- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Mortgage Question
Posted on 4/21/12 at 1:07 pm
Posted on 4/21/12 at 1:07 pm
Trying to convince my parents to build a home here in West Virginia. Just remember that home prices are drastically cheaper here to build. They are scared of a mortgage, but I think it can be done.
Combined they earn about $82,000 annually plus own a small business that nets approximately $30,000 a year.
Considering the home cost as being less than $120,000 since they already own the land where it would be built.
What options would they have? Possibly a 20 year mortgage? I think the 30 year mortgage is what scares them. Father is 53 and mother is 48.
Thanks for any help you can give, guys. Appreciate it.
Combined they earn about $82,000 annually plus own a small business that nets approximately $30,000 a year.
Considering the home cost as being less than $120,000 since they already own the land where it would be built.
What options would they have? Possibly a 20 year mortgage? I think the 30 year mortgage is what scares them. Father is 53 and mother is 48.
Thanks for any help you can give, guys. Appreciate it.
3
Posted on 4/21/12 at 1:10 pm to wvubrandon
Convince them to do a 15 year mortgage. The interest rates are crazy cheap right now.
Posted on 4/21/12 at 1:18 pm to notiger1997
Thanks!
Posted on 4/21/12 at 1:48 pm to wvubrandon
Would this be a second home?
Posted on 4/21/12 at 2:14 pm to Ric Flair
quote:
Would this be a second home?
Not entirely sure about this. The home we live in now they had been renting from my Uncle for the better part of 20+ years. Now they have entered into a land contract purchase of the home. Are they considered homeowners at the signing of the land contract or when the contract is paid in full?
Posted on 4/21/12 at 2:16 pm to Ric Flair
Also...the land contract price they are paying is $19,000 total. In the event of building a new home they would likely sell the current house for $30,000, pay off the land contract, and use the remainder towards the new purchase.
Posted on 4/21/12 at 2:27 pm to wvubrandon
quote:
they would likely sell the current house
The new house would be their primary residence if it would be the one they would be living in.
I agree with the 15 yr mortgage being the route to go right now with rates where they are.
Posted on 4/21/12 at 3:32 pm to notiger1997
quote:
Convince them to do a 15 year mortgage. The interest rates are crazy cheap right now.
Not necessarily. Believe it or not 30 year can be better than the 15. It isn't just the interest rate that matters, you also must consider the cost of not investing the extra money you pay each month.
It happens I ran the numbers in Excel last week, and concluded that if the economy picks up again over the next 15 years, you are better off with the 30 year note (about 3% after tax rate) over a 30 year investing horizon than you are with a 15 year note (about 2% after tax rate) over that same 30 year horizon.
Put it another way - with the 15 year note you are required to pay extra to retire a 2% debt when you could be investing it in a 10% bull market instead.
This assumes you can fully deduct the interest, which (roughly) turns a 4% 30 year rate into 3% after tax and a 3% 15 year rate into a little over 2% after tax. It also assumes that if you go with the 30 year that you invest the monthly note difference during years 1-15, and invest the full amount of the 15 year note from years 15-30.
This post was edited on 4/21/12 at 3:45 pm
Posted on 4/21/12 at 3:59 pm to foshizzle
quote:
investing it in a 10% bull market instead.
I hope you are right
Posted on 4/21/12 at 4:11 pm to wvubrandon
Don't worry about paying off your mortgage before you die. If they're more comfortable with the 30-year payment, go for it.
Posted on 4/22/12 at 10:20 am to foshizzle
quote:
Not necessarily. Believe it or not 30 year can be better than the 15. It isn't just the interest rate that matters, you also must consider the cost of not investing the extra money you pay each month. It happens I ran the numbers in Excel last week, and concluded that if the economy picks up again over the next 15 years, you are better off with the 30 year note (about 3% after tax rate) over a 30 year investing horizon than you are with a 15 year note (about 2% after tax rate) over that same 30 year horizon.
you know what mr money board smarty pants, these people don't sound like the people that are gonna be looking into options like that. The correct answer to them is the lowest rate paid off as fast as possible.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News