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.
Being a home owner for 27 years and mortgage free for 19 of those years looking back that mortgage payment it was a drop in the bucket compared to all the other rising costs of home ownership which will continue with or without a mortgage post retirement. My initial property taxes were $1,200 annually on a $200,000 assessed home and now they are $6,000 because my home is now assessed at $400,000. I think I have replaced all my appliances at least 3 x, all flooring 2 x, totally gutted and replaced 2 bathrooms, and within the next 3 years I will be replacing all my 17 windows and roof which I expect to cost around $30,000. Following that my SO who is a retired carpenter and kitchen designer along with his son who is a plumber and a friend who is an electrician will rehab our kitchen. Even with this free labor and getting contractor material discounts I am still looking at a rehab cost of around $25,000.
Why all the renovations and appliances? I'm shocked that anything would break down in even the full 27-year time period.
Nothing "wrong" with them except for the fact that you pay a ton more in interest and just like any longer term financing it tempts people to buy more than they can really afford.
Location: Was Midvalley Oregon; Now Eastside Seattle area
13,073 posts, read 7,511,991 times
Reputation: 9798
nothing wrong with a 30 yr loan. Just understand your reasons and know the alternative financing reasons.
Son (31) refi'd to a 30 year this year from a variable 7. He expects that the Inflation will eventually cover the higher interest payments. {Lender assumes the inflation risk for more of the loan's time value}
We have his student loans (PLUS) with 15 years remaining. I fully expect that inflation will eat most of the interest & principal. We are also 70 yrs old and if I die, the loan is paid off. We can pay off this loan, but why? The why is important.
Nothing "wrong" with them except for the fact that you pay a ton more in interest and just like any longer term financing it tempts people to buy more than they can really afford.
But you lose the use of the money for 180 months.
For a $100,000 mortgage at 4% the increase in payment is $262 a month.
If you invested that and earned an average of 6% then at the end of 15 years you'd have about $73,000!
Now if you kept earning 6% on that money but deducted the $5279 annual mortgage amount at the end of the second 15 years you'd have a paid off house and a stash of about $42,000.
That is not even counting the benefits of taxes, inflation, etc.
Clearly there is more to this than just paying more interest.
Why all the renovations and appliances? I'm shocked that anything would break down in even the full 27-year time period.
Appliances these days rarely last longer than 10 years. Ditto water heaters. HVAC systems average around 15 years. you're not going to live in a house for decades without having to replace these things. It's just part of the total cost of home ownership.
In the last few days I have heard several people say that 30 year mortgages were for suckers or just a plain bad idea. I realize if you get a 15 year mortgage that your home will be paid off faster with less money paid for interest, however you will have a larger payment each month. Not everybody can afford that and what about "older" people like me who are planning on buying a small home in the next few months? Although I just turned 62 last month and I am in pretty good health with no major health issues what are the chances that I will live to 92 and be healthy enough to stay in my home? I'm not too concerned about having my house paid off before I die. Hopefully my kids who are 31 & 29 will have their own homes in the next 10 years plus neither one really wants to stay in Florida.
After living in rented condos for the last 4 1/2 years and paying such high rent I will be happy to have my own place with a much smaller payment (I'm getting an excellent deal on my late aunt's house). I would like to use some of that extra money I will have each month to set up a savings account for my one grandchild and maybe travel.
Sure I will paying more for the house due to the higher interest but why is that such a terrible thing at my age? If I was younger and had a husband (I'm widowed) I would definitely consider a 15 or 20 year mortgage so that my house would be paid off while I was in my 40's or 50's and I could enjoy an early retirement with a paid off house.
So I get a 30 year mortgage, die in 20 years and the house goes to my heirs who can do what they want with at that time. I've paid less each month so I can enjoy my retirement years. Why is that so wrong economically?
They are babbling idiots who like to babble their mouth. I made a mistake of getting a 15- year mortgage once on one house and learned not to do that ever again. You can pay ahead if you want to on 30 year mortgage. Particularly now that we have the lowest interest rate in years.
I also would never get one. If circumstances changed, I'd have to pay a lot to re-fi. 'd get the 30 year and pay like it's a 15 year if a 15 year was what I wanted and could afford.
For the OP it doesn't matter. She isn't trying to own it as fast as possible. She wants to enjoy the home with the payment as it is for 30 years. I wouldn't even make extra payments if I were her - I'd put them away for REPAIRS and EMERGENCIES!
i always liked 30 year mortgages for most people. they always have the option of paying it off sooner and the luxury of taking up to 30 years if money is tight. on the other hand if you really want to go the cheapest route most folks would do best with an adjustable since they tend to move a few times while raising and growing a family
Thank you for all the great advice. I think I will probably go with the 30 year mortgage and just pay extra on it so I can pay it off quicker. That way I'm not "house poor" and I'm living in my OWN place paying less than rent. Yes taxes go up but the taxes on this house are unbelievably low because my aunt had Homestead & Widow Exemption which I will also get.
I'm not doing any updating right away, although the kitchen is stuck in the 70's or 80's, it's functional and is very large. I'm planning on doing the roof and soffits (which have holes in them) first and painting the house because it is the most horrible dark color green you can picture. I don't know what she was thinking going from a white house to this dark Kermit the frog color. The rest can be done a little at a time. I'm looking forward to gardening again and I have a clean slate here. :-)
In Texas, your ceilings on the property taxes would be re-set at current values. So you might pay more than your aunt did if Florida is the same. I just learned this the hard way.
Why make extra payments? You'll need the money to pay repairs and replacements. SO MANY repairs and replacements they never end with home ownership.
Why all the renovations and appliances? I'm shocked that anything would break down in even the full 27-year time period.
You are? I bought my condo 24 years old and it had top of the line everything when it was built. Almost all of which had broken down or did after I bought. The only original thing still in here that works is the stove. And the oven and microwave part do not - just the stove .
Prior owners replaced the fridge, the w/d, the floors (but with really horrible cheap ones) and they did not replace the horrible A/C that cost a mint to run (first thing I replaced).
The tub needs replacing. There is a hole in the kitchen sink from rust (my bad - those two things are also original)
They did not put down more insulation in the attic so I had to. The cabinets need refinishing or replacement, on and on ......
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.
.
