Author Topic: Went through the process of house hunting/buying  (Read 30121 times)

Offline Fan of Dan

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Re: Went through the process of house hunting/buying
« Reply #45 on: June 07, 2013, 05:07:39 PM »
Details?
For example a 30 year term makes sense as your down payment is lower. Agreed. This way you have a lower payment for a pinch an option a 15 year does not provide. According to that logic which is simple an interest only product would be even better, provided there is no prepayment penalty.

However on a 30 year term of say 350,000 borrowed at 4 percent a prepayment of 100 a month over the lifetime of the loan will not only close out your mortgage 3 years early but you will save almost 30,000 in interest over the course of the loan. Your total amount of prepayment at 324 total months is only 32,400.

Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #46 on: June 09, 2013, 08:46:43 AM »
For example a 30 year term makes sense as your down payment is lower. Agreed. This way you have a lower payment for a pinch an option a 15 year does not provide. According to that logic which is simple an interest only product would be even better, provided there is no prepayment penalty.

However on a 30 year term of say 350,000 borrowed at 4 percent a prepayment of 100 a month over the lifetime of the loan will not only close out your mortgage 3 years early but you will save almost 30,000 in interest over the course of the loan. Your total amount of prepayment at 324 total months is only 32,400.

I'd guess that Edelman would say why are you "earning" 4% on your $100 per month (by avoiding the interest) when you could invest it and most likely earn a lot more.  Over a 30-year period you can expect to average somewhere in the ballpark of 9-10% per year in stocks, so why not put that monthly $100 in a highly diversified stock portfolio?

Offline YankyDoodle

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Re: Went through the process of house hunting/buying
« Reply #47 on: June 09, 2013, 09:18:20 AM »
I'd guess that Edelman would say why are you "earning" 4% on your $100 per month (by avoiding the interest) when you could invest it and most likely earn a lot more.  Over a 30-year period you can expect to average somewhere in the ballpark of 9-10% per year in stocks, so why not put that monthly $100 in a highly diversified stock portfolio?

Wow, expect to average 9-10%?? :o

Where are those numbers from? That's cray cray

Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #48 on: June 09, 2013, 09:32:21 AM »
Wow, expect to average 9-10%?? :o

Where are those numbers from? That's cray cray

I'll give you a few sources:

"Over longer periods, equities have tended to come out ahead. The average annual return for the worst 30-year period for the S&P 500 was 8.5 percent." - http://articles.chicagotribune.com/2012-07-13/business/sc-cons-0712-started-20120713_1_young-investors-stock-market-double-digit-stock-returns

http://observationsandnotes.blogspot.com/2009/03/average-annual-stock-market-return.html

http://www.khis.org/2011/09/average-stock-market-return-since-19xx.html

http://www.stockpickssystem.com/historical-rate-of-return/

And remember, the last 3 of those links are talking about average return either since 1900 or 1929, which includes the Great Depression.

Offline meshugener

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Re: Went through the process of house hunting/buying
« Reply #49 on: June 09, 2013, 12:38:28 PM »
I see that the fact that you altered your listed programs has not been a result of a change of heart.  :P
Lol, good memory....
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Offline YankyDoodle

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Re: Went through the process of house hunting/buying
« Reply #50 on: June 09, 2013, 02:24:30 PM »
I'll give you a few sources:

"Over longer periods, equities have tended to come out ahead. The average annual return for the worst 30-year period for the S&P 500 was 8.5 percent." - http://articles.chicagotribune.com/2012-07-13/business/sc-cons-0712-started-20120713_1_young-investors-stock-market-double-digit-stock-returns

http://observationsandnotes.blogspot.com/2009/03/average-annual-stock-market-return.html

http://www.khis.org/2011/09/average-stock-market-return-since-19xx.html

http://www.stockpickssystem.com/historical-rate-of-return/

And remember, the last 3 of those links are talking about average return either since 1900 or 1929, which includes the Great Depression.

Very interesting articles, thanks for quoting them.

Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #51 on: June 09, 2013, 03:00:42 PM »
Very interesting articles, thanks for quoting them.

My pleasure.  People have a tendency to believe that stocks are this incredibly risky investment that can lose all of your money and doesn't offer a great return.... but that belief is built on

1) the events of the past 10 years or so, which are considered by some to be the worst ten years in equities history, and
2) the experiences of people who lost a fortune in stocks generally. 

The problem is that you will find very very few people who diversified properly who lost money on that scale.  In fact, as Edelman points out in some of his books, the US stock market has never lost money over a 15 year period - ANY 15 year period.  And over any 10 year period it's made money 95% of the time.

Offline schneury

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Re: Went through the process of house hunting/buying
« Reply #52 on: June 09, 2013, 03:30:06 PM »
I got a mortgage 3 months ago from a small bank without a mortgage broker, FHA loan with 3.25% and closed in a few days

Offline daganster

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Re: Went through the process of house hunting/buying
« Reply #53 on: June 09, 2013, 04:39:40 PM »
I got a mortgage 3 months ago from a small bank without a mortgage broker, FHA loan with 3.25% and closed in a few days
Thats incredible. Which bank did you use? Did you purchase a primary?

Offline schneury

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Re: Went through the process of house hunting/buying
« Reply #54 on: June 09, 2013, 04:45:45 PM »
Thats incredible. Which bank did you use? Did you purchase a primary?
Continental home loans if you want the contact info pm me

Offline daganster

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Re: Went through the process of house hunting/buying
« Reply #55 on: June 09, 2013, 04:47:57 PM »
Continental home loans if you want the contact info pm me
I just googled them, thanks.

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Re: Went through the process of house hunting/buying
« Reply #56 on: June 09, 2013, 10:58:20 PM »
I got a mortgage 3 months ago from a small bank without a mortgage broker, FHA loan with 3.25% and closed in a few days
Was it a large loan? Commercial or residential?

Offline skyguy918

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Re: Went through the process of house hunting/buying
« Reply #57 on: June 10, 2013, 09:59:18 AM »
I got a mortgage 3 months ago from a small bank without a mortgage broker, FHA loan with 3.25% and closed in a few days

Not to say 3.25% wasn't a very good rate a few months ago, but that's what many (no-fee) brokers had a few months ago. But nobody should be expecting that right now. In fact, we're probably not likely to see 3.25% again, period.

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #58 on: June 10, 2013, 11:30:01 AM »
Not to say 3.25% wasn't a very good rate a few months ago, but that's what many (no-fee) brokers had a few months ago. But nobody should be expecting that right now. In fact, we're probably not likely to see 3.25% again, period.
+1, at least not until the next market crash
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Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #59 on: June 10, 2013, 11:32:19 AM »
Not to say 3.25% wasn't a very good rate a few months ago, but that's what many (no-fee) brokers had a few months ago. But nobody should be expecting that right now. In fact, we're probably not likely to see 3.25% again, period.

Meh, 3.25 or 4.75, it's all good to me lol.  It was only about 30 years ago that mortgage rates were 13%