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Old 09-21-2010, 05:03 PM
 
9,803 posts, read 16,119,939 times
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ARM ?

I sure got burned. Could have had a set 25 year farm mortgage in 1978 at a local bank for 8.50

I went with an Ag Lender for 8.25 ARM.

A few years later I wAs paying 13.5

Hanging onto the farm was a real struggle.
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Old 09-21-2010, 05:12 PM
 
Location: State of Superior
8,733 posts, read 15,884,529 times
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Quote:
Originally Posted by Oildog View Post
darstar I tend to agree with you...just looking at my own employer
Good , atlest there are two of us that are seeing the signs.
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Old 09-21-2010, 09:59 PM
 
48,505 posts, read 96,540,710 times
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Many business are only spoending to assure a profit i the future by lower cost. I'll give you a example. A refinery near me is being double in capacity,In the 70's recscession it was modernized to be able to be run with 2000 employees instead of 4000.Noe with the additon of 400 employees the new expansio will double output. Since they won other refienries that are not being modernised and they don't need the prodcution here ;what do you think hapens to at ealst spome of the other refineries.You guess it. That will mean more profit because of reduced cost.They are spending the money right now because they have it and it oofers future gains . Others are actaully doing the same with M&A to get a bigger market share and likely they can redcue cost by employing fewer overll thn two separate companies. Preparing for the future with money available now because they have been holding on to it.
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Old 09-22-2010, 08:28 AM
 
Location: State of Superior
8,733 posts, read 15,884,529 times
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Its more likely that a lot of orders were put on hold , 2-3 years ago....some companies can't wait anylonger....Aside from that , the trend I am starting to see out there is MFG companies are starting to diversify, create new markets , and in general prepairing themselves for the new age of product developement and production. R & D is coming back big time and along with that will come new companies , with new ideas. Stay tuned , its just starting !
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Old 09-22-2010, 09:51 AM
 
Location: State of Superior
8,733 posts, read 15,884,529 times
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Quote:
Originally Posted by marmac View Post
ARM ?

I sure got burned. Could have had a set 25 year farm mortgage in 1978 at a local bank for 8.50

I went with an Ag Lender for 8.25 ARM.

A few years later I wAs paying 13.5

Hanging onto the farm was a real struggle.
One of the reasons many are " property poor" these days. It can be tough holding on to large properties , especially when they produce little or no revenue.
Up here in Upper Michigan many of the large tracts have been put in land trusts...as an alternative , some are starting to change hands , just for cash flow , and to adust mortage rates. You can only log off so may years , meanwhile the outlay keeps going. We have thousands of acres that are negative producers , always will be. Mineral rights can help , but its a long shot...waiting.
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Old 09-23-2010, 11:22 AM
 
2,036 posts, read 4,231,026 times
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Quote:
Originally Posted by sharpie1234 View Post
hi,
i recently refinanced my mort. of about 325k at 4% fixed for 15 years.
i plan on paying extra every month which would allow me to pay off the house in about 5 years and 2 months instead of 15.

what i recently found out from bankrate.com is that i 'could have' gotten a 5 year arm at 2% and then adjustable after that. given that i would be paying extra every month, i would have been able to pay off the house a lot quicker (2% difference in interest).

but, of course, who knows what will happen 2 or 3 years down the road....maybe i won't be able to contribute as much as i'd like in a couple of years....then i'd be SOL if i had a 5 year arm.

Any thoughts on this? I haven't been able to find a calculator to show the amortization of a 5 year arm with the adjustable rate after that.
Don't get too hasty with paying off your mortgage. Unless you are investing 20-30% of your income for retirement and you just have nowhere else to put the cash, paying off the home doesn't make a lot of sense. You are already paying off the home at a very fast clip.

If you can find a quality investment (or fee-only financial advisor) talk to them about your plans and see if they can help you invest the extra cash for the next 5 years. You will be glad you did. You can use that to pay off the home or it can serve as a source of liquid savings for you in a few years.
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Old 09-23-2010, 11:32 AM
 
Location: West Orange, NJ
12,546 posts, read 21,339,782 times
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Quote:
Originally Posted by midlifeman View Post
Why does everyone assume an ARM is bad?

My 5 year ARM just adjusted downward from 6% to 5%. Sure it's a dumb luck scenarios of timing the market, but even if my payments went up I was prepared to make them. The advantage over the last 5 years is that I had an affordable mortgage and was able to use that extra money in my pocket as leverage to invest. In addition I was able to grow my income in the last 5 years to help pay for any increase in payments. How did I grow my income?...I used that extra money in my pocket to start a business.
most people aren't capable of doing it like you did, so people paint ARMs with a broad brush and say they are bad for everyone.

i love some of these gimmicks. the banks know they'll make out 99.9% of the time, but it sounds like people like you and me are in the .1% that stick it to the banks.

i'm moving towards my retirement goals, paying down my mortgage at normal rate for now, and will accelerate at some point.

one thing i do is make weekly payments instead of monthly payments. that alone knocks a few years off the loan and saves some interest.
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Old 09-23-2010, 01:42 PM
 
512 posts, read 1,428,506 times
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Quote:
Originally Posted by Spraynard Kruger View Post
Don't get too hasty with paying off your mortgage. Unless you are investing 20-30% of your income for retirement and you just have nowhere else to put the cash, paying off the home doesn't make a lot of sense. You are already paying off the home at a very fast clip.

If you can find a quality investment (or fee-only financial advisor) talk to them about your plans and see if they can help you invest the extra cash for the next 5 years. You will be glad you did. You can use that to pay off the home or it can serve as a source of liquid savings for you in a few years.
By "investing", i'm guessing you mean stocks/bonds/etc.
i'm contributing the full 16000 (including my match though), but i'm not bothering with Roth or any other stock purchasing.
i know i'm buying stocks cheap as it is right now....i just have a hard time letting go of a sure 4% return on my money, as well peace of mind in 5 years when the house is paid off.
could you elaborate on what you mean a bit more please?
what type of investment can guarantee at least 4% in the next 5 years?
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Old 09-23-2010, 10:19 PM
 
442 posts, read 738,898 times
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Default Emotion vs. Money

The question you need to ask yourself is this: What would I do with that extra money in my pocket vs. paying off the mortgage in 5 years?

If you don't think you can beat a 4% rate of return, then think about what are the personal things you would do with that money.

What about the Peace of Mind of having extra money in your pocket every month and not sinking that money into your house.

If you sink your money into your house, it's essentially dead equity. Your house isn't making you money on that equity. Sure you can borrow against it (I.E. home equity line), but the rate will be higher than 4%!!
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Old 09-24-2010, 01:50 AM
 
14,249 posts, read 17,857,171 times
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Paying off that mortgage is a risk free return of 4%. What other investment gives you a risk free return of 4%?

Sure, you can not pay off the mortgage and have extra cash each month. But the mortgage doesn't go away. It still needs to be paid.

Pay it off and in 5-6 years you have a whole lot more cash in your pocket at the end of the month.
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