Comments on: 15 Year Mortgage Too Pricey for Normal People http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/ Seattle's Leading Resource for Real Estate Information Sat, 20 Mar 2010 23:08:33 -0700 http://wordpress.org/?v=2.8.4 hourly 1 By: Rhonda Porter http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-173478 Rhonda Porter Sun, 26 Aug 2007 03:58:55 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-173478 Edward, one product does not work for all. A fixed period interest only product or a 40 year is fine for the right circumstance...not for everyone. I do not provide "blanket" advice or "one size fits all" ever. The point of this post is that the renter was only considering a 15 year fixed mortgage. The programs stated were for comparison purposes. Edward, one product does not work for all. A fixed period interest only product or a 40 year is fine for the right circumstance…not for everyone. I do not provide “blanket” advice or “one size fits all” ever. The point of this post is that the renter was only considering a 15 year fixed mortgage. The programs stated were for comparison purposes.

]]> By: Edward Abrams http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-172140 Edward Abrams Tue, 21 Aug 2007 22:30:51 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-172140 A 40 year or interest only mortgage is whats leading to all the foreclosures... that and advice from "experts.". The sensible person knows that overextending yourself during a period of historically super-low interest rates is a big mistake. A 40 year or interest only mortgage is whats leading to all the foreclosures… that and advice from “experts.”.

The sensible person knows that overextending yourself during a period of historically super-low interest rates is a big mistake.

]]> By: BloggerJacks > Bear Market? and Go Fly a Kite, Jim Cramer http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-169885 BloggerJacks > Bear Market? and Go Fly a Kite, Jim Cramer Mon, 13 Aug 2007 12:47:31 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-169885 [...] Lowering interest rates is not going to help anything. The problem is that people bought into a craze promoted by the real estate market and everyone surrounding it. A great post is the following at rain city guide. This couple wanted to get a 15 year fixed rate mortgage and found that they could not in Seattle and complained. What did the mortgage agent say? Christy, Seattle is not too pricey for normal people…your 15 year fixed mortgage is. [...] [...] Lowering interest rates is not going to help anything. The problem is that people bought into a craze promoted by the real estate market and everyone surrounding it. A great post is the following at rain city guide. This couple wanted to get a 15 year fixed rate mortgage and found that they could not in Seattle and complained. What did the mortgage agent say? Christy, Seattle is not too pricey for normal people…your 15 year fixed mortgage is. [...]

]]> By: BloggerJacks > What Gives With Interest Only Being Better Version 2? http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-169811 BloggerJacks > What Gives With Interest Only Being Better Version 2? Mon, 13 Aug 2007 08:09:20 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-169811 [...] I was reading a blog entry where one couple in Seattle had a hard time trying to find a place where they could take out a mortgage for 15 years. One woman in another blog commented that 15 years is a bad idea, and better would be a 30 year mortgage because it lets you buy more house. [...] [...] I was reading a blog entry where one couple in Seattle had a hard time trying to find a place where they could take out a mortgage for 15 years. One woman in another blog commented that 15 years is a bad idea, and better would be a 30 year mortgage because it lets you buy more house. [...]

]]> By: Bear Market? and Go Fly a Kite, Jim Cramer on InvestorGeeks http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-167136 Bear Market? and Go Fly a Kite, Jim Cramer on InvestorGeeks Sat, 04 Aug 2007 16:06:00 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-167136 [...] Lowering interest rates is not going to help anything. The problem is that people bought into a craze promoted by the real estate market and everyone surrounding it. A great post is the following at rain city guide. This couple wanted to get a 15 year fixed rate mortgage and found that they could not in Seattle and complained. What did the mortgage agent say? Christy, Seattle is not too pricey for normal people…your 15 year fixed mortgage is. [...] [...] Lowering interest rates is not going to help anything. The problem is that people bought into a craze promoted by the real estate market and everyone surrounding it. A great post is the following at rain city guide. This couple wanted to get a 15 year fixed rate mortgage and found that they could not in Seattle and complained. What did the mortgage agent say? Christy, Seattle is not too pricey for normal people…your 15 year fixed mortgage is. [...]

