Super User Root beer Posted December 9, 2010 Super User Posted December 9, 2010 Would that be somethign you found in a finance textbook? Nope, a theory. Quote
preach4bass Posted December 9, 2010 Posted December 9, 2010 J Francho and Tyrius, ya'll said it was the better to put your extra money towards investments as long as they were above the interest rates. That makes sense. But, Rhino said something that makes sense too: "A rough breakdown of the amortization schedule showed that in the beginning, nearly ninety percent of the payment was interest, and only ten percent, give or take, was applied to the principal. (90 bucks for interest, 10 bucks to reduce the principle balance.) The next payment was a few cents less for interest, and a few cents more applied to the balance) So, if we paid an extra ten bucks against the principle, it saved us ninety bucks in interest. Paying ten to save ninety is a pretty good return on that ten spot. Granted, as time goes by, the savings per month shrinks, and at some point that money might be better invested elsewhere." So, wouldn't it be better to put extra money toward a mortgage early on, but later put the extra money in investments? If not, why? BTW, Way to go Speed! Quote
tyrius. Posted December 9, 2010 Posted December 9, 2010 I tell you what. I find this No reason to be an arse in your posts either. Not crying about anything, just pointing out that I never asked for your advice here. Again, shoo!! Back to your hole... coming from you, to be absolutely hilarious! Quote
tyrius. Posted December 9, 2010 Posted December 9, 2010 So, wouldn't it be better to put extra money toward a mortgage early on, but later put the extra money in investments? If not, why? I don't agree with Rhino's assessment that in a fixed rate mortage paying an extra $10 at the beginning saves you $90 in interest. The amortization table is set when the mortgage is created. If in the first payment I paid an extra $10 and didn't pay any extra for the remainder of the mortgage my final payment would be $10 less than it would have been originally. If you do that enough you'll pay off the mortgage early, but that $10 does not turn into $90 in interest savings. Also as I said in my first post, it's not a good idea for everyone. I was simply pointing out another option that could be considered. Quote
Super User SirSnookalot Posted December 9, 2010 Super User Posted December 9, 2010 If I had it do over again I would have just bought the home I'm in now outright with the funds from my last home. Ample funds to pay but if something were to happen to me I want 1 less thing for my wife to be concerned with. Being in the metals business I was close with some extremely wealthy people. Most I knew were highly leveraged in business, if people were privy to that kind of business they would know why. When it came to their personal homes and lifestyles let's just say they managed themselves a bit more modest. 250-300k a year doesn't sound that much today, but back in '75 that was a big income and many I knew made way more than that. Looking back I'm glad I took a page out of their playbook. I know the arguments on both sides but IMO it is not a bad idea to have a very low or no mortgage, especially in this economy, never know your job may be the next go. Quote
Super User SPEEDBEAD. Posted December 9, 2010 Author Super User Posted December 9, 2010 I tell you what. I find this No reason to be an arse in your posts either. Not crying about anything, just pointing out that I never asked for your advice here. Again, shoo!! Back to your hole... coming from you, to be absolutely hilarious! I aim to please... Quote
Super User J Francho Posted December 9, 2010 Super User Posted December 9, 2010 ya'll said it was the better I only said it was better for me, and my situation. I think it may be something Speed might look at, but for now what he's doing is fine. There's quite a bit of security in owning your home outright. If I had THE right house, in THE right spot, and was going to stay there until the bitter end, then I'd consider dumping that mortgage, so I could do "other things" to the property, like build a bass lake, LOL. Quote
Super User CWB Posted December 9, 2010 Super User Posted December 9, 2010 Keep in mind, everyone has a different risk tolerance. Paying extra to the principal is a sure bet. Can you make more by investing the extra cash? Definitely. Can you lose it? Definitely. Everyone has to decide for themselves what they can live with. Today there are very few sure things that offer a decent return. P.S. Can't we all just get along? :'( Yes, I too sometimes use emoticons or whatever the h*ll you call them. Quote
BadKarma42 Posted December 10, 2010 Posted December 10, 2010 Would that be somethign you found in a finance textbook? Nope, a theory. Well, let's hear it then. Quote
tyrius. Posted December 10, 2010 Posted December 10, 2010 Would that be somethign you found in a finance textbook? Nope, a theory. Well, let's hear it then. It is better to rent when home prices are falling. It's better to rent when you are not planning on staying in the house for a long period of time. It's better to rent when rents are significantly lower than your monthly mortgage payment would be (including property taxes, insurance, assessments, etc). There's a few for you, but purchasing your own home is most certainly not always the best financial decision. Quote
BadKarma42 Posted December 10, 2010 Posted December 10, 2010 I understand your points ty., and can see why people might make those decisions for those scenarios. Not sure if that's what RB's theory was... Quote
Super User Munkin Posted December 10, 2010 Super User Posted December 10, 2010 Wayne I was looking to refinance myself so any info you have I will take. Now that you have more free time maybe you can help me install those boat fender on my garage Allen Quote
Super User SPEEDBEAD. Posted December 10, 2010 Author Super User Posted December 10, 2010 Wayne I was looking to refinance myself so any info you have I will take. Now that you have more free time maybe you can help me install those boat fender on my garage Allen LOL, I'll work for LC Pointers. PM coming your way. Quote
Super User Root beer Posted December 10, 2010 Super User Posted December 10, 2010 I understand your points ty., and can see why people might make those decisions for those scenarios. Not sure if that's what RB's theory was... To keep it simple, it similar to what ty said, but it also has do with fact you can make higher gain in financial market than you can from your house.... A guy bought a house next door from my parents that was bought off an auction well below the average price in my parents neighborhood and he might have made 15% gain off of it. I got couple individual stocks with higher gains than that. Whenever I get out of college and what not, I'm not going treat my home as an investment.....Sure I'd like to sell it for profit one day, but if I sell it for loss, fine I'll take the tax break to off-set the taxes I incurred from the financial market. Quote
BadKarma42 Posted December 11, 2010 Posted December 11, 2010 All assuming that you are getting a 15% return on individual stocks you pick? All assuming that you pick enough winners over losers? Good luck. Quote
Super User Root beer Posted December 11, 2010 Super User Posted December 11, 2010 All assuming that you are getting a 15% return on individual stocks you pick? All assuming that you pick enough winners over losers? Good luck. Put options prevents losers. Thank you. Quote
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