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mortgages are the biggest scam (compounded interest)
08-25-2016, 10:49 AM
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#91
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Originally Posted By midcoastking33⏩
mortgages are generally fine, the other aspects that inflate home prices are the big issue.only on the misc would people defend mortgages and the inflated cost of homes
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08-25-2016, 10:49 AM
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#92
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Originally Posted By StickLegs78⏩
Can you elaborate on what you're talking about?All that stuff is phased out once you get over like 100k income or something.
Obviously, you can make interest only payments, but at 3% it's almost free money anyways, better off just investing it. I never really understood the compulsion to pay down low interest loans.
Obviously, you can make interest only payments, but at 3% it's almost free money anyways, better off just investing it. I never really understood the compulsion to pay down low interest loans.
As far as I know, income doesn't have any effect on either the standard nor itemized deductions.
08-25-2016, 10:53 AM
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#93
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Originally Posted By pushlimits⏩
Owns home(s) outright crew. And that's news for you OP? Says right on the doc what you'll end up paying over the life of the loan and they want their $ asap, so interest usually loaded up in the payment the first few years.just had our mortgage statement through.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
Just be happy your rate is that damn low. Many purchased homes with rates in the double digits.
You got first world problems OP.
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08-25-2016, 10:57 AM
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#94
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Originally Posted By freudslip⏩
20% to avoid mortgage insurance, you can get a conventional loan at 10 and 15% though as well but will have to pay a little insurance. I think you can even get a conventional at 5% but not sure on that one.How much % wise is a down payment on a house usually?
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08-25-2016, 11:00 AM
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#95
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Originally Posted By JoshSP1985⏩
Yes, you can get an FHA loan with 5% down (might even be lower).20% to avoid mortgage insurance, you can get a conventional loan at 10 and 15% though as well but will have to pay a little insurance. I think you can even get a conventional at 5% but not sure on that one.
I used a VA loan with 0% down (although we did buy points). No reason to put money down with money being so cheap.
08-25-2016, 11:04 AM
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#96
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Originally Posted By pushlimits⏩
Went full potato. Over half of your payment is actually interestright now. That is a pretty low interest rate, nothing special.just had our mortgage statement through.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
Once your principle balance gets low (Lets say you have 50K of your 250K example) then your payments will be primarily to the principle and little will be interest. If you pay 10K in a year instead of say 4K going to your mortage, more like 9K would go to your mortgage.
Also with a 250K mortgage at 3.00% for 30 years, you pay a total of 380K.
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08-25-2016, 11:12 AM
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#97
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Originally Posted By pushlimits⏩
At 3% Total cost of mortgage is $379,444 over 30 yearsjust had our mortgage statement through.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
Right now market returns is 5-6% so over 30 years so they could have made $483,139-$539,595 instead over of investing with you.
On average the market return is 8% so they could have made $660,388 in that scenario.
You are just the safest bet since they can always re-cooperate some of the money if you end up being a dud to loan to.
Also lock in a loan and inflation hit and you just hit the mothafuarking jackpot
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08-25-2016, 11:12 AM
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#98
Originally Posted By Dan_S⏩
IMO only time money is created is when there is a difference between what is borrowed and what is paid back, IE when mortgages were forgiven during the '08 crisis. When a loan is issued, the transaction is a long one, 30 years in a 30 yr mortgage. The money borrowed is paid back, not created, the person taking out the loan is just paying the interest to have the item at the beginning of the loan and throughout the payoff time rather than at the end. I suppose one could argue that within the interest, the portion of the interest that is profit (after operating expenses) could be considered wealth created. But I would have to hear a good argument to change my mind that the principle portion is created (it would only be created if you didn't have to pay it back).He's actually not making that up. It's not completely out of thin air, but banks "create" money by making loans. The money doesn't exist until the loan is created.
Fractional-reserve banking
Because bank deposits are usually considered money in their own right, and because banks hold reserves that are less than their deposit liabilities, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank.
Fractional-reserve banking
Because bank deposits are usually considered money in their own right, and because banks hold reserves that are less than their deposit liabilities, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank.
08-25-2016, 11:18 AM
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#99
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Originally Posted By JoshSP1985⏩
I've been told by some older homeowners to avoid mortgage insurance like a plague.20% to avoid mortgage insurance, you can get a conventional loan at 10 and 15% though as well but will have to pay a little insurance. I think you can even get a conventional at 5% but not sure on that one.
08-25-2016, 11:39 AM
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#100
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Understand the struggle, it's hard to swallow that your principal remaining is going down so slowly towards the beginning of your mortgage.
I majored in finance in college, and one of the things I would recommend to people is to prepay their mortgage off faster. So if you owe say $1500 that month, you can always pay more than that, say $2000. That extra $500 goes directly towards your principal remaining. The faster your principal remaining goes down, the less interest you pay.
