Getting Real (Estate) - Page 8

glatt · 01-18-2009, 09:22 AM

Quote:

Originally Posted by TheMercenary

We refinanced to a 15yr loan and our payments went up a few hundred dollars. Best thing we ever did.

We ran a bunch of different calculators yesterday using all the actual numbers in front of us, and it looks like our monthly payments would go up by around $150 a month. That's actually a little too painful for us. We could swing it, but it would impact our already frugal standard of living for a few years. I think we may stick with the old loan. It's a tough call. Paying off the house 9 years sooner would be really nice. Ugh.

smoothmoniker · 01-17-2009, 11:15 AM

they may drop a little, but not by much. The banks themselves are getting money for free right now, so what you see on the rates is their profit margin. There's no skin left on the cat, so to speak. Nothing left to cut.

We got a 30-year fixed lock at 4.875, with an option or a one-time float down within 21 days. If the rate moves down within 21 days, we get the new rate.

monster · 01-18-2009, 07:36 PM

beest did the same and our increase was more painful that that....

classicman · 01-18-2009, 07:46 PM

I refinanced mine from a 30 to a fifteen about 6 years ago. It was painful at first, but now I only have a few years left and that feels really good.

smoothmoniker · 01-18-2009, 08:23 PM

Sheesh, do you people understand nothing about the American way of life? You're supposed to refinance a new 30-year mortgage, take out all of your equity and invest it in the stock market, preferably on margin.

Think of all the money you'll make! Can't lose!

Radar · 01-18-2009, 11:54 PM

A friend of mine got one of those "interest only" loans a few years ago and I thought he was an idiot. Then he told me he claims single/zero on his taxes, and since his payments are all interest...at the end of the year he gets a check for about $12,000. He has the discipline to use that check to pay down the principle of the house. Doing it this way, his payments are lower, and he's actually paying the house off faster than a conventional loan.

It does take a lot of discipline though. When you've got a big fat check like that in your hand, a lot of other ways to spend it must pop into your head.

classicman · 01-19-2009, 07:12 AM

What about the interest he could have been earning/losing all year? How does that factor into this equation? Wouldn't he be better off, if he is that disciplined, to pay more each month?

TheMercenary · 01-19-2009, 07:16 AM

Yea, the neighbor bought a house on an interest only loan, 450k. He loses it today on the courthouse steps at auction to the highest bidder. The house is on prime real estate and is about 4000sq feet. Anyone who wants it can get it cheap.

Griff · 01-19-2009, 07:43 AM

I still can't get over the numbers you guys are tossing around.

classicman · 01-19-2009, 08:09 AM

What do you mean Griff?

Griff · 01-19-2009, 08:36 AM

The house prices mentioned are approaching one full decimal place from comparable homes in my local market. Beyond that, as an owner builder, I just can't conceive of paying down that kind of debt. I just wouldn't have the stomach for it. I think the stress of knowing I was one job away from financial ruin would be debilitating. I admire everybodies stones but am way more comfortable debt free.

smoothmoniker · 01-19-2009, 10:34 AM

You can't think of it that way. Add up the amount of money you pay into savings, into stock investments, and into mortgage each month. Now, instead of spreading it out into all of those places, you're putting all of that investment money into just one thing, the house.

In CA, the roll of the dice is a pretty good bet. If you're a generational buyer (buy once, live there forever), the chance that you'll retire with a home free and clear worth 10x your annual salary is a decent one. I don't know that that's true elsewhere.

It's a home, but it's also your primary savings and investment. That's a big part of why my wife and I are stretching so far to get into this house. We feel like it's the best leveraged investment we could make right now. Also, we really, really want to live there.

lookout123 · 01-20-2009, 10:53 AM

Quote:

Originally Posted by smoothmoniker

It's a home, but it's also your primary savings and investment. That's a big part of why my wife and I are stretching so far to get into this house. We feel like it's the best leveraged investment we could make right now.

/devil's/While that is traditionally true, have you considered the effect of the baby boom generation on this traditional strategy? Every boom/bust cycle we've experienced since 1945 has been directly tied to the habits and needs of the boomers. As boomers age they will downsize. In many cases they owned second and third properties as investments. They will sell these properties as the need for cash comes along combined with their diminishing desire to have the extra concern of multiple properties. There are nowhere near enough buyers for all of the existing properties + additional properties as the builders continue to do what they do. Home prices cannot not escalate the way they have traditionally. The home as primary investment just might not work for our generation the way it did for our parents./advocate/

Quote:

Also, we really, really want to live there.

Now that is a perfectly respectable, legitimate reason to purchase a home.

xoxoxoBruce · 01-20-2009, 10:55 AM

Quote:

Originally Posted by lookout123

Now that is a perfectly respectable, legitimate reason to purchase a home.

The bestest.

