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Homeowners taking out 10-year mortgages
Wall Street Journal ^ | June 2, 2003 | RUTH SIMON

Posted on 06/02/2003 4:23:28 PM PDT by Dog Gone

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To: supercat
Thats a good point Supercat.....I would think that Nothing is Static...therefore spreading odds is a good thing
161 posted on 06/02/2003 9:20:58 PM PDT by mylife (Opinions, $1.00 Todays Special: Half Baked, 50 cents)
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To: supercat
Funny how One market suffers as another thrives
162 posted on 06/02/2003 9:34:11 PM PDT by mylife (Opinions, $1.00 Todays Special: Half Baked, 50 cents)
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To: speekinout
Do you really think the value of your house will go up >20% in the next 7 months?

Why not ? It went up 90% in the last 3 years...

163 posted on 06/02/2003 9:34:44 PM PDT by tubebender ((?))
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To: Kosh5
A lower minimum payment maximizes your personal liquidity and ability to deal with unexpected problems without the threat of defaulting or messing up your credit scores.

A lot of computer programmers and others who are out of work today would not have anticipated they'd be out of work 2 years ago. I think liquidity is very important now ---if you have to foreclose on a mortgage because you lose your job in one or two years, then it would be best not to have so much into it. Also if you can put the money into savings, you might not have to lose the house. I'm thinking of going the other way if I refinance which I might if the economy worsens so I'd have lower payments and more flexibility.

164 posted on 06/02/2003 9:35:00 PM PDT by FITZ
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To: Mannaggia l'America
Now my oldest kid is ready for college - I have to go ask the bank if I can borrow my own money that is tied up in the house.

You are not responsible for your kid's college tuition. If you are not totally free of debt -- no mortgage, no car loan, no credit card debt, no debt whatsoever -- and with substantial assets in the bank, you have no business subsidizing your kid's college tuition. And even then, it's another question whether you should do so.

Your duty to yourself and to your kid is to be free of debt and totally self-sufficient so that you will not be a drain on them and society during your old age. This is the way that it was 50, 100, 200 years ago and the way that it should be now.

Get out of debt. Get out of all debt. Especially debt on your home. This was the standard procedure 50 years ago, and it is just as vital today. Anyone who tries to convince you that you are better off being in debt is just a snake-oil salesman trying to get rich quick off of your hard earned dollars.
165 posted on 06/02/2003 9:37:39 PM PDT by Iwo Jima
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To: griffin
I'd much prefer to borrow at 5% and receive capital gains at 10% than just sit in a payed off house.

How do you feel about borrowing money at 5% and receiving capital losses of 10%? That's far more more likely than any kind of gain. Or 50% losses? Not at all out of the question. The banks aren't paying .02% interest on your savings accounts for no good reason.

You will never, ever have a sounder financial plan than paying off your debts, especially your mortgage.
166 posted on 06/02/2003 9:44:16 PM PDT by Iwo Jima
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To: Texas Eagle
You won't save interest by doing that, you'll pay more. It's mathematically impossible for you to pay less total interest by making the same payment at a higher APR.

Using a $75,000 principal w/ a 30-year note @ 5.5%, you get a monthly payment of $425.84. With a 15-year mortgage @ 5%, the payment is $593.10. If you get the 30-year loan but pre-pay the extra $167.26 each month (i.e., as if you had a 15-yr. mortgage), then you don't finish paying off the debt until late in the 16th year... and you pay $5629.13 in extra interest, because of the half-percent APR difference.

(Total interest w/ 15-year loan = $31757.14; total interest w/ 30-year loan, making same payment = $37385.87)
167 posted on 06/02/2003 9:44:26 PM PDT by Sloth ("I feel like I'm taking crazy pills!" -- Jacobim Mugatu, 'Zoolander')
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To: Myrddin
The feds let you write off that interest...

Not exactly. You can write off the interest if you are in a lower tax bracket such that you would basically be just as well off to take the standard deduction. If you are in a higher tax bracket such that the standard deduction is not advantageous to you, the alternative minimum tax will greatly decrease any benefit of a mortgage interest deduction. So, you basically only benefit from the deduction if you can't benefit from the deduction.

