How much to spend on monthly mortgage?

[rimmerama]

Originally Posted by TheGreatCurve

But is that 7% return totally risk free? Meaning there's absolutely zero chance of losing even a dime of your investment?

Zero risk = zero return.

[vrhunski]

Originally Posted by rimmerama

Zero risk = zero return.

right 0 risk = zero or even negative return. But I got some security.

[stan4]

Originally Posted by rimmerama

Half your take home on a 600k mortgage with a 200k income? Man, your credit must suck!

Naw. My tax bracket sucks.
Plus, like I said, being house poor sucks.

[stan4]

Also, they should think about how the mortgage would be if one of them loses their job.

[meameame12]

[quote=SOON2BNSURPRISE;24561837]
2. Place at least 20% down on the home and more if you can do it. With what currently seem to be low interest rates you may want to keep it to 20% and pay off the rest with inflated dollars.
QUOTE]

hi, can you explain what you mean by this? Pay off in inflated dollars?

[jaypee]

[quote=meameame12;24571128]

Originally Posted by SOON2BNSURPRISE

2. Place at least 20% down on the home and more if you can do it. With what currently seem to be low interest rates you may want to keep it to 20% and pay off the rest with inflated dollars.
QUOTE]

hi, can you explain what you mean by this? Pay off in inflated dollars?

It means the cost of borrowing money is low so take advantage of that.

[rimmerama]

Originally Posted by stan4

Naw. My tax bracket sucks.
Plus, like I said, being house poor sucks.

Uh... Tax bracket notwithstanding, a mortgage on a 600,000 dollar house (20% down = 500,000 dollar mortgage) should only be about 2,800 a month, or 33600 dollars. Are you saying that your tax burden is roughly 140,000 dollars?

[SOON2BNSURPRISE]

[quote=meameame12;24571128]

Originally Posted by SOON2BNSURPRISE

2. Place at least 20% down on the home and more if you can do it. With what currently seem to be low interest rates you may want to keep it to 20% and pay off the rest with inflated dollars.
QUOTE]

hi, can you explain what you mean by this? Pay off in inflated dollars?

1. Better to borrow money at the lowest interest rate that you can. Rates are at historic lows or at least at the time I am writing this. My rate is 3.7895% that is some cheap money. Low interest rates make it easier to pay off your loan. You pay much less over time to borrow the money. Kind of why those 0% car loans are so popular, the borrowed money doesn't cost anything to borrow.

2. The time value of money is another factor. Most people would prefer $50 today then $100 paid out over 10 years. With inflation prices go up and the value of the money goes down. Todays $10 could buy lunch for 2 at some fast food places, in 10 years $10 may only buy one lunch. Then again that is getting harder and harder to find as well. With paying over time you use the time value of money in your favor.

3. Inflation. You think that you are getting a raise because you are that much better or needed at your job. (That is if you can get a raise.) Everything is relative. In 1965 my dad made $350 a month and that was not a bad pay check. They also paid $105 a month for their home that they paid $13,000 for. Over time inflation increased the value of that home to $338,000 when they sold it in 2003. (I hear that you could buy a similar home for around $260,000 now, still much more than the $13,000 that they paid. With inflation comes loss of value. Although you get a raise, the purchasing power of the dollar falls. Companies have to cover the cost of that raise and to do that they increase the cost of doing business. That is past on to the consumer, who ends up needing a raise and they go to their employer and ask because they can not afford to buy what your company sells. Kind of why gold is so popular, it holds its value over time. In fact if you base the cost of goods on the price of gold I bet you would be closer to managing the true worth of something. Just my oppinion though and nothing I have looked at to see if it would work.

[TheGreatCurve]

Originally Posted by rimmerama

Zero risk = zero return.

High risk = loss of capital.