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(Daily Mail)   Welcome to the world of 40-year mortgages   (dailymail.co.uk) divider line 22
    More: Asinine, home price, Mark Carney, Niagara Falls FROZE, interest-only loan, mortgages, mortgage payments  
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3225 clicks; posted to Business » on 11 Jan 2014 at 8:22 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



Voting Results (Smartest)
View Voting Results: Smartest and Funniest

2014-01-11 10:19:12 AM  
2 votes:
30 year mortgage is ~4.5%
Stock market is ~7-9%.

You should be taking the longest loan period you can and paying it off as slowly as possible.
2014-01-11 09:50:25 AM  
2 votes:

Lee Jackson Beauregard: At 5 percent interest and initial principal of $100,000, the payment on a 30 year note is $536.83.  For a 40 year note, it's $482.20.  About ten percent less.

Make of that what you will.


You'll pay back $193,258.80 on the 30, $231,456.00 on the 40.  Make of that what you will as well.
2014-01-11 09:05:20 AM  
2 votes:

UnderwayRightNow: Meh, you can do up to 60 year mortgages in for example Sweden


Meh, you can do unlimited mortgages as long as you have equity. It's called "refinancing".
2014-01-11 08:26:06 AM  
2 votes:
Stop buying what you cannot reasonably afford?
2014-01-11 02:11:41 AM  
2 votes:
In a related story, unless you paid cash, you're just renting from a bank.  And if you did pay cash, you're renting from the government.  Ha ha.
2014-01-11 10:53:00 PM  
1 votes:

Smackledorfer: On average the only real advantage to owning over renting is money. People are stupid, but not stupid enough to all take on greater responsibility and tying up funds for shiats and giggles.


There are other advantages, like being in control of your property - being able to paint it the color you want, plant what you want in the yard, and not have to accept a landlord entering the property to do an inspection.

On the other hand, there are expenses beyond the mortgage, taxes, and insurance, such as maintenance and landscaping.

Here, the mortgage and taxes are extremely reasonable, it's the insurance that's driving me up the wall.  Farking Rick Scott deregulating the insurance industry has allowed the insurers to dramatically raise prices year after year, up to 20% each year, and they're taking full advantage.  Of course, the insurers themselves are a huge hassle as they insist on insuring the home for far more than the loan value, and use their own voodoo calculations for replacement value that put it far above what it would actually cost to replace just so that they can charge higher rates.

I get that the bank has an interest in making sure the property is insured, but they have no reason to require that the property be insured in any way other than a cash value policy in the amount of the outstanding balance.  If I have $80K outstanding on my loan, I should be able to buy a policy that covers a cash payout of that amount so that the bank gets their money in the event that the collateral is destroyed, instead of a policy for $195K for a total replacement.  The bank shouldn't care if the insurance pays to replace it or just pays out the due balance.
2014-01-11 09:23:25 PM  
1 votes:

Prophet of Loss: Smackledorfer: Prophet of Loss: A renter and a buyers start out ...

39 years later, the buyers defaults, loses everything put into the house and has ruined credit. The renter is still renting.

Who comes out ahead in this scenario? The bank.

You don't know how mortgages work, do you?

You assume the house is above water. That's a big assumption. Oh and fark you for your snide response. I'd say DIAF, but its not slow enough for the likes of you.


Lighten up.

What house is 39 years under water?
2014-01-11 08:40:06 PM  
1 votes:

Prophet of Loss: Smackledorfer: Prophet of Loss: A renter and a buyers start out ...

39 years later, the buyers defaults, loses everything put into the house and has ruined credit. The renter is still renting.

Who comes out ahead in this scenario? The bank.

You don't know how mortgages work, do you?

You assume the house is above water. That's a big assumption. Oh and fark you for your snide response. I'd say DIAF, but its not slow enough for the likes of you.


If a house is under water after 39 years of a 40 year mortgage then there is something seriously wrong.

Of course they could have re mortgaged several times and taken equity out, but then they'd have the proceeds of that which a renter wouldn't have.

If I lost my home the day before my mortgage ended and I got nothing from the foreclosure, which is vastly unlikely, I'd still be way ahead of someone who rented for all that time. They'd have no equity, like me, but they'd have been paying far more each month.
2014-01-11 06:11:08 PM  
1 votes:

Smackledorfer: Prophet of Loss: A renter and a buyers start out ...

39 years later, the buyers defaults, loses everything put into the house and has ruined credit. The renter is still renting.

Who comes out ahead in this scenario? The bank.

You don't know how mortgages work, do you?


Oh, and in my entire life, renting has never been cheaper than owning.

It has big benefits like never being house-poor, tied down, losing it to a hurricane and your insurance company farking you, etc. It is a fine option.

But nobody, anywhere, is renting out property at a loss. Even a month to month loss is still likely putting the landlord ahead due to what goes into principal.

I don't know why renters pretend/imply otherwise.
2014-01-11 06:02:23 PM  
1 votes:

Prophet of Loss: A renter and a buyers start out ...

39 years later, the buyers defaults, loses everything put into the house and has ruined credit. The renter is still renting.

Who comes out ahead in this scenario? The bank.


