...not your typical golf forum
Horseballs wrote:Investment real estate works great, as long as there is stability. Of course, I got absolutely jobbed on my investment property, though that was bubble-related.
What other investment can you own 20% of, yet get 100% of the growth when you sell?
If I had copious amounts of cash, I'd dabble in it. Unfortunately, I don't.
FamousDavis wrote:Poe4soul wrote:FamousDavis wrote:Horseballs wrote:I refinanced in September last year for 2.75% 15 yr fixed no points. It's truly unbelievable the financing deals out there for qualified people. I've always been a bit conservative about keeping fixed costs low, like paying cash for cars instead of financing. But I was able to get .9% financing on cars bought in 2010 and 2011. Of course I'm going to do that.
I'll need to look into that but again I really need to take a hard look at how long I believe I'll be in my current home. No doubt I'll pay off more principal with a 15 year vs. 30 year but it's an additional $400/month that's mainly going toward interest in the beginning.
One thing I've learned is to be skeptical when it comes to financial advice. A lot of advice is based on theory and opinion and there are many different ways of looking at an investment.
One opinion I disagree with, and that I believe has recently been proven wrong, is the one that states that you should borrow as much as possible when purchasing a home. The theory is that you can put the money that would have gone toward the down payment into a mutual fund and earn 8% to 10% a year rather than have it sit as a downpayment. In theory, that sounds good if you invest all that money in an S&P 500 fund and let it sit for 30 years.
However, if you would have done that in 2006 the value of that money, in 2008, would be almost half of what it originally was. Further, if you lost your job at that time, like many Americans did, you might need to sell your house that is now worth 30% less with an upside down mortgage. What if you needed to relocate?
With refinancing, it's not always a no brainer although the 2.75% sounds pretty darn good, especially with no fees. Still, you need to make sure that the extra monthly payment vs. the 30-year isn't going to hurt too much and that you're sure you'll be living in the house for quite awhile.
I agree that auto financing at 1% is the right thing to do. I once financed a car at around 6% and felt like I was throwing money away.
Another theory that's been proven wrong is that real estate is a great investment. If you take inflation into account along with interest payments, homeowners insurance, repairs, HOA (if applicable) and property taxes it's really not that great of an investment. Of course, owning a home brings you a certain amount of joy that renting does not.
I know plenty of people that did just fine investing in houses. Granted they've been down for a few years but the smart ones don't get overleveraged and cut their loses. Like the stock market, the rule is to buy low and sell high. Right now all of those people are investing in houses, at least they are in the Portland market. It's really an easy equation if you have the money to invest. Houses are at a all time low and many markets are moving pretty good right now. You just have to be smart about it. Many of the homes in our neighborhoods are be bought by investors and renting them out. Because of the low interest rates many of the homes are renting high enough to break even or show a profit. When the housing gets moving these homes will see double digit profits with little investment. You just have to have money or access to money.
As far as your loan, you need to consider other options if you don't want to make the extra $400 payment. Look into the 20 year or even refinance a 30 year. If the fees are very low, which they were for me, the only equation you have to consider is how long it take to pay off the cost of the loan with your interest savings. Every month after the cost is paid off is money in your pocket. It's really not rocket science.
It's certainly more complicated than you are making it out to be. For example, you mention me refinancing with a 30-year loan. I also have to take into consideration that I'm already 3 years into that loan and I've been paying on that loan for 3 years. Starting over with a new 30 year adds another 3 years of payments and it means I'll have my house paid off 3 years later than my situation now.
Buying low and selling high? Yeah, that sounds great when you look back in time. Most people I talked to back in 2003 thought the Calfornia housing bubble was about to burst at any time. It took 3 more years for that to happen. The home I bought in Los Angeles for $540,000 in 2003 sold for $750,000 exactly one year and 4 months later.
You cannot predict when a market is "low" or "high". That is only something people do in hindsight and they pretend that they knew it all along.
