quote:
Yes, every time I walk out my front door, cross the street, and onto my clubs 156 yard par 3, I think about how enslaved I am for the next 30 years. Knute Kinta would surely feel my strife

Yep, I'm not a fan of one-size-fits-all templates for this kind of thing. Basically it comes down to individual opportunity and circumstance.
Confidence in ROI: real estate vs the markets vs other.
Available lending rates vs anticipated rate of inflation.
Risk of overexposure in one area.
Tax strategy.
Need for liquidity.

etc.

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Posted by Ace Midnight

Between sanity and madness

Member since Dec 2006

89793 posts

Posted on 8/25/13 at 12:29 pm to NC_Tigah

quote:
Yep, I'm not a fan of one-size-fits-all templates for this kind of thing.

I agree as well, but even at low rates, a 30-year mortgage enriches the bank to a greater degree.

Assuming no inflation or increase in the value of the home, I walk in and buy a $500k house, with $100k down - The seller makes $500k (minus whatever he owed, but I don't care - he gets $500k) regardless of my financing. Ditto for me if no inflation/appreciation - at the end I have a house worth $500k free and clear.

But, the banker only gets $115k if paid back in 15 years, while he gets $250K (HALF what I made, and I paid for every single thing.) When you look at it on paper, that's hard to swallow - even the $115k is 20ish percent, but it is 15 years holding their money.

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Posted by ItNeverRains

37069

Member since Oct 2007

25928 posts

Posted on 8/25/13 at 12:41 pm to NC_Tigah

quote:
Yep, I'm not a fan of one-size-fits-all templates for this kind of thing. Basically it comes down to individual opportunity and circumstance.

Of course. I wouldn't have bought my home if a 30 year wasn't an option. I'm up 100k in equity since purchase in Dec 2011. So that 132k you'll save in 15 years in interest, I'm 32k from that being a wash in less than 2 years, and about a year away from trumping that. There are maybe two other neighborhoods this was possible in, in my area. All this was made possible by greedy banks enslaving me.

quote:
If you run those numbers as tax deductible, in the face of 7% inflation, with 10% market returns and increases of 2% real estate Y2Y, the landscape changes.

This will be the subject of Dave Ramsey show on Tuesday I believe