Forgotten Ancient
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Urge to buy house rising...
Just bought a house (crap... what have I done?)
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No it doesn't anymore than if you sent in extra payments. You're just paying an extra month (52 weekly payments vs 48 (12x4 monthly). Don't sign up for that nonsense.Warm Machine said:
Send in a few extra bucks early on while you're paying alot of interest (to pay one extra month a year if you can) if you want to shorten the mortgage a little then stop later when tax breaks lessen
Phoenix
Member
Haleon said:
Never ever assume that just because you have a warranty you shouldn't have an inspector come in. You should have an inspector come in to find things that are likely not covered under the warranty. For example, what if there is foundation work that needs to be done - I can assure you that's not covered. The other reason to bring in an inspector is so that YOU know what the issues are and you can get the seller to pay to have them fixed or lower the price.
Musashi Wins!
FLAWLESS VICTOLY!
Interesting thought from "Best Life" magazine article my friend handed me today. Basically, it says you should examine long term valuations of buying a home much the same way as stock, through price-to-earning ratios. The equivalent in the home market being ratio of home price to rent...if the ratio is too high, it's better to rent.
Their example...a $200,000 home that you can rent for $920 a month. Divide $200,000 by the annual rent ($920 x 12). A ratio of 18:1 which is historically very high. When the real estate market tanked between 79-89, the ratio was 14:1. So in many markets you may be better off renting and putting the excess income into other investments until housing rates fall again.
Their example...a $200,000 home that you can rent for $920 a month. Divide $200,000 by the annual rent ($920 x 12). A ratio of 18:1 which is historically very high. When the real estate market tanked between 79-89, the ratio was 14:1. So in many markets you may be better off renting and putting the excess income into other investments until housing rates fall again.
scissorfight
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This is great advice. I would try to get an inspection ASAP....depending on how old the house is...is it new contruction?Phoenix said:
Baron Aloha
A Shining Example
I'm looking for a house myself and seeing these pics makes me sad.
160K only buys you a shack in Maryland. That townhouse would easily go for 300K here.
160K only buys you a shack in Maryland. That townhouse would easily go for 300K here.
Congrats!
I'd kill for $4k in prop taxes, and some sort of house for anything less than $450K... we're already topping 10k in taxes in your typical 1950's built, 3BR/1.5 bath, 60x100 plot of land in the suburbs (Long Island, NY (Nassau County)) :/
Glad I got in 5 years ago before things really went through the roof.
The benefit of writing off the loans and property tax make it well worth it, not to mention the equity.
I'd kill for $4k in prop taxes, and some sort of house for anything less than $450K... we're already topping 10k in taxes in your typical 1950's built, 3BR/1.5 bath, 60x100 plot of land in the suburbs (Long Island, NY (Nassau County)) :/
Glad I got in 5 years ago before things really went through the roof.
The benefit of writing off the loans and property tax make it well worth it, not to mention the equity.
Warm Machine
Member
chinch said:
You're wrong. Interest against a mortgage accumulates on a daily rate not on a monthly rate. The faster the princlipal drops the less interest can accumulate against the principle. Most mortgages that I looked at do not allow extra monthly payments or yearly lump sums against the principal within the first year of the mortgage.
To see the monthly vs. weekly payment change click on this link and set up a quicky test yourself.
http://www.jeacle.ie/mortgage/
Jim said:
Me too... the wife and I bought our house in Chicago... we gutted everything except the front room and dining room floors. Every pieces of wall, pipe, water, sewer lines... everything in the house was redone.
We paid $245,000 and added another $50,000... so we were at $300,000 for basically a new house.
We sent an extra $300 each month and that is basically a little over 2 extra payments. So who know when we will pay it off...
Anyways, our house could go between $550,000 and $600,000... so it was worth it... this part of Chicago is as far north-west you can live before leaving the city. So the value will only go up in this area...
it's minimal (vs paying the same extra as i stated) and also stretches single income earners who might not want to overpay for a few weeks. plus you pay $300-500 setup fee upfront.Warm Machine said:
all mortgages - except very bad ones - allow additional PRINCIPAL payment with every mortgage payment. sorry but you're wrong, especially with today's low(er) interest rates.
