Mortgage Question

[Dante]

I don't understand why people do this. Why would you take a loan with a higher interest rate? Why not just take the better rate but pay as if you had the shorter amortization period? You could have refinanced at some point over the past 5 years to a rate in the 5s and saved yourself 1.5% interest per year yet continued to make the same payments.

I mainly did it because I was sick of paying ruffly 900 to interest and 100 to principal every month on the 30

I never came across a rate in the 5's saw a ton of 6's when I refinanced about 6 yrs ago and as I posted im not sure on my exact interest rate ...im going to check it may be 6.25 but its not under 6


but I guess im a Dumb ass idiot

 

[fhmesq44]

I wasn't inferring that you are dumb, an ass or an idiot. Just saying that I don't understand why someone would tie themselves to a 15 year am, even if the rate is exactly the same as a 30 year am. You force yourself to make the 15 year am payments whereas with a 30 you have the flexibility to pay only the minimum required or anything above that (including paying on a 15 year am schedule). Nothing prevents you from paying more than is owed and you have flexibility if you are short for a period of time.

If rates are better, I can understand, although typically 15s and 30s are so close the difference is negligible.

 

[joeyfitzclick]

I mainly did it because I was sick of paying ruffly 900 to interest and 100 to principal every month on the 30

I never came across a rate in the 5's saw a ton of 6's when I refinanced about 6 yrs ago and as I posted im not sure on my exact interest rate ...im going to check it may be 6.25 but its not under 6


but I guess im a Dumb ass idiot

Just go ahead and pay more off principle every month, no need to refi at a higher rate to do so.

 

[SportSavant]

Just go ahead and pay more off principle every month, no need to refi at a higher rate to do so.

Joey

Do you use AOL or MSN?

Id like to bounce a few mortgage investing type questions off you if you have the time.

Im renting my current house and buying a new house in Montreal with a basement apartment attached too it.

 

[oldmanTED]

I wasn't inferring that you are dumb, an ass or an idiot. Just saying that I don't understand why someone would tie themselves to a 15 year am, even if the rate is exactly the same as a 30 year am. You force yourself to make the 15 year am payments whereas with a 30 you have the flexibility to pay only the minimum required or anything above that (including paying on a 15 year am schedule). Nothing prevents you from paying more than is owed and you have flexibility if you are short for a period of time.

If rates are better, I can understand, although typically 15s and 30s are so close the difference is negligible.

Right on the money unless you feel that you can get a better return on the additional principal through other investments. Either way, borrow for the longer period as you still have the flexibility of deciding to pay at the shorter schedule.

 

[Dante]

I wasn't inferring that you are dumb, an ass or an idiot. Just saying that I don't understand why someone would tie themselves to a 15 year am, even if the rate is exactly the same as a 30 year am. You force yourself to make the 15 year am payments whereas with a 30 you have the flexibility to pay only the minimum required or anything above that (including paying on a 15 year am schedule). Nothing prevents you from paying more than is owed and you have flexibility if you are short for a period of time.

If rates are better, I can understand, although typically 15s and 30s are so close the difference is negligible.

what is a 15 year AM payment.....its not a adjustable mortgage if that what you mean its a fixed 15yr not a ARM if that is what you are thinking

 

[fhmesq44]

am as in amortization.

if you have a 300k loan at .0625% the payments are:

$2572.27 under a 15 year amortization schedule
$1847.15 under a 30 year amortization schedule

Our point is, take the 30 and if you want, pay on a 15. This gives you flexibility if you are short of cash for a month or two or 12.

 

[aceduecetrey]

Who is the lender and what loan to value do you think you are at given todays market?

 

[catpaws]

<TABLE class=tborder id=post4363024 cellSpacing=0 cellPadding=6 width="100%" align=center border=0><TBODY><TR vAlign=top><TD class=alt1 id=td_post_4363024 style="BORDER-RIGHT: #fdde82 1px solid">am as in amortization.

if you have a 300k loan at .0625% the payments are:

$2572.27 under a 15 year amortization schedule
$1847.15 under a 30 year amortization schedule

Our point is, take the 30 and if you want, pay on a 15. This gives you flexibility if you are short of cash for a month or two or 12.
<!-- / message --></TD></TR><TR><TD class=alt2 style="BORDER-RIGHT: #fdde82 1px solid; BORDER-TOP: #fdde82 0px solid; BORDER-LEFT: #fdde82 1px solid; BORDER-BOTTOM: #fdde82 1px solid">

</TD><TD class=alt1 style="BORDER-RIGHT: #fdde82 1px solid; BORDER-TOP: #fdde82 0px solid; BORDER-LEFT: #fdde82 0px solid; BORDER-BOTTOM: #fdde82 1px solid" align=right><!-- controls --></TD></TR></TBODY></TABLE>


I find that very few people have the discipline to do that, It's good in theory though.