Undertoad · 01-19-2009, 10:41 AM

tax deduction

01-17-2009, 11:15 AM	#2
smoothmoniker to live and die in LA Join Date: Feb 2003 Location: Los Angeles Posts: 2,090	they may drop a little, but not by much. The banks themselves are getting money for free right now, so what you see on the rates is their profit margin. There's no skin left on the cat, so to speak. Nothing left to cut. We got a 30-year fixed lock at 4.875, with an option or a one-time float down within 21 days. If the rate moves down within 21 days, we get the new rate. __________________ to live and die in LA

01-18-2009, 07:36 PM	#3
monster I hear them call the tide Join Date: Dec 2005 Location: Perpetual Chaos Posts: 30,852	beest did the same and our increase was more painful that that.... __________________ The most difficult thing is the decision to act, the rest is merely tenacity Amelia Earhart

01-18-2009, 07:46 PM	#4
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	I refinanced mine from a 30 to a fifteen about 6 years ago. It was painful at first, but now I only have a few years left and that feels really good. __________________ "like strapping a pillow on a bull in a china shop" Bullitt

01-18-2009, 08:23 PM	#5
smoothmoniker to live and die in LA Join Date: Feb 2003 Location: Los Angeles Posts: 2,090	Sheesh, do you people understand nothing about the American way of life? You're supposed to refinance a new 30-year mortgage, take out all of your equity and invest it in the stock market, preferably on margin. Think of all the money you'll make! Can't lose! __________________ to live and die in LA

01-18-2009, 11:54 PM	#6
Radar Constitutional Scholar Join Date: Dec 2002 Location: Ocala, FL Posts: 4,006	A friend of mine got one of those "interest only" loans a few years ago and I thought he was an idiot. Then he told me he claims single/zero on his taxes, and since his payments are all interest...at the end of the year he gets a check for about $12,000. He has the discipline to use that check to pay down the principle of the house. Doing it this way, his payments are lower, and he's actually paying the house off faster than a conventional loan. It does take a lot of discipline though. When you've got a big fat check like that in your hand, a lot of other ways to spend it must pop into your head. __________________ "I'm completely in favor of the separation of Church and State. My idea is that these two institutions screw us up enough on their own, so both of them together is certain death." - George Carlin

01-19-2009, 07:12 AM	#7
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	What about the interest he could have been earning/losing all year? How does that factor into this equation? Wouldn't he be better off, if he is that disciplined, to pay more each month? __________________ "like strapping a pillow on a bull in a china shop" Bullitt

01-19-2009, 07:16 AM	#8
TheMercenary “Hypocrisy: prejudice with a halo” Join Date: Mar 2007 Location: Savannah, Georgia Posts: 21,393	Yea, the neighbor bought a house on an interest only loan, 450k. He loses it today on the courthouse steps at auction to the highest bidder. The house is on prime real estate and is about 4000sq feet. Anyone who wants it can get it cheap. __________________ Anyone but the this most fuked up President in History in 2012!

01-19-2009, 07:43 AM	#9
Griff still says videotape Join Date: Feb 2001 Posts: 26,813	I still can't get over the numbers you guys are tossing around. __________________ If you would only recognize that life is hard, things would be so much easier for you. - Louis D. Brandeis

01-19-2009, 08:09 AM	#10
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	What do you mean Griff? __________________ "like strapping a pillow on a bull in a china shop" Bullitt

01-19-2009, 08:36 AM	#11
Griff still says videotape Join Date: Feb 2001 Posts: 26,813	The house prices mentioned are approaching one full decimal place from comparable homes in my local market. Beyond that, as an owner builder, I just can't conceive of paying down that kind of debt. I just wouldn't have the stomach for it. I think the stress of knowing I was one job away from financial ruin would be debilitating. I admire everybodies stones but am way more comfortable debt free. __________________ If you would only recognize that life is hard, things would be so much easier for you. - Louis D. Brandeis

01-19-2009, 10:34 AM	#12
smoothmoniker to live and die in LA Join Date: Feb 2003 Location: Los Angeles Posts: 2,090	You can't think of it that way. Add up the amount of money you pay into savings, into stock investments, and into mortgage each month. Now, instead of spreading it out into all of those places, you're putting all of that investment money into just one thing, the house. In CA, the roll of the dice is a pretty good bet. If you're a generational buyer (buy once, live there forever), the chance that you'll retire with a home free and clear worth 10x your annual salary is a decent one. I don't know that that's true elsewhere. It's a home, but it's also your primary savings and investment. That's a big part of why my wife and I are stretching so far to get into this house. We feel like it's the best leveraged investment we could make right now. Also, we really, really want to live there. __________________ to live and die in LA

01-19-2009, 10:41 AM	#15
Undertoad Radical Centrist Join Date: Jan 2001 Location: Cottage of Prussia Posts: 31,423	tax deduction

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