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Old 05-12-2015, 09:32 AM
 
432 posts, read 230,249 times
Reputation: 905

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I have three homes that are all mortgage free. We live in one and rent our townhouse and other home to tenants. I do think you should save at least six months of expenses first and then I would work towards paying the mortgage off. Not having a thousand plus dollar mortgage every month makes a huge difference in the amount you can save each month. Start young and you will never regret it.
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Old 05-12-2015, 10:02 AM
 
Location: Columbia SC
9,011 posts, read 7,774,270 times
Reputation: 12247
Quote:
Originally Posted by Submariner View Post
HOAs frighten me.

Why any same person would submit themselves to the whim of a group of neighborhood busybodies is beyond me.
There are many reasons why:

1. Amenities one could not afford on their own. Pools, Tennis, etc.

2. Services such as landscaping, outside home shell maintenance, etc.

3. Ability to "control" what can and cannot be done on a neighbor's property like no junk cars, no overgrown lawns, etc.

4. Ability to "control" the neighbor standard/look/curb appeal, etc.

5. Control parking so the street does not become a parking lot, etc.

Yes the above cost money. Yes "control" does mean one does "give up" some individual rights. Yes it is not a life style for all.
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Old 05-12-2015, 11:29 AM
 
Location: Tennessee
23,651 posts, read 17,632,423 times
Reputation: 27754
Quote:
Originally Posted by johngolf View Post
There are many reasons why:

1. Amenities one could not afford on their own. Pools, Tennis, etc.

2. Services such as landscaping, outside home shell maintenance, etc.

3. Ability to "control" what can and cannot be done on a neighbor's property like no junk cars, no overgrown lawns, etc.

4. Ability to "control" the neighbor standard/look/curb appeal, etc.

5. Control parking so the street does not become a parking lot, etc.

Yes the above cost money. Yes "control" does mean one does "give up" some individual rights. Yes it is not a life style for all.
I may have the orders completely backward here, but HOAs are typically in affluent to middle class areas. These people are generally going to be less likely to "junk up" the property than poorer or rural residents IMO. In many cases, it seems like an expense to enforce a problem that doesn't exist.
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Old 05-12-2015, 11:40 AM
 
Location: Pennsylvania
12,577 posts, read 4,254,726 times
Reputation: 9913
For the posters who are urging either 30 year mortgages, and/or not paying off the debt as quickly as possible, in order to invest the $$$.... you are relying on the following item:


You are expecting the fabulous stock market returns since we bottomed out in Q1 of 2009 to continue on, pretty much forever.


It's not going to happen folks. This country is leveraged to the hilt. Sooner or later, people are going to begin cashing out of stocks, and the returns are going to suffer. Now do I think that we're going back to dow 6,000? NO. But there's no way that the sky high returns are going to continue either. I'd bank on a major correction within the next couple of years (likely right around the 2016 election cycle, before or after). And then I'd bank on much smaller % gains after that.
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Old 05-12-2015, 11:44 AM
 
71,819 posts, read 71,919,037 times
Reputation: 49380
the projections for the markets even with a correction are in the 6% range based on the fact dividends account for 1/3 of the markets returns.

dividends and interest rates track each other . with dividends in the 2% range that puts total returns in about the 6% range.

lower than the past but still not bad for the near term until things pick up again down the road . 6% beats 4% mortgages so it could still pay off .

your time frame for staying in equities should be long term.
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Old 05-12-2015, 12:04 PM
 
Location: Tennessee
23,651 posts, read 17,632,423 times
Reputation: 27754
Quote:
Originally Posted by BeerGeek40 View Post
For the posters who are urging either 30 year mortgages, and/or not paying off the debt as quickly as possible, in order to invest the $$$.... you are relying on the following item:


You are expecting the fabulous stock market returns since we bottomed out in Q1 of 2009 to continue on, pretty much forever.