Congrats! Seems like a pretty good deal, depending on where you're at.
I know my family just unloaded their 1700 sq ft. house in Metro Detroit for 265K. Funny thing is that one that's about an hour north that we had at one time, 3200 sq ft., only sold for 135K cuz the area. Point being, though, is that if you get in a good area you can earn some absolutely sick equity on a house.
Just never ever ever take out a home equity loan. Seriously. You fuck that up and you lose your home and everything you own. Bad news. You wanna borrow against your house as little as possible.
I can't wait til I own my own place someday, but since I graduate from college this year and will be working for SCHITE til I get my masters or JD, I'm just gonna take it up the ass and rent an apartment.
I know my family just unloaded their 1700 sq ft. house in Metro Detroit for 265K. Funny thing is that one that's about an hour north that we had at one time, 3200 sq ft., only sold for 135K cuz the area. Point being, though, is that if you get in a good area you can earn some absolutely sick equity on a house.
Just never ever ever take out a home equity loan. Seriously. You fuck that up and you lose your home and everything you own. Bad news. You wanna borrow against your house as little as possible.
I can't wait til I own my own place someday, but since I graduate from college this year and will be working for SCHITE til I get my masters or JD, I'm just gonna take it up the ass and rent an apartment.
Warm Machine
Member
chinch said:
On a $160,000 mortgage at 5% interest over a 25 year term with monthy payments:
Total Interest:
$120604.48
On a $160,000 mortgage at 5% interest over a 25 year term with bi-weekly payments:
Total Interest:
$101643.93 + term shortened by 3 years and 5 months.
$19000 is pretty substantial and owning the home that much quicker is well worth it. Imagine what weekly would do to those numbers. Even still, setting it up this way still allows for extra mortgage payments over the term if the money is available. If you are paying per month you are getting raped. The banks love you for it, but you are getting raped.
Jill Sandwich
the turds of Optimus Prime
I think it's a great deal as it comes with bonus chixx.
again, you can own quicker paying as you want sending about 1 extra payment a year. All they're doing is making you pay more in a regular manner and probably charging you up front for it. You are misinformed.Warm Machine said:
$19k is about $750 per year (not "raped" LOL @ the clueless vocabulary). You also failed to calculate if you paid extra at your leisure (or payed more early and less later on in the loan).
5% is a great rate (sorry i'm at 4.75 myself fixed ... started at 8.00) and probably less than other debt services so the haste to payoff this often counterproductive. You're leaving out interest earned on $$$ if you pay monthly. You've left out tax savings (less interest less savings). weekly does minimum and it doesn't factor "cash flow" if you're payed every other week nor does it let you be "late".
in short, you're blabbering on about nonsense. pay some extra early on and don't overcommit (to a weekly ROTFLMAO loan or even bi-monthly). you'll thank me later.
TheQueen'sOwn
insert blank space here
Ryck said:
Come to Canada... you'd be able to get a pretty big house for the same price (in canadian dollars :lol).
Phoenix
Member
If you plan on buying your house and staying there for 25 years then yess it will always make sense to spend more money more often to defeat compounding interest. If you don't plan on staying there 25 years, you're likely better off investing the money instead of chunking it into the house.
The best investment anyone is likely to make is to pay off and eliminate ALL credit card debt. Just as home interest compounds - so does credit card debt and you will be hard pressed to get investments that accrue faster than the interest rate on your credit card. Eliminate it as quickly as possible before you do anything else.
If you've found you've dug yourself into a hole - STOP DIGGING!
And yes, $750 a year is still being raped because instead of YOU earning money on that $750, someone else is.
The best investment anyone is likely to make is to pay off and eliminate ALL credit card debt. Just as home interest compounds - so does credit card debt and you will be hard pressed to get investments that accrue faster than the interest rate on your credit card. Eliminate it as quickly as possible before you do anything else.
If you've found you've dug yourself into a hole - STOP DIGGING!
