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Forum » mortgages are the biggest scam (compounded interest)
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Thread: mortgages are the biggest scam (compounded interest)

post 1459276813 08-25-2016, 01:07 PM
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Originally Posted By frozennorth⏩
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.
It drops off when you get to a 20% equity position. He should just pay extra to principle to kill that PMI asap
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post 1459277143 08-25-2016, 01:10 PM
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Originally Posted By JoshSP1985⏩
It drops off when you get to a 20% equity position. He should just pay extra to principle to kill that PMI asap
Maybe in Murica but here in the frozen north is never goes away if you start with less than 20% down. Biggest scam ever
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post 1459279113 08-25-2016, 01:25 PM
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Originally Posted By Omnivium⏩
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 houses

opportunity cost m8
Definitely agree there. But real estate can give you a huge return if you know what you're doing/when to get in and out. Probably can make more money than any kind of stock portfolio with less risk.
post 1459281823 08-25-2016, 01:48 PM
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Originally Posted By twovalvekid⏩
Better off investing that 10k than sinking it in your mortgage in all reality.
Yeah you may be right but I have a friend who is mortgage free and he has plenty of spare cash to do fun things. I really want to become mortgage free as well. It would be awesome so I chuck money at it when I can.
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post 1459283333 08-25-2016, 01:58 PM
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Its not that bad. The fun part is when you actually can buy a house for cash and dont because you can invest the money and make 2-4x more than the mortgage interest rate.

Also overpaying on your principal every month, especially at the beginning, can cut HUUUGE amounts off how much interest you pay.

But yes, if you are like most morons and only pay the minimum amount on everything its a huge waste of money. But then again if you do that, you are not very smart with your money and as far as Im concerned you deserve to be taken advantage of.
post 1459283393 08-25-2016, 01:59 PM
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Originally Posted By JoshSP1985⏩
It drops off when you get to a 20% equity position. He should just pay extra to principle to kill that PMI asap
from what I understand, it doesn't fall off on the new loans

I had hell getting it off my old loan, they want 20% equity off the sales price, not the appraised value(which my house appreciated a ton at the time)
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post 1459283563 08-25-2016, 02:00 PM
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Originally Posted By EnforcerOTF⏩
I got my mortgage about 7 years ago and it's at 6.9% so I pay a ton of interest. It's kind of a double edged sword, but I'd rather spend it on interest than give it to the IRS.
You need to rethink your reasoning. If you refinanced, you'd keep your money, not give it to the IRS.
post 1459283643 08-25-2016, 02:00 PM
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Originally Posted By frozennorth⏩
Maybe in Murica but here in the frozen north is never goes away if you start with less than 20% down. Biggest scam ever
LMAO that's absurd.
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post 1459283703 08-25-2016, 02:00 PM
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Originally Posted By JimmyVee⏩
You need to rethink your reasoning. If you refinanced, you'd keep your money, not give it to the IRS.
I have a lot to deduct, I still pay a lot in taxes anyway.
post 1459283843 08-25-2016, 02:01 PM
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With interest rates so low, the name of the game is volume and the banks have become really creative and selling as many loans as they can. They've also become very creative with their fees. This is where the scam lies. Basically, just to exchange the right to own that piece of property, it's going to cost you about 2-6% in realtor fees and another 2.5% in bank fees disguised with a fancy name called "closing costs". So, on the high end of a typical $300,000 house, you'll be paying $25,500 just in fees. In a typical area with housing appreciation of about 3%/year, you'll need to live in the house 3 years just to offset the fees required to sell your house.

And you wonder why housing prices are so high. In a percentage based business, the more they're worth, the more they make. Who gives a shi+ what the interest rates are. And the banks don't have to sit around and wait for your loan to mature. They just need to come up with more creative ideas to sell more loans to people who can't afford them. Did you know the average time an American owns a house is 4 years? Cha-ching

And then there's property taxes. A tax on your home's value based on what the city thinks. Not what it will actually sell for.
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post 1459283953 08-25-2016, 02:02 PM
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Originally Posted By 5x10⏩
from what I understand, it doesn't fall off on the new loans

I had hell getting it off my old loan, they want 20% equity off the sales price, not the appraised value(which my house appreciated a ton at the time)
I literally just bought a house (closed last Friday)and put 15% down I asked specifically if PMI will fall off and they told me yes. Even in the disclosure it shows only 5 yrs of PMI unless I pay extra towards principle (which I will) to make it drop off sooner.

Maybe FHA loans or something never lose the PMI?
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post 1459284233 08-25-2016, 02:04 PM
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Originally Posted By JoshSP1985⏩
I literally just bought a house (closed last Friday)and put 15% down I asked specifically if PMI will fall off and they told me yes. Even in the disclosure it shows only 5 yrs of PMI unless I pay extra towards principle (which I will) to make it drop off sooner.

