OT: General OT Thread [NO POLITICS OR RELIGION]

[chonestown]

Pay down at least 20% to avoid PMI

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

[DrWood]

There's what you're pre-approved for and what you can afford. Often two very different numbers. Just remember you don't want to be "house poor". In other words, you spend so much of your income on mortgage that you can't afford furniture.

Yeah, I don't know where they come up with their numbers for how much they think you can afford. I haven't bought a house in 20 years, but it was always about twice what I thought was reasonable.

[DrWood]

Pay down at least 20% to avoid PMI

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

It depends on if you can itemize deductions. With the new tax laws, I'd guess most people use the standard deduction, but the interest I paid for my mortgage led to a nice tax refund.

Plus there is the opportunity cost of money. If you can get 3% interest note, you can expect to earn more on investments (at least 6%), so IMO, there is ZERO reason to pay off your mortgage early, other than peace of mind.

[buckboy]

The ads I see at the top of the page are often for ladies lingerie. You guys getting that, too?

Nope. All earwax all the time.

[jute2003]

Pay down at least 20% to avoid PMI

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

With as low as interest rates are anymore, the 15 over 30 advice isnt a slam dunk anymore.

[chonestown]

Pay down at least 20% to avoid PMI

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

It depends on if you can itemize deductions. With the new tax laws, I'd guess most people use the standard deduction, but the interest I paid for my mortgage led to a nice tax refund.

Plus there is the opportunity cost of money. If you can get 3% interest note, you can expect to earn more on investments (at least 6%), so IMO, there is ZERO reason to pay off your mortgage early, other than peace of mind.

Yep, you're dead right on the opportunity cost. I try to live with as little debt as possible [I'm driving my paid-off car until it collapses at the Cook County Assessors Office], but even I am avoiding extra house payments. Better off putting it into deferred comp, 401K or any other sort of safe investments.

[MartyConlonOnTheRun]

Pay down at least 20% to avoid PMI

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

With as low as interest rates are anymore, the 15 over 30 advice isnt a slam dunk anymore.

It only isn't a slam dunk if you actually invest the difference. For (I'm making up numbers) 90% of homeowners, the 15 year mortgage is better since it is forced savings. If you are in the small percentage that 1. Spends the time to look at the numbers 2. Has the self control not to spend the extra cash, then yes you are better off playing the market with the cash flow of the longer mortgage.

No one hates themselves for having a paid off house. Physiologically it relieves a lot of stress even if someone couldve managed their investments slightly better.

[KidA24]

Anyone know how I figure out what kind of house I can afford? I legit have no idea.

Go talk to your bank. It's free and they'll pre-approve you. There's no obligation to do anything with the information. You can shop around later for rates, but you're not suddenly going to have an extra couple hundred thousand to spend unless something changes financially for you.

There's what you can afford / get pre-approved for and what you should actually get. Kind of shocked what the bank pre-approved us for and that would've put us in some bad financial times if we just relied on that. Personally I would see what you can monthly afford on a 15-year loan and then use that house price range over a 30 year mortgage since rates are so low. This could also keep you out of PMI with a cheaper house . But I'm pretty conservative (read cheap) with my finances.

Make sure you use the Zillow calculator with property taxes. Can be as much as 50% of mortgage payments depending on area.

You shouldn't be shocked by that. The banks are in the business of making money.

How do they make the most? Leaving you in the midst of the most debt with the highest interest rate possible.

[jute2003]

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

With as low as interest rates are anymore, the 15 over 30 advice isnt a slam dunk anymore.

It only isn't a slam dunk if you actually invest the difference. For (I'm making up numbers) 90% of homeowners, the 15 year mortgage is better since it is forced savings. If you are in the small percentage that 1. Spends the time to look at the numbers 2. Has the self control not to spend the extra cash, then yes you are better off playing the market with the cash flow of the longer mortgage.

No one hates themselves for having a paid off house. Physiologically it relieves a lot of stress even if someone couldve managed their investments slightly better.

For many, the 15 year option is fine an good...even for most it is. But like you said, if you are someone who does a bit of investing, it isnt unheard of to get a better return on the money you would have spent on your mortgage. If you plan on being in the house long term..this is even more true.

[HaroldinGMinor]

Pay down at least 20% to avoid PMI

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

It depends on if you can itemize deductions. With the new tax laws, I'd guess most people use the standard deduction, but the interest I paid for my mortgage led to a nice tax refund.

Plus there is the opportunity cost of money. If you can get 3% interest note, you can expect to earn more on investments (at least 6%), so IMO, there is ZERO reason to pay off your mortgage early, other than peace of mind.

I refinanced my student loans from 6.5% to 3.15%. I was making extra payments up the yin yang but not anymore.

[buckboy]

Pay down at least 20% to avoid PMI

It's basic, but extremely good advice to follow.

To give you an idea of how much rates matter, I initially started with a 6.5 at 30. I refinanced my loan beginning January 2013 to a 2.875 at 15. I pay roughly $25.00 more month at the 15 year plan. If you can do 15, do it. The interest tables will point that out very clearly. If 30 years are more palatable and you can put down 20%, that's real good.

Good luck, KM.

It depends on if you can itemize deductions. With the new tax laws, I'd guess most people use the standard deduction, but the interest I paid for my mortgage led to a nice tax refund.