I majored in finance in college, and one of the things I would recommend to people is to prepay their mortgage off faster. So if you owe say $1500 that month, you can always pay more than that, say $2000. That extra $500 goes directly towards your principal remaining. The faster your principal remaining goes down, the less interest you pay.
08-25-2016, 11:46 AM
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#101
08-25-2016, 11:53 AM
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#102
08-25-2016, 11:53 AM
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#103
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Originally Posted By pushlimits⏩
If you think its a good deal for the banks, I tell you what. Loan me $400k at 3% interest and I will pay you back according to a 30 year amortization table. You will make OOOODLEs of money over those 30 years. Cool?no chit sherlock - it's the way compounding works. as i say, most people would think on the face of it, a small percentage (say 2 or 3%) can't be adding too much - but it's quite staggering what you end up paying back.
08-25-2016, 12:01 PM
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#104
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Ban compound interest on mortgages. Pretty simple. Set a reasonable one time interest rate, say 25%.
500k home, plus 25%= 625k
Divide that over 20 years. 2600/mo for 20 years and it's paid off.
Currently, you'd end up paying nearly 2million.
Home ownership up, bank slavery down. Everyone wins.
500k home, plus 25%= 625k
Divide that over 20 years. 2600/mo for 20 years and it's paid off.
Currently, you'd end up paying nearly 2million.
Home ownership up, bank slavery down. Everyone wins.
08-25-2016, 12:03 PM
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#105
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Originally Posted By CoolKnees⏩
Theres collateral though, the house. If you don't make the payments the bank can foreclose. Its the same with vehicles, that why most vehicle interest rates are around 0%.It's not a scam.
Interest is the price of loaning money. Just lol if you think anybody is willing to front you $250,000 for nothing.
Interest is the price of loaning money. Just lol if you think anybody is willing to front you $250,000 for nothing.
08-25-2016, 12:03 PM
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#106
08-25-2016, 12:05 PM
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#107
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Originally Posted By Omnivium⏩
Theres pros and cons to both. At the end of the day you need a roof over your head.Fuk all that chit. Renting crew
inb4 someone who doesn't know what they are talking about calls me an idiot
inb4 someone who doesn't know what they are talking about calls me an idiot
08-25-2016, 12:06 PM
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#108
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Originally Posted By Ratfish⏩
I am in the opposite camp. I want to pay my low interest loans off as slowly as possible. No need to pay them off faster.just fukken lol @ plebeians who let a loan fully mature
should have mine paid off in 5-6 years total shehehe
should have mine paid off in 5-6 years total shehehe
Some people's minds are wired to figure out how to save money.
Mine is more geared towards figuring out how to make money.
One is not more right than another. Do whatever makes you happy.
08-25-2016, 12:07 PM
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#109
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Originally Posted By Omnivium⏩
Definitely no issue in renting so long as you are making moves elsewhere.Fuk all that chit. Renting crew
inb4 someone who doesn't know what they are talking about calls me an idiot
inb4 someone who doesn't know what they are talking about calls me an idiot
08-25-2016, 12:08 PM
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#110
Originally Posted By bsmit107⏩
great advice for young people and exactly what i intend to doFinance not even once......
Make an amortization schedule for your mortgage and look at the interest portion of your payment in the first year vs the interest portion in the last year. As time goes on and you move through the years interest continues to become less of your payment as principal becomes more.
Want to save more money with mortgages? Live below your means, buy less house than you can afford comfortable and pay that chit down quickly.
Other than that, shut-up and get back in line sheep.
Edit: Fukkin Gandolf up here with the amortization chit.
Make an amortization schedule for your mortgage and look at the interest portion of your payment in the first year vs the interest portion in the last year. As time goes on and you move through the years interest continues to become less of your payment as principal becomes more.
Want to save more money with mortgages? Live below your means, buy less house than you can afford comfortable and pay that chit down quickly.
Other than that, shut-up and get back in line sheep.
Edit: Fukkin Gandolf up here with the amortization chit.
Get a place below your means for the mean time (doesn't have to be poverty)
save and pay that chit off fast
08-25-2016, 12:14 PM
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#111
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Originally Posted By rootcon⏩
Did you really try to "feels" this topic? Oh, so since you don't think that's how it is, it's not? Read the damn link, at the very least.IMO only time money is created is when there is a difference between what is borrowed and what is paid back, IE when mortgages were forgiven during the '08 crisis. When a loan is issued, the transaction is a long one, 30 years in a 30 yr mortgage. The money borrowed is paid back, not created, the person taking out the loan is just paying the interest to have the item at the beginning of the loan and throughout the payoff time rather than at the end. I suppose one could argue that within the interest, the portion of the interest that is profit (after operating expenses) could be considered wealth created. But I would have to hear a good argument to change my mind that the principle portion is created (it would only be created if you didn't have to pay it back).
