scary numbers...

[blkTJ]

I'm pre-qualified for some money and I've seen some places that look promising. I did some calculations based on monthly mortgage payments x 12 x 30.

let's say that for 300k your mortgage is $1600. That doesn't include tax or hoa, just plain ole' payin' off the loan.

correct me if I'm wrong here... but 1.6k x 12 = 19.2k.

19.2k x 30 = $576,000.00

who in the hell deserves 276 thousand dollars so I can buy a 300 thousand dollar home??? :confused:

[sam 15]

Yeah, I put home mortgages right up there with loan sharking. I thing the only thing that keeps it legal is the amount of time you're given to pay it back (10, 15, 20, 30, 40 years). If you look at it even closer, the banks get their interest (Vig) up front, so if you sell your house, lets say after 5 years, you pay around 96,000 dollars on the loan, but only about 16,000 goes towards the principal. And yes, you get to write off the interest, but you also get to pay capital gains when you sell, unless you reinvest the whole amount, and the cycle starts again.............home ownership, it's a wonderful thing.......these days, it makes renting look pretty good. Me, I pay the piper. I like home ownership over renting......... get yourself a good tax person

[goodtimes]

It may be a $300K home now....but in 30 years, when you get done paying off that $576K, it will be a $750K home. Plus, you will get to deduct $276K from your taxes over the next 30 years...and you also need to deduct 360 months of rent that you are not giving someone else........plus you can probably get a garage to work in.....

[goodtimes]

Oh yea, get a good tax guy, set yourself up as a independant contractor (I do freelance mechanical work --- lift kit installs, gear installs, industrial equipment repair, etc. --- plus driver training, produt testing and a few other things----basically stuff I normally do anyway), then you can deduct ALOT more of your expenses. Due to one project I am working on (I'll give details when I wrap it up late this year or early next), I get to deduct all of my jeep expenses--including milage!

Plus, you don't have so many noisy neighbors.....unless you live over by Erik.

[jmbrowning]

who in the hell deserves 276 thousand dollars so I can buy a 300 thousand dollar home??? :confused:

Goodtimes is right. You need to consider appreciation in value over the time of your loan. Interest is just rent that you pay on money while you are using it.

Having said that, there are a few things that you can do to decrease the amount of interest you pay, if your cash flow situation permits.

1. Pay extra principal, either by paying half a monthly payment every two weeks (this puts another months principal into a years payment) or just by sending in a lump sum whenever you have the extra cash.
2. Get a 15 year fixed loan. You will have a higher minimum monthly payment though. We liked this option the best.
3. Get the previous owner to carry the paper on simple interest basis for five years and then get a bank (compound interest) loan later. Commonly done on acreage and farms, but a little less likely on private homes. Also, who knows what interest rates will be like in five years.

Bottom line, though, is...it is worth it to be a homeowner, if you plan on staying in the same area for a while (three years min). Tax deduction, debt consolidation, appreciation, and plumbing problems can all be yours for signing on the dotted line.

[seapahn]

For me, the choice was really easy ... either pay like $900 to $1000 in rent which is a TOTAL waste of money, or about $1400 in mortgage payments that would allow me to build equity over time and get a bunch of tax benefits. To top it off, as already mentioned, the property value usually goes up and for my area it has been about 10% a year for the past decade.

For me, I went with a 80-15-5 plan ... which means I put 5% down to begin, 80% as a fixed rate 30 year loan, and 15% as a home equity line of credit (variable rate). By doing this, I did NOT have to pay Private Mortgage Insurance (PMI) which is another TOTAL waste of money IMO.

[rick]

who in the hell deserves 276 thousand dollars so I can buy a 300 thousand dollar home??? :confused:

Compound interest is a beatch. As Ted says, extra payments will add up to paying the loan off significantly sooner since you are paying mostly interest and little principal at the beginning of the loan. The answer to your question is: "people that have $300k cash laying around".

