Posted on 04/06/2023 12:32:39 PM PDT by EBH
We came to Wyoming as equity refugees from California and we were able to pay cash. I will add that we were blessed to have found a place that had been foreclosed and sitting empty for over a year. The bank took the deal we offered and we made a paradise out of it for ourselves.
And I do not miss California or angry black people. Not at all.
It would make more sense to buy a cheaper house, then trade up in 10 years.
yep, all that. And paying an additional 40% in total interest for a 10% reduction in monthly payments
This is a remarkably bad idea. Very few people keep a home for 40 years.
Why not just interest only? It will save a couple more bucks a month and won’t make much difference in equity in the long run.
Going from 30 years to 40 years is pretty disastrous in terms of creating equity.
Per hundred thousand, at current 7%:
You go from a $665.30 monthly payment to $621.43, so $44 less per month, and 528 less per year.
However, with the 40 year mortgage at 30 years you would still owe more than half, at $53,521, and you will have already paid 177k in interest on your way to 198k, instead of the 140k for the 30-year loan.
At 6%, after 30 years, you would have paid off 50.2% of the loan on a 40 year loan.
On your 30 year loan you will have paid $405k in interest.
On a 40 year loan, you will have paid $516k of $574k in interest.
At 6%, it would be $3503.41 per hundred thousand of the loan paid after the first 5 years.
After 10 years, it would still be only $8228.98.
Even Black women with kids could not have a man in the Govt. paid housing projects after 12 PM.
A 40 year mortgage is stupid. It’s a con job for homeowners.
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So is a 96 month car loan stupid, yet people are doing it.
I apologize. It was midnight according to the UNO ( Univ. Nebraska Omaha) so called prof. He was into social medicine/socialized healthcare in 70-72.
In a 30-year mortage, the "tipping point" is roughly 13 years in. That is the point where you finally start paying more of the principal on your mortgage payment instead of mostly interest.
That's bad enough. What's worse is that most people don't even make it to that thirteen year point. That's because they do a re-fi just a few years in, usually to take advantage of a lower mortgage rate that will lower their monthly payments. But they just screwed themselves in the long term because they are right back to paying nearly 100% interest on their mortgage payments with very little going towards principal.
With a 40-year mortgage, it will take you something like 18 years before you finally get to the point where you are paying more on the principal then the interest.
No wonder banks and mortgage companies love re-fi's! Almost all your mortgage payments going into their pockets instead of into your house.
It is actually even worse than that. A 40 year mortgage at 6% won’t hit that tipping point until 28.5 years into the mortgage.
That tipping point is also highly dependent on the interest rate.
For a 30 year mortgage it works out like this:
3% rate ==> 7 years
4% rate ==> 12 years, 9 months
6% rate ==> 18 years, 6 months
When you change it to a 40 year mortgage it actually bumps those out by 10 years. (I was a little surprised to find the math worked out that way honestly - I really didn’t just add 10 because 40 = 30 + 10 lol)
3% rate ==> 17 years
4% rate ==> 22 years, 9 months
6% rate ==> 28 years, 6 months
And you are absolutely right - mortgage companies love re-fis. If you know a little bit about what you are doing and don’t just think in a month to month mentality, it can be a great tool - but they are ready to take advantage of people who don’t think it through, or just don’t understand how things work.
Sorry. Midnight.
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