 

[oldmanTED]

am as in amortization.

if you have a 300k loan at .0625% the payments are:

$2572.27 under a 15 year amortization schedule
$1847.15 under a 30 year amortization schedule

Our point is, take the 30 and if you want, pay on a 15. This gives you flexibility if you are short of cash for a month or two or 12.

This is an excellent example. If you pay the 30 year loan at a 15 year schedule, you need only add $725.12 which goes in as pure principal against the loan leaving the remaining principle subject to the interest rate of the loan. You build up equity faster, yet have the flexibility to add or not add the additional principle as you so choose.

 

[Dante]

<TABLE class=tborder id=post4363024 cellSpacing=0 cellPadding=6 width="100%" align=center border=0><TBODY><TR vAlign=top><TD class=alt1 id=td_post_4363024 style="BORDER-RIGHT: #fdde82 1px solid">am as in amortization.

if you have a 300k loan at .0625% the payments are:

$2572.27 under a 15 year amortization schedule
$1847.15 under a 30 year amortization schedule

Our point is, take the 30 and if you want, pay on a 15. This gives you flexibility if you are short of cash for a month or two or 12.
<!-- / message -->
</TD></TR><TR><TD class=alt2 style="BORDER-RIGHT: #fdde82 1px solid; BORDER-TOP: #fdde82 0px solid; BORDER-LEFT: #fdde82 1px solid; BORDER-BOTTOM: #fdde82 1px solid">

</TD><TD class=alt1 style="BORDER-RIGHT: #fdde82 1px solid; BORDER-TOP: #fdde82 0px solid; BORDER-LEFT: #fdde82 0px solid; BORDER-BOTTOM: #fdde82 1px solid" align=right><!-- controls --></TD></TR></TBODY></TABLE>


I find that very few people have the discipline to do that, It's good in theory though.

EXACTLY....THAT was another reason I did it I do not want the flexability to pay more or not I wanted to HAVE to pay more to get it paid so if that is what you meant that I am forced to pay an amount then your right and im happy to do it

 

[catpaws]

When I put someone into an interest only mortgage they have all the intention in the world to only use the option when they need to, but they use it every month. The same with the option ARM they use the minimum payment every month until they recast and have to refi again.(In N.Y. you can onle neg am 110%)

 

[fhmesq44]

Right, I hear you guys. Some people need to be forced to pay more to actually do it. I understand if that is your reasoning.

 

[catpaws]

EXACTLY....THAT was another reason I did it I do not want the flexability to pay more or not I wanted to HAVE to pay more to get it paid so if that is what you meant that I am forced to pay an amount then your right and im happy to do it


In Idaho a fifteen year mortgage is probably realistic for a good percentage of the people, In New York however home prices are so high very few people can afford them.<!-- / message -->

 

[oldmanTED]

EXACTLY....THAT was another reason I did it I do not want the flexability to pay more or not I wanted to HAVE to pay more to get it paid so if that is what you meant that I am forced to pay an amount then your right and im happy to do it


In Idaho a fifteen year mortgage is probably realistic for a good percentage of the people, In New York however home prices are so high very few people can afford them.<!-- / message -->

Understood. In truth, the majority of homeowners don't initially have the additional money to put in extra principle, but some do and can and remain disciplined throughout the duration of the loan. Another way of shortening the payment schedule is to double the principle amount every payment. This goes hand in hand with an increasing salary and is easier on the homeowner. You still can pay off a 30 year fixed loan in close to a 15 year schedule.

 

[catpaws]

At the same time, as a persons salary grows so do their financial responsibility's (marriage, children, college, vacations...... )

 

[winbet]

Wait a minute, this thread is bollocks. Surely nobody on this Forum has money issues considering the wealth of sharp information on here and at worse, one only has to play the pinny lean at a slow book to not only pay a mortgage but retire :drink:

 

[steaktartar]

Wait a minute, this thread is bollocks. Surely nobody on this Forum has money issues considering the wealth of sharp information on here and at worse, one only has to play the pinny lean at a slow book to not only pay a mortgage but retire :drink:

:lolBIG:

 

[Timetopay]

I remember alot of you didnt believe it was so. Take a look now

http://biz.yahoo.com/rb/080122/usa_housing_workout.html?.v=8&.pf=loans

 

[TheKinz]

Been in the market for many, many years and this is the worst lending failure and foreclosure rate I've ever seen and it will continue at least into 2008. Real estate is cyclical but don't expect any price bounceback until a number of years have passed when demand exceeds supply due in part to this particular period of time with it's lessoning of applications for new construction. However, do expect the fed funds rate to begin to be lowered and you may be in a position to refinance at a later date and come out with a better loan then you currently have if you so choose.

Very true but also something to watch is when the rates go low many lenders may say to the borrower "fuck you" send them into foreclosure and then sell the house. Demand will tick up as interest rates go down. Still one of the safest long term plays is real estate and there are/will be some good bargains out there. Once some liquidity comes to these banks and the media says "time to buy" the down cycle will be over