I love it when I hear people talk about their stocks and they say "Yeah, I knew the market was going to tank in 2007 so I got out early. How did you do?". These people are insufferable asses and pretend as if they have some deeper knowledge and can accurately predict the market. Most of them are broke and full of sh!t.
FamousDavis wrote:Poe4soul wrote:FamousDavis wrote:Horseballs wrote:I refinanced in September last year for 2.75% 15 yr fixed no points. It's truly unbelievable the financing deals out there for qualified people. I've always been a bit conservative about keeping fixed costs low, like paying cash for cars instead of financing. But I was able to get .9% financing on cars bought in 2010 and 2011. Of course I'm going to do that.
I'll need to look into that but again I really need to take a hard look at how long I believe I'll be in my current home. No doubt I'll pay off more principal with a 15 year vs. 30 year but it's an additional $400/month that's mainly going toward interest in the beginning.
One thing I've learned is to be skeptical when it comes to financial advice. A lot of advice is based on theory and opinion and there are many different ways of looking at an investment.
One opinion I disagree with, and that I believe has recently been proven wrong, is the one that states that you should borrow as much as possible when purchasing a home. The theory is that you can put the money that would have gone toward the down payment into a mutual fund and earn 8% to 10% a year rather than have it sit as a downpayment. In theory, that sounds good if you invest all that money in an S&P 500 fund and let it sit for 30 years.
However, if you would have done that in 2006 the value of that money, in 2008, would be almost half of what it originally was. Further, if you lost your job at that time, like many Americans did, you might need to sell your house that is now worth 30% less with an upside down mortgage. What if you needed to relocate?
With refinancing, it's not always a no brainer although the 2.75% sounds pretty darn good, especially with no fees. Still, you need to make sure that the extra monthly payment vs. the 30-year isn't going to hurt too much and that you're sure you'll be living in the house for quite awhile.
I agree that auto financing at 1% is the right thing to do. I once financed a car at around 6% and felt like I was throwing money away.
Another theory that's been proven wrong is that real estate is a great investment. If you take inflation into account along with interest payments, homeowners insurance, repairs, HOA (if applicable) and property taxes it's really not that great of an investment. Of course, owning a home brings you a certain amount of joy that renting does not.
I know plenty of people that did just fine investing in houses. Granted they've been down for a few years but the smart ones don't get overleveraged and cut their loses. Like the stock market, the rule is to buy low and sell high. Right now all of those people are investing in houses, at least they are in the Portland market. It's really an easy equation if you have the money to invest. Houses are at a all time low and many markets are moving pretty good right now. You just have to be smart about it. Many of the homes in our neighborhoods are be bought by investors and renting them out. Because of the low interest rates many of the homes are renting high enough to break even or show a profit. When the housing gets moving these homes will see double digit profits with little investment. You just have to have money or access to money.
As far as your loan, you need to consider other options if you don't want to make the extra $400 payment. Look into the 20 year or even refinance a 30 year. If the fees are very low, which they were for me, the only equation you have to consider is how long it take to pay off the cost of the loan with your interest savings. Every month after the cost is paid off is money in your pocket. It's really not rocket science.
It's certainly more complicated than you are making it out to be. For example, you mention me refinancing with a 30-year loan. I also have to take into consideration that I'm already 3 years into that loan and I've been paying on that loan for 3 years. Starting over with a new 30 year adds another 3 years of payments and it means I'll have my house paid off 3 years later than my situation now.
Buying low and selling high? Yeah, that sounds great when you look back in time. Most people I talked to back in 2003 thought the Calfornia housing bubble was about to burst at any time. It took 3 more years for that to happen. The home I bought in Los Angeles for $540,000 in 2003 sold for $750,000 exactly one year and 4 months later.
You cannot predict when a market is "low" or "high". That is only something people do in hindsight and they pretend that they knew it all along.
