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Tiger4Ever
UTEP Fan
Member since Aug 2003
35654 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


If your income is sufficient to qualify for the two home loans, why are you so lean on liquidity?

I suspect (could be wrong) that spending may be the bigger issue in which case I can't see two mortgages being a good idea.

Sell the house, take your hit and get disciplined once in the new house with one mortgage on building that cushion.



This post was edited on 4/16 at 4:32 pm


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eng08
LSU Fan
Member since Jan 2013
1108 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


If you are out moving of town don't rent.

There is always something to deal with...






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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
28616 posts
 Online 

re: Better to spend all of savings and be debt free or full of debt with lots of...


Debt is kind of a personal thing. I treat paying down debt as an investment. If I am paying off a 8% personal loan, that is a guaranteed return on investment of 8% after taxes, which is very very good these days.

A mortgage maybe not so much. I'm trying to mortgage as much as I can right now at 30 year fixed rates, the idea being that after the tax deduction the effective rate is only a little above 2.6%. That's basically the rate of inflation, for 30 years. There is no need to pay more than the minimum required on such a loan.

Interestingly, a lower rate loan with a shorter term (like a 15 year mortgage) may not be as good because your larger payments have a return below the rate of inflation.

If all that is confusing, the best thing to do is stick with what you do understand and learn as much as you can. Paying down debt is rarely a terrible thing but it sometimes isn't the best thing.






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BACONisMEATcandy
LSU Fan
My opinions are my own
Member since Dec 2007
40221 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


Always listen to Foshizzle when it comes to debt and interest rates(among other things)





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Ric Flair
LSU Fan
Charlotte
Member since Oct 2005
6997 posts
 Online 

re: Better to spend all of savings and be debt free or full of debt with lots of...


My advice would be to cut your losses, and sell. I'm not trying to be a dick, but if you only are able to save 15k over the course of a few years (with that low of a mortgage) then I don't think you have enough income/capital (or if you have the income, then discipline to control spending) to be a landlord.





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makersmark1
Auburn Fan
Member since Oct 2011
1354 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


if the offers are market based and you have to move, then sell and move.

A house is not an investment; it is a place to live.






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StrangeBrew
LSU Fan
Salvation Army-Thanks Obama
Member since May 2009
12977 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

What's with the rash of posters creating their own accounting rules?


that truly had me






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townhallsavoy
Auburn Fan
Member since Oct 2007
3045 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

if the offers are market based and you have to move, then sell and move.


This may be off topic, but I feel like our house is above the market of our area.

We're asking $174k, and the houses in the neighborhood have sold for around $160k-$165k. I actually went and toured two of those homes that did eventually sell, and they needed work.

My house needs zero work. Zero. The roof is three years old. The hardwoods are three years old. All neutral colors on every wall. Carpet is one year old. Landscaped yard. The works.

So when the realtor said, "Based on the nearby homes..." I assumed I could get at least what I owe on the house ($167k). Definitely not going to accept offers that range from $155k-$165 and ask me to pay everything except their down payment.






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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
5878 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

If I get shat on by my renters and then can't fill the house with people, we couldn't afford two mortgages for very long.


My advice would be to sell then, take your lump at closing.

After 8-9k at closing, is 95/5 on conventional not an option? Figure in another 1% for cost on a 140k home could you not put down roughly $8400?






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townhallsavoy
Auburn Fan
Member since Oct 2007
3045 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

My advice would be to sell then, take your lump at closing.

After 8-9k at closing, is 95/5 on conventional not an option? Figure in another 1% for cost on a 140k home could you not put down roughly $8400?


Selling has been difficult.

I won't have $8400 if I sell.

It's possible that with the way the market is right now, I may not even be able to buy after I sell.






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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
5878 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

It's possible that with the way the market is right now, I may not even be able to buy after I sell.


Rates are staying around 4% on 30 until 2015 according to every economist I've seen.

If you can't tuck 10k away for a house by then, probably shouldn't buy.

If 170k house today is 200k by then the difference monthly is about $125 at said rate.

I wouldn't panic







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Bmath
LSU Fan
TX
Member since Aug 2010
5723 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


Have you looked at having your employer recoup some of the relocation costs? Many competitive companies provide some assistance.

My father in law was relocated right as the housing market crashed. It took him over a year to sell, and it affected his ability to movie. His company offered to buy his house and sell it for him if he couldn't sell it after a lengthy period of time.

Obviously those circumstances are probably unique, but it may not hurt to ask for some extra cash.






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townhallsavoy
Auburn Fan
Member since Oct 2007
3045 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

Have you looked at having your employer recoup some of the relocation costs? Many competitive companies provide some assistance.

My father in law was relocated right as the housing market crashed. It took him over a year to sell, and it affected his ability to movie. His company offered to buy his house and sell it for him if he couldn't sell it after a lengthy period of time.

Obviously those circumstances are probably unique, but it may not hurt to ask for some extra cash.


I work in education. The only thing my employer provides is other people's children.






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OnTheBrink
Alabama Fan
TN
Member since Mar 2012
3423 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


Are you switching school within the district or are you moving towns?





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townhallsavoy
Auburn Fan
Member since Oct 2007
3045 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

Are you switching school within the district or are you moving towns?


Moving towns. Well...to be more accurate, moving across town.

It takes an hour for my wife to get work from where we are now. Will take me a little over an hour thanks to traffic.






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OnTheBrink
Alabama Fan
TN
Member since Mar 2012
3423 posts

re: Better to spend all of savings and be debt free or full of debt with lots of...


quote:

Moving towns. Well...to be more accurate, moving across town.

It takes an hour for my wife to get work from where we are now. Will take me a little over an hour thanks to traffic.


Honestly, I would stay put. I was kind of under the impression that you were moving towns/out of state, but since that is not the case, I would sit tight until you (1) build up the funds to be more secure in your decision and (2) get a little more equity in the house while you wait.






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