Mortgage thoughts

[CuzzinOlaf]

Okay, so all of that said, the difference between the 30 to 25 is $135 monthly. The difference between the 30 to 20 is $309.

 

[EmersonHart13]

So that 309. Take 231 and invest and then the rest do extra to principal

that is 2781 invested per year plus your gains

 

[CuzzinOlaf]

So $231 invest, $78, throw towards the principal. That doesn't sound like much LOL

 

[EmersonHart13]

It adds up. It takes time and patience.

 

[Turk]

231 invested over 20 years gets you 175k....

 

[Bruce Jibboo]

lol what happens when the stock market bubble pops or deflates?

 

[EmersonHart13]

lol what happens when the stock market bubble pops or deflates?

This is why we are talking averages debbie downer

 

[Bruce Jibboo]

fuck that, time it right and you can keep it

 

[Turk]

fuck that, time it right and you can keep it

Bubbles aren't normally determined until after they burst. Even when they happen, which is frequently, you still come out ahead 10% annualized over a long term.

 

[Turk]

To Emersons point, we are talking averages which takes into account every bear market including the depression and Great Recession.

 

[Bruce Jibboo]

ya def can't arguing facts represented in graphs

as you can see from my last post, impulsive crew need not apply.

 

[CuzzinOlaf]

Good information, thanks.

So now back to the escrow money. If it isn't in my mortgage, where is a safe place to put this money so I can get a small but guaranteed return? I'll need to be able to pull out the money when taxes are due twice a year.

 

[Turk]

Good information, thanks.

So now back to the escrow money. If it isn't in my mortgage, where is a safe place to put this money so I can get a small but guaranteed return? I'll need to be able to pull out the money when taxes are due twice a year.

Nowhere unfortunately. Unless you find a savings account with a decent return.

 

[CuzzinOlaf]

Nowhere unfortunately. Unless you find a savings account with a decent return.

That's what I was thinking. What about bonds or CDs?

 

[Turk]

Short term bonds and cds have such low returns they aren't even worth the hassle. You'd be making a few cents.

 

[EmersonHart13]

Yeah, I work at a bank. We aren't offering shit.

 

[RICH17]

Great info here. Hopefully everyone on the board is reading

 

[Mook]

RICH17, home owner, SunTrust Mortgage Lender.

 

[Outlaw]

But seriously, good info.




Hopefully everyone on the board is reading.

 

[Mike K]

Food for thought but if you're buying an average priced house, let's say $300,000, and you're putting 20% down ($60,000) you'll end up with a $240,000 mortgage and the difference in payment between a 20 year 3.49% loan and a 30 year 3.75% loan is something like $30. It's nothing. But with the 30 year loan you have the freedom of paying less should something happen that necessitates that. For that reason alone I'd go with the 30 year loan but just pay it down as if it were a 20 year loan.

 

[jason05gt]

Also, equity in your home isn't liquid, stocks are. The money in stocks can be converted to cash in about 3 days. My recommendation, do the 30 year. 75% of leftover monthly money in the stock market and 25% as extra principal on the home. You'll be rich in 10 years if you stick with that plan.

You have to look at a lot of factors though.

Anyone looking at a mortgage should be looking at an amortization table to see how much interest is being paid over the life of a 15, 20, and 30 year loan at the differing rates. You can easy plug in the numbers and different mortgage rates to see what each scenario nets out.

Also, it depends on what you're investing in. If you invest in SPY, VOO, VIO or any S&P indexed funds the return annualized is roughly 10%. If you are investing in individual stocks, it varies.

Lastly, you should also look at historical real estate values in your city and neighborhood. The rate of returns pre-crash in 2008 were pretty significant and the market recently has started to come back around.

 

[CuzzinOlaf]

Food for thought but if you're buying an average priced house, let's say $300,000, and you're putting 20% down ($60,000) you'll end up with a $240,000 mortgage and the difference in payment between a 20 year 3.49% loan and a 30 year 3.75% loan is something like $30. It's nothing. But with the 30 year loan you have the freedom of paying less should something happen that necessitates that. For that reason alone I'd go with the 30 year loan but just pay it down as if it were a 20 year loan.

You mean a difference of $300, right?

 

[EmersonHart13]

I did not put 20% down. I put the minimum down. That's how I roll because I'm not a baller that lives on the top of THE Beverly Hill in CA

 

[jason05gt]

Food for thought but if you're buying an average priced house, let's say $300,000, and you're putting 20% down ($60,000) you'll end up with a $240,000 mortgage and the difference in payment between a 20 year 3.49% loan and a 30 year 3.75% loan is something like $30. It's nothing. But with the 30 year loan you have the freedom of paying less should something happen that necessitates that. For that reason alone I'd go with the 30 year loan but just pay it down as if it were a 20 year loan.

I think you left off a zero there. The difference would be nearly $300 a month.

 

[Mike K]

You mean a difference of $300, right?

No, I mean $3x.xx but I just re-read my post and did a shit job of making my point. What I was saying was that the difference between the 3.75% 30 year loan paid off on a 20 year schedule and the 3.49% 20 year loan paid on the same schedule is about $30 difference a month but paying the higher interest 30 year loan on the 20 year schedule, though slightly more money each month, would give him a buffer in case something popped up in the future that affected his ability to make the higher payment. So lets say two years from now he loses his job and exhausts his savings... He can then revert to the lower payment of the 30 year loan without needing to refinance, something he likely wouldn't be able to do anyhow if he found himself in a situation where he was unable to pay.