Moral of the story: GET OUT OF DEBT!!!!!
168 posted on 06/02/2003 9:56:06 PM PDT by Iwo Jima
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To: Skywalk
   At the rate of $586 a month, Ed won't run out of money for nearly eight years!

Assuming he doesn't like to eat, or wear clothes, or heat the house.

Also, what about PMI? At 5% down they're gonna nick ya hard for that.

169 posted on 06/02/2003 10:07:55 PM PDT by Mike-o-Matic
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To: Beelzebubba
Here's Ric's explanation:

http://www.ricedelman.com/planning/home/rule21.asp


Thanks for posting the link. It's an excellent article that everyone, who is considering paying off their mortgage early should read. (and for those who read it, don't forget to read the second page too).

One of the reasons that people want to prepay the mortgage is to reduce risk, when in fact if all their money is stuck in the house, in tough times they won't be able to get it back out, whereas, if they saved the extra money, instead of putting it into the house, that can tide them over tough time, or provide money for retirement. You can't eat the bricks, many older people have their house paid off, and don't have enough money to live on, and the only way they could get the money is by selling the house. On the other hand, if they had saved that money and invested it over the years, they would have enough to live on and make the payments.

This is especially true, when interest rates are as low as they are today.

It really is the question, whether you want the same money to be inaccessible in the house, or accessible, liquid. The money you earn on the extra money covers the payments.
170 posted on 06/02/2003 10:08:33 PM PDT by FairOpinion
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To: sysvr4
"So, the point is, borrow for as LONG as you can, as cheaply as you can, because you're borrowing cheaper than you can make money (you do believe your portfolio can do better than 4.5% over the long term, yes?) "
---

And with the current low ortgage interest rates, if they just break even, i.e. they only get as much return on the investment as what they are paying in mortgage, it covers the interest and preserves their flexibility of having the cash, should something happen, or for retirement.
171 posted on 06/02/2003 10:15:56 PM PDT by FairOpinion
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To: Texas Eagle
In tough times you may not get the best price for your house. Also, if you have the money, then you can get through the tough times AND keep your house.
172 posted on 06/02/2003 10:16:57 PM PDT by FairOpinion
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To: Texas Eagle
You are forgetting that you should also look at a report, where you take a 30 year mortgage, and taking the difference in payments between the 30 year and 10 or 15 year and invest it and look at where that money grows. People keep ignoring that part.
173 posted on 06/02/2003 10:19:44 PM PDT by FairOpinion
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To: Mike-o-Matic
All activities which he'd have to engage in regardless of the term of the loan repayment.
174 posted on 06/02/2003 10:30:01 PM PDT by Skywalk
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To: Texas Eagle
Is your portfolio earning 8%? If so, do you mind giving me the name of your financial advisor?

The S&P 500 over the last 10 years has returned 8.52%, and that is including the pretty big hit over the past few years.

175 posted on 06/02/2003 11:08:09 PM PDT by cashion
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Bump for a later read
176 posted on 06/02/2003 11:37:12 PM PDT by Mo1 (I'm a monthly Donor .. You can be one too!)
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To: nutmeg
bump
177 posted on 06/02/2003 11:39:16 PM PDT by nutmeg (USA: Land of the Free - Thanks to the Brave)
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To: Dog Gone
marking to read tomorrow.
178 posted on 06/02/2003 11:59:43 PM PDT by razorback-bert
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To: razorback-bert
Refinance tomorrow, dog breath.

I need to refinance ASAP.
179 posted on 06/03/2003 12:03:02 AM PDT by Fred Mertz
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To: Iwo Jima
I paid my mortgage off last year. Now, I just put aside $300 per month for property taxes and homeowners insurance. The money I was putting out for principal and interest is covering college costs for my kids on a pay as you go basis AND eliminating my remaining auto loan debt.
180 posted on 06/03/2003 12:04:20 AM PDT by Myrddin
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