Plus there is the opportunity cost of money. If you can get 3% interest note, you can expect to earn more on investments (at least 6%), so IMO, there is ZERO reason to pay off your mortgage early, other than peace of mind.

Debt is highly underrated in general. I'm in debt up to my eyeballs on purpose.

[DrWood]

No one hates themselves for having a paid off house. Physiologically it relieves a lot of stress even if someone couldve managed their investments slightly better.

Does it? If the option is between paying down $100K in principal or having $120K in investments?

I paid off my house when I had a windfall of money that allowed me to do so, but that was only because I chose the easiest thing to do, not because I chose the best thing to do.

[MartyConlonOnTheRun]

No one hates themselves for having a paid off house. Physiologically it relieves a lot of stress even if someone couldve managed their investments slightly better.

Does it? If the option is between paying down $100K in principal or having $120K in investments?

I paid off my house when I had a windfall of money that allowed me to do so, but that was only because I chose the easiest thing to do, not because I chose the best thing to do.

You are assuming that someone who chooses a 30 year mortgage over a 15 year mortgage is putting every extra cent of the difference between monthly payments back into investments. 90% of people aren't going to do that. I check my stocks weekly, I figit with my investments monthly and pretty hands on, and I don't think I would even be conscious enough to not have leakage. That extra cash flow would probably go to house updates, recreational spending etc.

You basically have to set up an automatic contribution to investments immediately after the mortgage. I just don't see the average person who put down a big down payment and signed a mortgage is going to do that with the incoming cash flow.

[DrWood]

No one hates themselves for having a paid off house. Physiologically it relieves a lot of stress even if someone couldve managed their investments slightly better.

Does it? If the option is between paying down $100K in principal or having $120K in investments?

I paid off my house when I had a windfall of money that allowed me to do so, but that was only because I chose the easiest thing to do, not because I chose the best thing to do.

You are assuming that someone who chooses a 30 year mortgage over a 15 year mortgage is putting every extra cent of the difference between monthly payments back into investments. 90% of people aren't going to do that. I check my stocks weekly, I figit with my investments monthly and pretty hands on, and I don't think I would even be conscious enough to not have leakage. That extra cash flow would probably go to house updates, recreational spending etc.

You basically have to set up an automatic contribution to investments immediately after the mortgage. I just don't see the average person who put down a big down payment and signed a mortgage is going to do that with the incoming cash flow.

so set up the automatic contribution, or develop some self control, whichever is easier.

[jschligs]

Does it? If the option is between paying down $100K in principal or having $120K in investments?

I paid off my house when I had a windfall of money that allowed me to do so, but that was only because I chose the easiest thing to do, not because I chose the best thing to do.

You are assuming that someone who chooses a 30 year mortgage over a 15 year mortgage is putting every extra cent of the difference between monthly payments back into investments. 90% of people aren't going to do that. I check my stocks weekly, I figit with my investments monthly and pretty hands on, and I don't think I would even be conscious enough to not have leakage. That extra cash flow would probably go to house updates, recreational spending etc.

You basically have to set up an automatic contribution to investments immediately after the mortgage. I just don't see the average person who put down a big down payment and signed a mortgage is going to do that with the incoming cash flow.

so set up the automatic contribution, or develop some self control, whichever is easier.

I think you’re missing the point. He knows how to do it, but most of America doesn’t. It’s actually incredible how bad the majority of Americans are at saving and investing.

[DrWood]

You are assuming that someone who chooses a 30 year mortgage over a 15 year mortgage is putting every extra cent of the difference between monthly payments back into investments. 90% of people aren't going to do that. I check my stocks weekly, I figit with my investments monthly and pretty hands on, and I don't think I would even be conscious enough to not have leakage. That extra cash flow would probably go to house updates, recreational spending etc.

You basically have to set up an automatic contribution to investments immediately after the mortgage. I just don't see the average person who put down a big down payment and signed a mortgage is going to do that with the incoming cash flow.

so set up the automatic contribution, or develop some self control, whichever is easier.

I think you’re missing the point. He knows how to do it, but most of America doesn’t. It’s actually incredible how bad the majority of Americans are at saving and investing.

no, I get that. But it's simple. It's not like if I said, "well, learn how to apply linear programming to solve your problems." You automate it or you take better control of your decision-making.

[buckboy]

I have 4 mortgages and the difference between 15 & 30 [roughly] goes directly into a 2.75 money market that gets liquidated into the market quarterly. Easy peasy.

Not a permanent situation of course, but it's gone on for like 5 years.

[raysbookclub]

I refinanced my student loans from 6.5% to 3.15%. I was making extra payments up the yin yang but not anymore.

Did you go much research and talk to many banks/lenders when you did that refinancing? My student loans are over 6% too, would love to get a better rate.

[HaroldinGMinor]

I refinanced my student loans from 6.5% to 3.15%. I was making extra payments up the yin yang but not anymore.

Did you go much research and talk to many banks/lenders when you did that refinancing? My student loans are over 6% too, would love to get a better rate.

I think I looked at four different ones all online. Sofi, LendKey, Earnest, and Laurel Road. Lend Key gave me the best rate.

[MickeyDavis]

The ads I see at the top of the page are often for ladies lingerie. You guys getting that, too?

Nope. All earwax all the time.

Mine seems to change frequently. But haven't seen either of these