]]> By: Greg LIns http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-166480 Greg LIns Thu, 02 Aug 2007 15:23:59 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-166480 You're right Rhonda, homes do have more value than tax benefits. They also have more costs than just the mortgage. The key benefits of home ownership include a place to live, and the value of an asset that tends to increase in value over time. We could draw a simple analogy for owning stock. If you don't own it, you can't make any money from it. If you do own it, it will cost you, but the investor is looking for stocks that appreciate. In a market appreciating on average 8% per year, the economics of appreciation far outweigh the costs of capital to buy the house. You’re right Rhonda, homes do have more value than tax benefits. They also have more costs than just the mortgage. The key benefits of home ownership include a place to live, and the value of an asset that tends to increase in value over time.

We could draw a simple analogy for owning stock. If you don’t own it, you can’t make any money from it. If you do own it, it will cost you, but the investor is looking for stocks that appreciate.

In a market appreciating on average 8% per year, the economics of appreciation far outweigh the costs of capital to buy the house.

]]> By: Rhonda Porter http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-166459 Rhonda Porter Thu, 02 Aug 2007 13:31:22 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-166459 I don't recommend having a mortgage JUST for the tax benefit. It is an advantage over the same payment you would be making towards rent. You are able to deduct your real estate taxes, too. I don’t recommend having a mortgage JUST for the tax benefit. It is an advantage over the same payment you would be making towards rent. You are able to deduct your real estate taxes, too.

]]> By: If you can't afford the payments on a 15 year mortgage - you can't afford the house. http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-166456 If you can't afford the payments on a 15 year mortgage - you can't afford the house. Thu, 02 Aug 2007 13:28:37 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-166456 Does anyone actually know how tax deductions work? Yes, the interest paid toward your mortgage will be deducted from your income for that tax year, so you would be paying less taxes. But lets say that you make an average salary of $60,000 and have a modest home that you pay $15,000 in interest toward. That would effctively mean you would only pay taxes on $45,000. This person would fall into the 25% tax bracket meaning they would pay $11,250 in taxes as opposed to $15,000, a savings of $3750 in taxes. However, they paid the mortgage company $15,000 in interest so they wouldn't have to pay the government $3,750. That is actually of loss of $11,250 dollars for the year. Great strategy everyone - Lets keep paying interest on our mortgages for that huge tax break. Your mortgage company loves that tax strategy too. Does anyone actually know how tax deductions work? Yes, the interest paid toward your mortgage will be deducted from your income for that tax year, so you would be paying less taxes. But lets say that you make an average salary of $60,000 and have a modest home that you pay $15,000 in interest toward. That would effctively mean you would only pay taxes on $45,000. This person would fall into the 25% tax bracket meaning they would pay $11,250 in taxes as opposed to $15,000, a savings of $3750 in taxes. However, they paid the mortgage company $15,000 in interest so they wouldn’t have to pay the government $3,750. That is actually of loss of $11,250 dollars for the year. Great strategy everyone – Lets keep paying interest on our mortgages for that huge tax break. Your mortgage company loves that tax strategy too.

]]> By: Rhonda Porter http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-153967 Rhonda Porter Thu, 28 Jun 2007 17:42:26 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-153967 Greg, You're also paying down your mortgage very quickly and reducing your tax benefit. Especially in a purchase situation where the amount you're able to claim is based on your aquistion mortgage (plus an additional amount for home equity loans). It depends on what your personal objectives and financial goals are. A mortgage is more than a payment for your house, if used properly, it is a financial tool. Greg, You’re also paying down your mortgage very quickly and reducing your tax benefit. Especially in a purchase situation where the amount you’re able to claim is based on your aquistion mortgage (plus an additional amount for home equity loans).

It depends on what your personal objectives and financial goals are. A mortgage is more than a payment for your house, if used properly, it is a financial tool.

]]> By: Greg Lins http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-153958 Greg Lins Thu, 28 Jun 2007 17:30:56 +0000 http://raincityguide.com/2007/02/19/15-year-mortgage-too-pricey-for-normal-people/#comment-153958 When interest rates are less than the rate of appreciation, it makes sense to purchase as much real estate as possible with as little down payment as possible. After considering the tax-deductibility of mortgage interest, most of us should be thinking in terms of 5% after-tax interest rates. Leverage, leverage, leverage. 15 year mortgages dilute leverage and therefore dilute the return on investment. When interest rates are less than the rate of appreciation, it makes sense to purchase as much real estate as possible with as little down payment as possible. After considering the tax-deductibility of mortgage interest, most of us should be thinking in terms of 5% after-tax interest rates. Leverage, leverage, leverage. 15 year mortgages dilute leverage and therefore dilute the return on investment.

]]>