Maybe FHA loans or something never lose the PMI?
ah, I was speaking of a fha loan
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post 1459284443 08-25-2016, 02:05 PM
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Originally Posted By gixxer0.6g⏩
With interest rates so low, the name of the game is volume and the banks have become really creative and selling as many loans as they can. They've also become very creative with their fees. This is where the scam lies. Basically, just to exchange the right to own that piece of property, it's going to cost you about 2-6% in realtor fees and another 2.5% in bank fees. So, on the high end of a typical $300,000 house, you'll be paying $25,500. In a typical area of housing appreciation of about 3%/year, you'll need to live in the house 3 years just to offset the fees required to sell your house.

And you wonder why housing prices are so high. In a percentage based business, the more their worth, the more they make. Who gives a shi+ what the interest rates are. And the banks don't have to sit around and wait for your loan to mature. They just need to come up with more creative ideas to sell more loans to people who can't afford them.
Realtor fees being a percentage is what always blew my ****ing mind. Exact same amount of work to sell a 100k house vs a 150k house yet they earn more. Then you have these dweebs in LA/NYC etc making 100,000 commission for a few hours work. /jelly
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post 1459284593 08-25-2016, 02:06 PM
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Originally Posted By 5x10⏩
ah, I was speaking of a fha loan
Avoid FHA like the plague, you can go conventional at 10% worth it to live in someones basement if you have to until you can make a down payment.
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post 1459284813 08-25-2016, 02:07 PM
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Originally Posted By JoshSP1985⏩
I literally just bought a house (closed last Friday)and put 15% down I asked specifically if PMI will fall off and they told me yes. Even in the disclosure it shows only 5 yrs of PMI unless I pay extra towards principle (which I will) to make it drop off sooner.

Maybe FHA loans or something never lose the PMI?
That is correct. Once you pay off 20% of the original purchase price.
post 1459284913 08-25-2016, 02:08 PM
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Originally Posted By JoshSP1985⏩
Avoid FHA like the plague, you can go conventional at 10% worth it to live in someones basement if you have to until you can make a down payment.
yeah, made that mistake out of college
Not an issue now, getting sick rates on non owner occ houses
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post 1459291163 08-25-2016, 02:48 PM
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Someone explain to me like I'm 5 what amortization is for reps. Have a mortgage of 200k total (40k of that was upfront), so loan amount of 160k @ 2.34% interest for 2 years fixed, then it goes up to ~4%. 30 year mortgage. Plan to remortgage after the 2 years so I don't end up on the 4% rate. Wut do to not get shafted by the bank?
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post 1459291523 08-25-2016, 02:50 PM
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Originally Posted By rootcon⏩
Good luck with that proof. First day of macroeconomics, econ 001, professor taught us its a social science not a hard science.
Er? Okay, well I have a finance degree.

Not listening to your troll job anymore.
Originally Posted By Agentdark45⏩
Someone explain to me like I'm 5 what amortization is for reps. Have a mortgage of 200k total (40k of that was upfront), so loan amount of 160k @ 2.34% interest for 2 years fixed, then it goes up to ~4%. 30 year mortgage. Plan to remortgage after the 2 years so I don't end up on the 4% rate. Wut do to not get shafted by the bank?
Amortization is just what percentage you're paying to principal and what to interest. So you can get an amortization table that shows exact dollar amounts for every single payment over the course of your 30 year term.
post 1459292343 08-25-2016, 02:56 PM
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Originally Posted By Agentdark45⏩
Someone explain to me like I'm 5 what amortization is for reps. Have a mortgage of 200k total (40k of that was upfront), so loan amount of 160k @ 2.34% interest for 2 years fixed, then it goes up to ~4%. 30 year mortgage. Plan to remortgage after the 2 years so I don't end up on the 4% rate. Wut do to not get shafted by the bank?
The banks always win. Even when their risky sub prime bubble burst we bailed them out. They're just too big and control too much of the economies money. There is no way around it. The only thing that you can do is try to reduce your closing cost and realtor fees. You can shop around for better interest rates but you need to take into account their closing costs and fees. You also need to try and predict the future by figuring out how long you plan on living in the house and what the market is going to do at that time. Good luck. My advice, grab your ankles and bring some lube. Like OP said, it's all a scam. Some of the easiest jobs in the world with some of the highest salaries. Why? Because it's all profit.

