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I'm probably showing my lack of knowledge in this area even more here ... but I don't understand. If you can only borrow what you put up for a down payment, how does anybody buy a home? Wouldn't it look something more like this for me?
House: 60k
Down Payment: 10k
House Note for 30 years: $500 a month
Am I missing something? I know not everyone who buys a 200k house puts 100k down, as the notion that you put forth.
I hate that I don't know more about this . It's prettymuch the one area of life in which I am cluless - buying a house.
Keep in mind, every month when you make your mortgage payment, you are paying both interest AND principal (as long as the buyer is smart and doesn't get an interest-only loan). Each month your equity in your home will go up simply because you have paid principal.
Yes, I am actually looking into that ... 23k of my student loans are consolidated (bechelors), but due to economic times, Sallie Mae will not consolidate the other 27k (masters) when I asked them a week ago (just started repayment of masters loans - the 27k - this month). Any advice?
Look into your states finance agencies to see if they have any programs to consolidate student loans. There are usually some options if you had subsidized loans, federal/state loans while in your Masters. Even if you have 1 loan with them you can usually consolidate all of them.
I had very few loans as an undergrad, and took out 1 while in NC for my doctorate. One main reason I took the loan from the NC college foundation was to consolidate all my loans under their great program after I graduated. Not sure about your state and what the options are now, I finished the PhD in 2005 and haven't really looked at my loans since then... just auto pay every month
Keep in mind, every month when you make your mortgage payment, you are paying both interest AND principal (as long as the buyer is smart and doesn't get an interest-only loan). Each month your equity in your home will go up simply because you have paid principal.
There is nothing inherently dumb about getting an interest only loans. Like ARMs, they can be valuable tools when used properly. Same as investing in stocks or bonds... all are part of a financial plan, the important part is to know the risks and rewards of what you are getting into.
Besides, the principle paid on a loan the first few years is minimal. It is nice and overtime it adds up... but interest only loans also have their benefits.
There is nothing inherently dumb about getting an interest only loans. Like ARMs, they can be valuable tools when used properly. Same as investing in stocks or bonds... all are part of a financial plan, the important part is to know the risks and rewards of what you are getting into.
Besides, the principle paid on a loan the first few years is minimal. It is nice and overtime it adds up... but interest only loans also have their benefits.
True, but most people are not disciplined enough to invest that money in other avenues, instead spending on consumer goods.
I think youre confusing things because youre talking about taking money OUT of your mortgage to use for other bills before youve even started gaining equity in the house... You can ONLY borrow what your house is worth/appraised for. (Which 99% of the time is the sale price). If you buy a 65k house, you put 10k down, you have that 10k in equity - eventually you will make payments, gain more equity, etc.. in a few years, your house may be worth 85k, and you may only owe 40k left on it. In THAT case, you now can borrow the difference in those figures. But the problem youre encountering is that you INITIALLY want to borrow money against the house - which isnt possible - teh only equity you would have off the bat is your down payment money
Each month your equity in your home will go up simply because you have paid principal.
Not if values continue to fall.
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. It's prettymuch the one area of life in which I am cluless - buying a house.
