Trying to decide on a 15 or 30 year mortgage (California, heloc, ARM)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hmm... The ARM could be pretty risky. I'm kind of surprised that interest rates have stayed as low as they are for as long as they have. Good for the initial term, but the possibility of a 6-7% interest rate at the end could eat up any gain, especially if some of the initial plans fall through.
When the fixed rate period expires, you will have built up much more equity than the traditional mortgage would allow. If you can afford the monthly payment for a 15-year mortgage, by the end of the fixed rate period the leftover loan will be so low that even a significant interest rate increase will not do much damage. And since you are young, your income will probably be much higher then, further reducing any damage by a higher variable interest rate.
This works best if you anticipate a need to move sometime in the future.
The average mortgage loan is 10 years b/c most people refi or buy a news house.
That being said I don't think there is even a question....or is there.
Your money never worth more now than in 15 or 30 years.
Do you believe the banks have your best interest at heart???
If you don't then maybe we should think twice when they offer a lower rate on a 15yr mortgage.
How much is tax-deductible. I keep hearing this over and over, even my tax guy suggested we get a mortgage so we can get some refunds. But it doesn't make sense to me. Is the tax refund based on amount of loan/interest you paid that year or is it same across the board.
Say if I have 150K loan at 4% interest, then in a given year I am losing 6K in interest (I think that is how the math works). In return I might get 1K back in tax refund. So total of 5K loss
On another hand if I only take 50K loan at 4% interest, then in a given year I am losing 2K in interest but will I still get 1K back from tax refund?
How much is tax-deductible. I keep hearing this over and over, even my tax guy suggested we get a mortgage so we can get some refunds. But it doesn't make sense to me. Is the tax refund based on amount of loan/interest you paid that year or is it same across the board.
Say if I have 150K loan at 4% interest, then in a given year I am losing 6K in interest (I think that is how the math works). In return I might get 1K back in tax refund. So total of 5K loss
On another hand if I only take 50K loan at 4% interest, then in a given year I am losing 2K in interest but will I still get 1K back from tax refund?
The tax deductible is for interests, PMI, and property taxes paid for the year. Let's just do mortgage interests for now. If you paid 10k in mortgage interests, and if you're in the 25% tax bracket, you get a tax deduction of 2.5k. Only the interests paid during the year matter; the original amount, interest rate, principal payments, etc. do not matter.
The tax deductible is for interests, PMI, and property taxes paid for the year. Let's just do mortgage interests for now. If you paid 10k in mortgage interests, and if you're in the 25% tax bracket, you get a tax deduction of 2.5k. Only the interests paid during the year matter; the original amount, interest rate, principal payments, etc. do not matter.
So the person paying 10K and getting back 2.5K is losing 7.5K to interest. vs had they paid off their home mortgage they would be 7.5K richer :S
So the person paying 10K and getting back 2.5K is losing 7.5K to interest. vs had they paid off their home mortgage they would be 7.5K richer :S
How is mortgage tax helping
It helps people who don't have the cash to pay for their home outright. If you have cash to buy a house, you should probably just do that.
The whole investing vs paying your home off early, is really just personal preference. With rates in the sub 4% range it is very feasible to come out ahead investing in the market instead of putting extra money towards principal. But you have to know what you're doing. And that takes time. Time=money so all the time you're spending understanding the market and managing your investments to try and beat that 4% is a hidden cost. Some people would rather just pay more towards their mortgage and be done with it. To each their own
You are right, I don't know enough about investment to feel like its worth spending money on more. Although I understand for someone who knows the stock market & investment world, will consider mortgage as borrowed money for investment. But for average person like me with minimal understanding of investment I am better off trying to pay off asap
.
One extra payment a year reduces term to 23.5 years (average), two extra payments a year takes term to 18 years...
Your calculation are off unless you mean the average rate is around 7%
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
seriously....30 yr