And yes, $750 a year is still being raped because instead of YOU earning money on that $750, someone else is.
Warm Machine
Member
chinch said:
The mortage payments are the same in total over a year paying weekly or monthly. They are not giving you free weeks.
In short the priciple drops faster because the bank is getting your money quicker. You cannot argue that monthly over the 25 years versus weekly over 19 years is better. Yeah you can put lump sums down on the monthly but you can on the weekly too. I'd rather get the mortgage down faster by paying the same amount as I would paying monthly by paying weekly.
My bank didn't charge me anything to set up my mortgage this way as opposed to a monthly schedule.
Tax savings, in Canada, means nothing as we are not able to write off interest on a home against our taxes as in the US.
I'm at 4.2% right now. I could lock in at 5% if I wanted to at the moment. In the first 5 years of a term as a new home owner you are generally given a more favorable rate. My first 6 months was at 2.5%
I've lumped summed down on my place a few times and since I took ownership in 2001 I'll have it paid off on my 25 year term in 2009.
mabye we can release this guy's thread from hijack soon.
ROTFLMAO.
thanks captain obvious.Warm Machine said:
we know. i'd argue monthly over 15 is better yet and pay a little extra early on but do it your way.Warm Machine said:
To use your term, they RAPED YOU to get yoru $$$ earlier (up to 3 weeks) so they can earn $$$ with your money.Warm Machine said:
bummer, but we're talking USA not Canada, Siberia or Somalia.Warm Machine said:
You're at a non-fixed rate and you're worried about beign RAPED by not paying weekly.Warm Machine said:
ROTFLMAO.
You should have shortened your 25 year term to 15 but since you're a financial wizard...Warm Machine said:
Phoenix
Member
chinch said:
Its apparently very difficult to comprehend as people still pay monthly one lump sum.
Its apparently not common sense to stop digging as people KEEP digging themselves into an increasing amount of debt to go along with the amount of money they make. People don't stop digging - they just work harder go get a bigger shovel.
BTW in the USA here weekly mortgage payments are typically not even accepted. No local banks would take that. I have GMAC and they won't accept that. 3rd party systems require upfront fees and also won't do "weekly" either. some do charge a buck or two per month.Phoenix said:
here is a good summary page for you guys who ignore all the snafus
http://www.mtgprofessor.com/A - Early Payoff/pay_off_sooner_making_weekly_mortgage_payments.htm
he must have recommended 1 month + 1/12th each month
Forgotten Ancient
Banned
Phoenix said:
They could?
Just kidding. Thanks for all the info you guys are providing to the original poster. I'm not going to buy for a couple of years (hopefully I can hold out that long), but the more info I can get the better.
Warm Machine
Member
chinch said:
Yeah I could have shortened to 15 years but I didn't have the same cash reserves when I got my mortgage to do 15 years. My 5 year term isn't up yet but will be soon. Alot can happen in 5 years good and bad. I was lucky enough to hit good. Besides, 25 years means that you are locked into paying less per month if something bad were to happen. I erred on the side of safety. If I were to lose my job tomorrow and be forced to work at McDonalds I could revert my principle to the remainder of the 20 year term and still pay my mortgage comfortably.
My rate is non fixed. I could have locked in at 5% back when I bought my place. But holy shit, I've averaged a 4.35% rate not including the first six months at 2.5%. I've averaged lower than the lock in.
If you are comfortable with the bank owning your ass for an extra 6 years and taking more money from you on a yearly basis then fine. If in the US it is not easy to find a mortgage like this it is too bad. I would never pay a monthly mortgage if I didn't have to.
Maxwell House
Member
Buying real estate is hardly ever a mistake. Usually, the mistake is NOT investing money in property (people who continually throw their money away by renting instead of owning).
Some of my friends make a very good living yet still rent instead of own. They spend $800-$1200 per month on rent. It just blows my mind that they just want to throw their money away like that.
Some of my friends make a very good living yet still rent instead of own. They spend $800-$1200 per month on rent. It just blows my mind that they just want to throw their money away like that.
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