One thing to consider, that a lot of the financial folks are recommending now, is an interest-only home loan. It sounds wacky compared to the traditional advice of “pay it off early,” but if you break it down, it makes sense.
If you owe any real amount of consumer debt at all, it makes more sense to take the difference that you would have paid in a traditional mortgage and pay off the consumer debt first. If your consumer debt is running even 10%, when you pay it off, then suddenly you are essentially earning 10% on your money that you’re NOT paying into the credit cards, etc. Essentially, pay off every kind of debt but your house first, because you will earn more back on your money than what your house can appreciate. When you are paying down the principal on your house, you are only earning whatever your house can appreciate - generally 3-5% (there are exceptions). That’s still better than a bank, but not as good as what you can do if you pay off your higher-interest debt. Then, if you want, you can either sock away the money in higher-earning investments, or put it into your house, whichever you choose. Unless you are in an unusual real-estate market, your house is still going to appreciate in value, even if you never pay off the principal.
Look, if you’re anything like me, and value leisure time, do NOT buy into the mindset of “there’s always something to do”. Just enjoy your house.
There were a couple things we HAD to do. . .we got a whole new kitchen, refinished the floors, and did some painting.
There are 8 million other things we’d “like to do” or “could do”.
I’m not going to be like my buddy. . .every weekend with him, it’s Home Depot, nails, tile, grout, plywood, pipes, glue, light fixtures. Holy shit. His house is a prison. Yeah, that paint job in the back room upstairs is pretty crappy, and the ceiling fan is sort of broken, but fuck it. No one goes back there anyway. Isn’t there something on TV?
I’m not saying “don’t fix that hole in the floor” or “just put a bucket under that leaky roof” but if you ever want to enjoy the house, don’t be a slave to it.
Keep an eye on the interest rates. We went from a 30 year ARM to a 15 year fixed with an increased payment of about $75 per month a few years back.
The “financial folks” aren’t recommending it. The mortgage brokers are.
That should put up a red flag right there.
Trunk,
My info came from a panel of financial consultants and some articles I’ve read recently, not from mortgage brokers…
Oh, forgot to mention - if you don’t have a lot of consumer debt to pay down, then the interest-only option is NOT for you. You would probably do better to look at refinancing a higher-interest 30yr mortgage to a lower-interest 15yr fixed in that case.
Wow. Slow markets. Our house went up in value by about 40% in 18 months.
The seller bought it about 18 months ago for $395 and sold it to me this month for $555. Ow… And to think we’re thrilled with $555 as a flat-out steal at only 12% over the asking price, and it’s still signficantly under the region’s median price. But then, the San Francisco area is just wacky that way.
You found a place around here for $555K? :eek: Did you have to pay extra for a roof?