Money is created by fractional reserve. That's literally how our economy works. I don't give a chit if you don't believe it, it's true.
You know what, I'm feeling generous, and I'LL do it for you.
When a deposit of central bank money is made at a commercial bank, the central bank money is removed from circulation and added to the commercial banks' reserves (it is no longer counted as part of M1 money supply). Simultaneously, an equal amount of new commercial bank money is created in the form of bank deposits. When a loan is made by the commercial bank (which keeps only a fraction of the central bank money as reserves), using the central bank money from the commercial bank's reserves, the M1 money supply expands by the size of the loan.[3] This process is called "deposit multiplication".
08-25-2016, 12:17 PM
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#112
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Originally Posted By Omnivium⏩
Rent is basically just paying all interest if you think about it...Fuk all that chit. Renting crew
inb4 someone who doesn't know what they are talking about calls me an idiot
inb4 someone who doesn't know what they are talking about calls me an idiot
Using mortgages to buy property is smart if you do it right.
08-25-2016, 12:40 PM
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#113
Originally Posted By Z257Z⏩
The way I see it buying a house is a huge investment. So you can use your money to invest in a house, or you can use your money to invest in something else. And there are things that are much more profitable than housesRent is basically just paying all interest if you think about it...
Using mortgages to buy property is smart if you do it right.
Using mortgages to buy property is smart if you do it right.
opportunity cost m8
08-25-2016, 12:41 PM
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#114
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Originally Posted By Dan_S⏩
I said conventional not FHA, FHA has other requirements. You want to get a conventional loan if at all possible.Yes, you can get an FHA loan with 5% down (might even be lower).
I used a VA loan with 0% down (although we did buy points). No reason to put money down with money being so cheap.
I used a VA loan with 0% down (although we did buy points). No reason to put money down with money being so cheap.
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08-25-2016, 12:42 PM
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#115
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Originally Posted By EnforcerOTF⏩
i can deduct my interest payments on my mortgage from my taxes.
Originally Posted By Dan_S⏩
I want to warn people about the mortgage interest deduction, as realtors love to talk it up. It only applies if you can itemize your deductions, which means you have to beat out the standard deduction.
If you don't live in an expensive city (your mortgage is small), and you have a low interest rate (and you will, because rates are in the toilet right now), you might not be paying enough in interest to actually make itemizing worthwhile. Also, more than likely, you don't have other deductions you can take unless you're a business owner.
I was able to take the deduction last year since interest is higher at the start of the loan, but it's likely the last year I will ever be able to take the mortgage interest deduction.
If you don't live in an expensive city (your mortgage is small), and you have a low interest rate (and you will, because rates are in the toilet right now), you might not be paying enough in interest to actually make itemizing worthwhile. Also, more than likely, you don't have other deductions you can take unless you're a business owner.
I was able to take the deduction last year since interest is higher at the start of the loan, but it's likely the last year I will ever be able to take the mortgage interest deduction.
Originally Posted By Dan_S⏩
Sorry I wasn't clear, was referencing PMI. I do know some people that itemized worked better for, but they had huge mortgages of close to a million. IME, it's always been a non-brained for me to just to take standard deduction.Can you elaborate on what you're talking about?
As far as I know, income doesn't have any effect on either the standard nor itemized deductions.
As far as I know, income doesn't have any effect on either the standard nor itemized deductions.
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08-25-2016, 12:46 PM
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#116
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I might be able to itemize my deductions for a few years since both kids are in daycare (1400 a month) right there
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08-25-2016, 12:51 PM
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#117
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Originally Posted By SitchNoHomo⏩
This is not a good thing.Actually with rates dropping below zero in some parts of Europe, you will see some people make money on taking loans.
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08-25-2016, 12:55 PM
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#118
Originally Posted By Dan_S⏩
Good luck with that proof. First day of macroeconomics, econ 001, professor taught us its a social science not a hard science.Did you really try to "feels" this topic? Oh, so since you don't think that's how it is, it's not? Read the damn link, at the very least.
Money is created by fractional reserve. That's literally how our economy works. I don't give a chit if you don't believe it, it's true.
You know what, I'm feeling generous, and I'LL do it for you.
Money is created by fractional reserve. That's literally how our economy works. I don't give a chit if you don't believe it, it's true.
You know what, I'm feeling generous, and I'LL do it for you.
08-25-2016, 12:56 PM
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#119
08-25-2016, 12:59 PM
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#120
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Originally Posted By freudslip⏩
Yep. I had to save a little longer to get 20% down but totally worth it in the long run. A friend of mine only put 5% down and is paying $8000 in mortgage insurance over the life of his loan.I've been told by some older homeowners to avoid mortgage insurance like a plague.
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