You don't know how mortgages work, do you?
2014-01-11 03:14:54 PM  
1 votes:
We were 3 years into a 30year, and went down to a 20year. We pay the same price evey month now (rate drop equaled the difference in payment), but chopped off seven years of loans, and about $100,000 in interest.
2014-01-11 01:17:06 PM  
1 votes:

gremlin1: Lance Russell's Nose: gremlin1: What happened to mortgage insurance? If you are disabled it picks up the payment or if you die it pays off the mortgage.


PMI kicks in and pays whatever is left, if anything, after the property has been foreclosed upon and sold.  It's for the benefit of the lender, not the borrower.

I don't know what type of insurance you have dealt with but the insurance I have dealt with required proof of death, notarized and the mortgage was paid off and the spouses kept the house.No foreclosing, no sale.


He's talking about mortgage insurance, which is to protect the lender in cases where the borrower doesn't pay back the loan.  You're talking about life insurance, which gives you money for being dead.
2014-01-11 12:16:56 PM  
1 votes:

gremlin1: What happened to mortgage insurance? If you are disabled it picks up the payment or if you die it pays off the mortgage.



PMI kicks in and pays whatever is left, if anything, after the property has been foreclosed upon and sold.  It's for the benefit of the lender, not the borrower.
2014-01-11 11:03:39 AM  
1 votes:

Tommy Moo: Chagrin: 30 year mortgage is ~4.5%
Stock market is ~7-9%.

You should be taking the longest loan period you can and paying it off as slowly as possible.

While that is technically the best thing to do if you are a robot, there is value to some people in having an ironclad guarantee that, no matter what, hell or high water, injury or disability, no one can EVER take the roof from over my head. The psychological boost I get from that is worth more than the extra few dollars I'd marginally make in interest each month, so I plan to pay my mortgage off as quickly as possible so that I can spend as many years of my life with that awesome, empowering feeling as possible.


Unless someone puts a judgment lien on your property, or you get divorced and your spouse gets the house, or a natural disaster comes by and washes your house away, or an idiot neighbor burns your house down, or you can't afford to pay property taxes, etc etc etc etc
2014-01-11 11:00:48 AM  
1 votes:

Chagrin: 30 year mortgage is ~4.5%
Stock market is ~7-9%.

You should be taking the longest loan period you can and paying it off as slowly as possible.


Addendum: Not to mention the fact that in many states, people can sue you to take any cash or investments you have, but it's a lot harder to take someone's house. In some states you can even keep your primary house through bankruptcy.
2014-01-11 10:46:10 AM  
1 votes:
A renter and a buyers start out ...

39 years later, the buyers defaults, loses everything put into the house and has ruined credit. The renter is still renting.

Who comes out ahead in this scenario? The bank.
2014-01-11 09:36:41 AM  
1 votes:

TuteTibiImperes: The recent housing bubble collapse certainly put a wrench into things, but isn't the typical process to buy a starter home, pay on it for 5-10 years, then sell it when you've accumulated some equity and the property value has increased enough to use that as a considerable down payment on your next home, where you'll start out in a better position, then rinse and repeat one or two more times until you're in your final home where you can put down a huge down payment and pay it off fairly quickly?


By typical?  All me and my wife's WWII fighting grandparents bought a middle-classish house in the late 40s/early 50s as their first, had kids, then lived in it to death/nursing home.

There's also the issue of leveraging house loans.  My wife and I have the money to pay off our mortgage today (yay, living in the midwest).  Several times over actually.  And I'm not doing so. Autopaying the standard 30-year plan. ??  Look, the mortgage is fixed at 4%  I can (some years, when it's worth itemizing) even get a tax deduction on the interest.  I want to believe that, over the next 30-some years, conservative investing and maxing out tax shelters (IRAs, 401ks and the like) will beat a 4% average return. I could be wrong. But, if you believe that... paying off the mortgage doesn't add up. It's cheap money.  Same way I feel about my student loans.

HotIgneous Intruder: Because being in debt for life and paying rent, upkeep, and taxes on a property for the bank is the only way you can find a place to live in the United States.


I can find you no shortage of sub-$30k bungalows in midwestern small towns.  Being in debt for life is the only way you can find a place to live  where you want to live in the United States.
2014-01-11 09:35:56 AM  
1 votes:
Just rent.
Then you won't have to worry about the damn house...and you can go do something.
2014-01-11 09:20:52 AM  
1 votes:
Some of us just call that "rent".
2014-01-11 09:20:10 AM  
1 votes:
I wonder what the percentage of people who actually fully pay off the loan on their first home is.

The recent housing bubble collapse certainly put a wrench into things, but isn't the typical process to buy a starter home, pay on it for 5-10 years, then sell it when you've accumulated some equity and the property value has increased enough to use that as a considerable down payment on your next home, where you'll start out in a better position, then rinse and repeat one or two more times until you're in your final home where you can put down a huge down payment and pay it off fairly quickly?
2014-01-11 09:06:21 AM  
1 votes:
Because being in debt for life and paying rent, upkeep, and taxes on a property for the bank is the only way you can find a place to live in the United States.
2014-01-11 08:52:35 AM  
1 votes:

gremlin1: What happened to mortgage insurance? If you are disabled it picks up the payment or if you die it pays off the mortgage.That way you would not be passing on the debt to your children.


Debt dies with the debtor.  You don't pass down debt to your children.  Unless of course they want the collateral, then they would have to arrange to make payments on it, but they are under no obligation to do so.
 
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