Don't get me started on investment banking and wealth management.
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post 1459292533 08-25-2016, 02:58 PM
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Originally Posted By gixxer0.6g⏩
With interest rates so low, the name of the game is volume and the banks have become really creative and selling as many loans as they can. They've also become very creative with their fees. This is where the scam lies. Basically, just to exchange the right to own that piece of property, it's going to cost you about 2-6% in realtor fees and another 2.5% in bank fees disguised with a fancy name called "closing costs". So, on the high end of a typical $300,000 house, you'll be paying $25,500 just in fees. In a typical area with housing appreciation of about 3%/year, you'll need to live in the house 3 years just to offset the fees required to sell your house.

And you wonder why housing prices are so high. In a percentage based business, the more they're worth, the more they make. Who gives a shi+ what the interest rates are. And the banks don't have to sit around and wait for your loan to mature. They just need to come up with more creative ideas to sell more loans to people who can't afford them. Did you know the average time an American owns a house is 4 years? Cha-ching

And then there's property taxes. A tax on your home's value based on what the city thinks. Not what it will actually sell for.
This

BRB 30k to sell your house
BRB hope your property value increases to offset closing costs

I sold my condo last year. The thing was on the market for 8 days. The realtor literally put it up on MLS and it was gone before she could print out flyers and make whatever BS book you give to people who walk through.

Still gave her a sweet 8k at the end for really not all that much effort.
post 1459293023 08-25-2016, 03:01 PM
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Originally Posted By pushlimits⏩
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.
i dislike how your poor attempts at math means you get use use the word "scam" improperly. Sounds like you are ignorant, and now you are butthurt. There is no scam here.
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post 1459293063 08-25-2016, 03:01 PM
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The real rip off is mortgage insurance .
post 1459293213 08-25-2016, 03:02 PM
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Originally Posted By Dan_S⏩
Er? Okay, well I have a finance degree.

Not listening to your troll job anymore.



Amortization is just what percentage you're paying to principal and what to interest. So you can get an amortization table that shows exact dollar amounts for every single payment over the course of your 30 year term.
I see, I think I already have a table like that on the original mortgage documents.
Originally Posted By gixxer0.6g⏩
The banks always win. Even when their risky sub prime bubble burst we bailed them out. They're just too big and control too much of the economies money. There is no way around it. The only thing that you can do is try to reduce your closing cost and realtor fees. You can shop around for better interest rates but you need to take into account their closing costs and fees. You also need to try and predict the future by figuring out how long you plan on living in the house and what the market is going to do at that time. Good luck. My advice, grab your ankles and bring some lube. Like OP said, it's all a scam. Some of the easiest jobs in the world with some of the highest salaries. Why? Because it's all profit.

Don't get me started on investment banking and wealth management.
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post 1459294033 08-25-2016, 03:08 PM
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Bankrate has a good mortgage amortization tool. Just do a Google search for "Bankrate mortgage calculator."

You can put in the date your mortgage started, the total value, interest rate, and any additional payments (whether they're regular, once a year, one off, etc).

Theirs is probably the best I've seen. Not sure how it work with an adjustable rate though.
post 1459294423 08-25-2016, 03:11 PM
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Originally Posted By WellHungOver⏩
The real rip off is mortgage insurance .
Arrgghhhhh. I despise mortgage insurance. Another can of horseshi+ banks made up to qualify more people for a mortgage and get more money out of them upfront. I really need to leave this thread. It's increasing my blood pressure.
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post 1459294623 08-25-2016, 03:12 PM
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Originally Posted By je61⏩
LOL at the retards in here
"what, you think they should loan it for free?"

No you dumb bastards, he's saying it's a joke that with a 3% interest rate, you are paying more than 10 times that interest at the start. You'd think 3% of your 250k mortgage would mean you would end up paying 75k in interest, not another 150k..
250,000 x .03 = 7,500 x 30 = 225,000


??????
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Originally Posted By donblaximus⏩
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.
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.
I'm in this camp too. All money I save I expect to generate a higher gain% than I'm paying out in interest
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post 1459298793 08-25-2016, 03:42 PM
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Originally Posted By the700level⏩
250,000 x .03 = 7,500 x 30 = 225,000


??????
Not how it works. Your interest goes down as you pay off your principal. That's why you pay so much interest upfront and less as time goes on.
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mortagages LMAO
post 1459365233 08-26-2016, 03:25 AM
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Yes, thats what happens at the start of the loan. If you have fixed payments, you pay more interest at the start, and more principal at the end. Welcome to math.

and you're a bit off on your own math there opie, even on a $400k loan over 20 years at APR 3%, you'll pay about $130k in interest

Thats your price to pay for the privillege of borrowing hundreds of thousands of dollars from somebody else for a few decades that they could otherwise have been using for something else. If you dont like it, dont use it. But dont complain about having to rent for the rest of your life.
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