20$ (unless 30 days passes and u request it....some banks will) BUT MOST would apply ur extra 20$ to the next bill, and if there is no bill they jus include in ur account a 20$ credit......well in that sense u are letting them earn interest on that money RIGHT NOW and for as long as u keep it in there....sure 6% of 20$ over 1 month is nothing, but they have 1 billion customers, and ALOT of people write the check out to cover more than needed, EVEN if it is just for2 days, because they just bought gas, and it will show up on account.....that money adds up to MILLIONS over a years time, and multiply that by the number of years a consumer carriers a card, and by the number of cards they have.....ITS DISGUSTING.
Sure that is okay, cause U SENT IN THE PAYMENT, but that really makes u believe they wouldnt take advantage of u if u were unaware of what was going on??
I mean seriously IF u pay 1500$ on ur 1200$ Prinicpal and interest payment mortgage, every month....U REALLY Would notice a difference in ur total blance (including interest and escrows) if u had to??? I think not...especially if it is just done once ...or twice....maybe for every time u made 300$ extra they applied it 1 out of 2...or something like that...U WOULD NEVER KNOW....WHY>?????? because people do not request amortization schedules every month, nor should u......BUT U SHOULD EVERYTIME MARK - APPLY TO PRINCIPAL 300$.
I hope everythng really works out and for the people that trust and believe the bank jus because the teller is nice, or they never screwed u like Key Bank did (jus a example) ...please think twice next time.
The most messed up part bout this whole thing is it IS LEGAL...AND sure it may sound dishonest, or UNETHICAL...but since when is COMPANY ABC going to have to respond to an ethics commitee???? THEY WONT, because they are not human....anything that is done, is PLAIN OLD BUSINESS....its that simple.
-murph
""I dont care how good of a deal u have...people naturally come into bad times into there life and somehow need alittle room to wiggle with and therefore that is why it is smart to take advantage of your home while u still can....Literally people WITHOUT a mortgage are just plain ignorant.....Maybe they dont need money, sure ....but there is no sense in starving and living off retirement income at bare bones needs just to save your home for when u die....""
You obviously have a lot more knowledge than I do working in the industry. However, what I don't understand is that you said people should have a mortgage. I would agree with you if you are assuming many people are struggling to pay their mortgage every month on a year 15 plan as opposed to a 30 year plan.
I can only speak from my experiences. My parents had a 15 year mortgage and paid it off in about 8 years, and it was never a stretch to pay it. My wife and I have not had much trouble paying our mortgage either. I know we are extremely wise with our spending (she is presently not working, in grad school), we didn't move into a house that would force us to be close to our financial ceiling. I think it varies by individuals, but many people that are currently struggling is because they have been living well above their means.
Americans tend to live above their means and don't save. I personally feel that is why so many are struggling right now. I understand set backs occur, but many would stop living high on the hog, I guarantee there wouldn't be nearly as many foreclosures.
You obviously have a lot more knowledge than I do working in the industry. However, what I don't understand is that you said people should have a mortgage. I would agree with you if you are assuming many people are struggling to pay their mortgage every month on a year 15 plan as opposed to a 30 year plan.
I can only speak from my experiences. My parents had a 15 year mortgage and paid it off in about 8 years, and it was never a stretch to pay it. My wife and I have not had much trouble paying our mortgage either. I know we are extremely wise with our spending (she is presently not working, in grad school), we didn't move into a house that would force us to be close to our financial ceiling. I think it varies by individuals, but many people that are currently struggling is because they have been living well above their means.
Americans tend to live above their means and don't save. I personally feel that is why so many are struggling right now. I understand set backs occur, but many would stop living high on the hog, I guarantee there wouldn't be nearly as many foreclosures.