It also helps to buy "below market value"... If you find a place that needs paint, carpet, and some minor repairs you can spend significantly less money in some cases. The cost/value of making the repairs is usually significantly less than the increase in market value once they are made. If I had bought my house, painted it, and cleaned up the yard I could have turned around a month later and sold it for at least $15k more than I paid for it, irrespective of the ridiculous real estate price increases lately. It was pretty bad, but paint is paint whether it is just an ugly color or it is dirty (in my case it was both!). Of course, you don't make much on $15k when you pay to buy it (up front taxes, insurance, cost of loan) and you pay to sell it (realtor, inspections, etc). However, the increase in value overall a few years from now when it is all done will be much more than if I had gone out and bought a place in tip top shape. Of course, I'm a glutton for punishment, I don't mind working on it in my free time. It usually works out (with "normal" market value increases) that you need to keep a place about 5 years before it appreciates enough to get your costs back from the sale and actually make money on it. Of course, recently I think you could have bought about the stinkiest piece of trash on the market and sell it a year later and make money.

[igofshn]

Just remember, all that interest is tax deductable.

[blkTJ]

thanks guys, all good points. I guess I just had a bit of sticker shock when I ran the numbers. :confused2 :smile:

[aston]

thanks guys, all good points. I guess I just had a bit of sticker shock when I ran the numbers. :confused2 :smile:

Make sure you get a groovy shag-pad.

[NAILER341]

there are a couple of ways to more quickly pay off the loan. as stated above... over pay each month a hundred or 2 [whatever you can afford] and another way is to pay every 2 weeks.
i have them debit my acct every 2 weeks for half of the monthly mortguage, and add 100 bucks to the principal. this brings a 15 year loan to just under 12 years.
that is something else to consider... look at the 15 year loans as well. in my case, the interest dropped low enough that it wasnt much more than i was paying each month for the 30 year loan.
look around for a good lender.
http://www.abnamro.com/com/homepage.jsp
http://www.mortgage.com/C3/_Start.bus

i use these guys.
they loan money to the lenders

[aston]

Brian,

Here's what my tax/finance chick worked out for me and she likes Jeeps :yay:

Put 20% down, then you don't have to pay extra mortgage insurance.

So on your $300k that's errr 60k

Then get a 30 year fixed. 30 years is for the tax deduction, fixed 'cos rates are low now duh!

Then if you sell in a couple of years and you make 15% you get $45k back on your $60k investment - ace!

But let's say you *could* putdown $100k still only putdown 60, for the juicy return, and invest the 40k elsewhere.

Chris L.

[blackZZR]

the intrest is not tax deductable, it is income deductable, big difference. if it were tax deductable then you would take it your taxes, not your income, so you do not really get it back, you get a percentage. However finacial instatutions want use to use the words Tax deductable so we think we get it back. That way they can fool all of america to do it.
Another thing they get you to do is to refie after about 7 years
you realise that for about the first 10 years you are paying only intrest on that loan, so when you refie you actually in the long run get screwwed. they say you will lower your payment, but if you lower a 1600 dollar payment to 1200 dollars you save 400 bucks a month, then you pay 1200 times 84 more payments or 100,800 dollars when the 400 over the 23 years is only 100,400, So you see they extend your dept out and you save nothing. Or you take money out and finance whatever you purchase for 30 years.
the best thing you can ever do with a mortgage is pay it off early.
And never take finacial advise from someone who wants to loan you money.

[igofshn]

the intrest is not tax deductable, it is income deductable, big difference. if it were tax deductable then you would take it your taxes, not your income, so you do not really get it back, you get a percentage. However finacial instatutions want use to use the words Tax deductable so we think we get it back. That way they can fool all of america to do it.
Another thing they get you to do is to refie after about 7 years
you realise that for about the first 10 years you are paying only intrest on that loan, so when you refie you actually in the long run get screwwed. they say you will lower your payment, but if you lower a 1600 dollar payment to 1200 dollars you save 400 bucks a month, then you pay 1200 times 84 more payments or 100,800 dollars when the 400 over the 23 years is only 100,400, So you see they extend your dept out and you save nothing. Or you take money out and finance whatever you purchase for 30 years.
the best thing you can ever do with a mortgage is pay it off early.
And never take finacial advise from someone who wants to loan you money.

You aren't totally correct. If you refi for the same # of years left or less, then you aren't paying again. For most people, their mortgage is the only way to lower their tax burden, so paying it off early isn't always the best thing.

[king4wd2]

For our mortgage company to pay every two weeks you have to fork out an additional $300 just to do that. Check into that also.