It's not going to happen folks. This country is leveraged to the hilt. Sooner or later, people are going to begin cashing out of stocks, and the returns are going to suffer. Now do I think that we're going back to dow 6,000? NO. But there's no way that the sky high returns are going to continue either. I'd bank on a major correction within the next couple of years (likely right around the 2016 election cycle, before or after). And then I'd bank on much smaller % gains after that.
I'd be skeptical of seeing such gains again over a six year period, barring another meltdown, which no one wants.
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Old 05-12-2015, 01:28 PM
 
Location: Myrtle Creek, Oregon
12,298 posts, read 12,537,923 times
Reputation: 19538
The comments about the "safety" of a 30 year mortgage seem to me to be nonsense. If you can't afford to continue saving while making mortgage payments, you are buying too much house. If you can't project your job/lifestyle at least 5 years in advance you have no business buying a house at all. With a 15 year, that is 1/3 of the mortgage term, and you have substantial equity built up. With a 30 year mortgage you are still making interest payments with a pittance going toward principal. Also, the chances of a financial emergency double over the course of 30 years vs. 15 years.
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Old 05-12-2015, 01:31 PM
 
71,819 posts, read 71,919,037 times
Reputation: 49380
few can project the 3 biggest financial killers that are usually not on the radar years prior.

illness-divorce -job loss. add to that the expense of a family down the road.

we know someone who is having twins and while one child was no problem two can be very taxing.

my opinion is nothing beats having slack in a plan.
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Old 05-12-2015, 01:51 PM
 
Location: Tennessee
23,651 posts, read 17,632,423 times
Reputation: 27754
Quote:
Originally Posted by Larry Caldwell View Post
The comments about the "safety" of a 30 year mortgage seem to me to be nonsense. If you can't afford to continue saving while making mortgage payments, you are buying too much house. If you can't project your job/lifestyle at least 5 years in advance you have no business buying a house at all. With a 15 year, that is 1/3 of the mortgage term, and you have substantial equity built up. With a 30 year mortgage you are still making interest payments with a pittance going toward principal. Also, the chances of a financial emergency double over the course of 30 years vs. 15 years.
I agree with you in principal on the life projection, but I think we have entered into more unsettled times than has historically been the norm. I graduated college five years ago, almost to the day. When I graduated, I never would have suspected I would have lived in three states in four years (from 2010-2014 I've lived in IA, IN, and TN. I've also spent some time in MA, VA, and SC), nor would I have predicted the wild income swings ($30k to $45k to ~$21k to now roughly $60k). Only one of these moves was really by choice, the rest I've made out of financial necessity.

I feel more comfortable about my circumstances now than ever before, but I've had the bottom fall out in a day before and realize it could do so again.
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Old 05-12-2015, 02:01 PM
 
12,709 posts, read 9,995,847 times
Reputation: 9521
Quote:
Originally Posted by mathjak107 View Post
few can project the 3 biggest financial killers that are usually not on the radar years prior.

illness-divorce -job loss. add to that the expense of a family down the road.

we know someone who is having twins and while one child was no problem two can be very taxing.

my opinion is nothing beats having slack in a plan.
It really depends on debt to income ratio among other things. Someone who would be putting themselves at (for example) a 30% DTI by having a 15-year loan is in a much, much riskier position than one that would only rise to a DTI ratio of (say) 10%.

15-year loans are really not always a bad thing. If you think that a 15-year loan should be avoided even if it would only be a 10% DTI, then what about those of more modest means for whom even a 30-year mortgage would be 20% or 25% DTI? By your logic they should rent and save 50% of the home value before they buy at all.

Risks lie on a spectrum from negligible to serious, and exactly where on the spectrum a give household would put themselves by having a 15-year loan is going to depend on a lot of factors. You are painting such loan with a ridiculously broad brush. I don't know what motivates your contempt for 15-year loans. Like many other financial products they will make sense for some and not others. Why is this so hard to understand?
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