I love it when I hear people talk about their stocks and they say "Yeah, I knew the market was going to tank in 2007 so I got out early. How did you do?". These people are insufferable asses and pretend as if they have some deeper knowledge and can accurately predict the market. Most of them are broke and full of sh!t.
FamousDavis wrote:
Obviously you are missing my point. I never said that I couldn't put together an Excel spreadsheet to figure out the pros and cons of a refinanced mortgage.
FamousDavis wrote:
Obviously you are missing my point. I never said that I couldn't put together an Excel spreadsheet to figure out the pros and cons of a refinanced mortgage.
Fluffy wrote:I dont have money.....
Talking about this money you guys are making me feel suicidal....
Poe4soul wrote:FamousDavis wrote:
Obviously you are missing my point. I never said that I couldn't put together an Excel spreadsheet to figure out the pros and cons of a refinanced mortgage.
Then what was your point? I'm a bit obtuse in regards personal relationships. I might have missed some ques along the way. I just thought you needed to reality to show how much money it is in a short period of time. 8 years = $25K, pretty amazing. And we're talking low interest rates. It's no wonder people dig themselves into serious holes with high interest notes like credit cards rates.
FamousDavis wrote:Poe4soul wrote:FamousDavis wrote:
Obviously you are missing my point. I never said that I couldn't put together an Excel spreadsheet to figure out the pros and cons of a refinanced mortgage.
Then what was your point? I'm a bit obtuse in regards personal relationships. I might have missed some ques along the way. I just thought you needed to reality to show how much money it is in a short period of time. 8 years = $25K, pretty amazing. And we're talking low interest rates. It's no wonder people dig themselves into serious holes with high interest notes like credit cards rates.
No, I appreciate you putting the spreadsheet together. Can you do another one? Please do one comparing my 27 years remaining on a 30 year loan at 4.375% vs. a 15 year loan at 2.75%, no fees. Just do it by year. Thanks, I would do the spreadsheet myself but I just caught a delicious sea bass and I'm letting it breathe.
Poe4soul wrote:Fluffy wrote:I dont have money.....
Talking about this money you guys are making me feel suicidal....
I didn't have money when I was 25 either.
Kiwigolfer wrote:Just a question for you guys talking about 15-30 year finance. Are you locked into that arrangement for that time? What if you want to sell your house and break the loan. Is the finance fixed to your home/business or to you personally and transferable to new or other assets? The longest I have ever fixed a loan for is 3 years. My current loan is only two years though I always have a mix of floating and fixed rates. The longest I ever considered fixing was 5 years when the rates were at an all time low in 2003 but in the end couldn't bring myself to fix for that long.
Kiwigolfer wrote:Just a question for you guys talking about 15-30 year finance. Are you locked into that arrangement for that time? What if you want to sell your house and break the loan. Is the finance fixed to your home/business or to you personally and transferable to new or other assets? The longest I have ever fixed a loan for is 3 years. My current loan is only two years though I always have a mix of floating and fixed rates. The longest I ever considered fixing was 5 years when the rates were at an all time low in 2003 but in the end couldn't bring myself to fix for that long.
Poe4soul wrote:FamousDavis wrote:Poe4soul wrote:FamousDavis wrote:
Obviously you are missing my point. I never said that I couldn't put together an Excel spreadsheet to figure out the pros and cons of a refinanced mortgage.
Then what was your point? I'm a bit obtuse in regards personal relationships. I might have missed some ques along the way. I just thought you needed to reality to show how much money it is in a short period of time. 8 years = $25K, pretty amazing. And we're talking low interest rates. It's no wonder people dig themselves into serious holes with high interest notes like credit cards rates.
No, I appreciate you putting the spreadsheet together. Can you do another one? Please do one comparing my 27 years remaining on a 30 year loan at 4.375% vs. a 15 year loan at 2.75%, no fees. Just do it by year. Thanks, I would do the spreadsheet myself but I just caught a delicious sea bass and I'm letting it breathe.
Sure, I'll get right on that boss.
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