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NOPE! I wanna live good today AND tomorrow. I am merely taking advantage of the economics of homeownership in America and the time value of money, etc. The only upside any pay off mortgage people seem to have is the sleeping better thing. I know what I am doing, I sleep well.
Well if you live today and tomorrow, regardless of what happens with your mortgage, then the change in the amount you purchase due to paying off the mortgage is zero (you'd buy the same in either scenario).
Therefore your purchasing power is irrelevant, because your marginal consumption of goods and services is zero.
My losses are twice as much if I invest twice as much? DUH? If I invest the same as you but I use leverage our losses WILL be the same.
Yes, however, if one invests instead of paying down the mortgage, the amount invested is increased. You were taking my comment out of context as it should have been clear I was not talking about holding the dollar amount invested fixed.
No, it isn't. But when you switch houses, you must take on the new market rate, you can't keep the old rate. Thus, if you insist on thinking of all these mortgages in a continuous fashion (which you sort of did earlier), it is as if your rate was adjusting.
And no, you are not fixing it for 30 years if you switch houses. This again was my earlier point. Suppose you sell the house after 8 years and at that time the mortgages being offered charged 9% APR. Where is the benefit of being locked in for 30 years? Oh, right, there isn't any.
Well if you think mortgage rates are going up to 9% in 8 years then you better be grabbing that 3.5% today! See how you are arguing against yourself?
And what do you think my money that is not trapped in the house is earning when mortgages are 8%?
No, because grabbing 3.5% today is not an alternative to grabbing 9% tomorrow. Each decision is made independently of the other.
The fact that it's a lower rate doesn't imply it is a good deal, because the former is not an alternative to the latter.
You can only get the rates available for each purchase when you make that purchase.
Actually it is because my liquid money outside the house can be utilized easily. If the rate goes up to 9% I can choose to keep the property and it's 3.5% mortgage because it is even MORE profitable now that the economy is selling mortgages at 9%. You however pissed away your cash for only 3.5% and to make a change now is going to cost you 9%.
And what do you think my money that is not trapped in the house is earning when mortgages are 8%?
Well, if you have it in 10-year t-bonds, probably about 6.5%-7%. If you have it in stocks, it is highly uncertain but the odds are pretty much the same as they are with low rates...
Actually it is because my liquid money outside the house can be utilized easily. If the rate goes up to 9% I can choose to keep the property and it's 3.5% mortgage because it is even MORE profitable now that the economy is selling mortgages at 9%. You however pissed away your cash for only 3.5% and to make a change now is going to cost you 9%.
Oh, so in other words, you are willing to be trapped in your house and can't move. Ok, fair enough. But then let's say your job forces a relocation and you don't want to be a landlord. What then?
Well, if you have it in 10-year t-bonds, probably about 6.5%-7%. If you have it in stocks, it is highly uncertain but the odds are pretty much the same as they are with low rates...
So either way, I'm blowing the doors off my 3.5% mortgage. Whee!
So either way, I'm blowing the doors off my 3.5% mortgage. Whee!
No, you moved in this scenario and sold the old house, remember?
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