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Mango

SoWal Insider
Apr 7, 2006
9,709
1,360
New York/ Santa Rosa Beach
Also if you can make the monthly debt ratio work, 15 year mortgages have some nice features like seeing a real reduction in principal from the first payment. 30 year notes frontload the interest so much that the balance barely goes down for the first 10+ years.

The difference in rate between the 30 and 15 over the last years, has never been substantial enough to warrant taking a 15 yr. on a purchase, especially for first time home buyers. One never knows when illness, job loss, and change in family circumstances occur, and making that 30 year payment vs. the 15 is going to be a life saver. If you work out the numbers, the earlier payoff isn't substantial enough to warrant taking the chance. The only time it makes sense is on a refinance, in some cases, or, when the spread between the 30 and 15 is substantially wider.
I would rather see someone go into one of those accelerated bi-monthly programs on a 30 to pre-pay faster vs. taking a straight 15 yr., with no options but to make that payment or refinance. If personal catastrophe is involved, refinancing may not be an option.
 

scooterbug44

SoWal Expert
May 8, 2007
16,732
3,330
Sowal
My family typically gets a 30 year mortgage and then pays it off in 10 or 15.

The thinking is that you can always pay MORE, but it's better to be conservative in case of an emergency or change in circumstances.
 

Matt J

SWGB
May 9, 2007
24,646
9,496
You are completely wicked. Maybe you should design a portable pet mausoleum and capitalize on the situation! ;-)

The problem at this point is not so much not being able to swing the house...there are houses out there that would work. The problem is not wanting to see the house across the street that's bigger and has better countertops sell for a year's salary less in a year or so. It's the fear of being trapped if some unexpected thing we can't predict happens, I mean, there's being cautious, and then there's being paralyzed with fear of the unknown. Just trying to figure out where we are on that spectrum...

As far as seeing some uber deal at some point is going to happen after you buy. Guaranteed no questions ask it will happen. It's right up there with things like the first thing to break on a new car, the first scratch on new furniture, or, my all time favorite, pricing on the iPhone.
 

30ashopper

SoWal Insider
Apr 30, 2008
6,846
3,471
56
Right here!
My family typically gets a 30 year mortgage and then pays it off in 10 or 15.

The thinking is that you can always pay MORE, but it's better to be conservative in case of an emergency or change in circumstances.

(Make sure you read the fine print to be sure your mortgage doesn't have penalties for early pay off. BofA currently has nice no fees, no early pay off penalty 15 or 30 years available for example.)
 

scooterbug44

SoWal Expert
May 8, 2007
16,732
3,330
Sowal
(Make sure you read the fine print to be sure your mortgage doesn't have penalties for early pay off. BofA currently has nice no fees, no early pay off penalty 15 or 30 years available for example.)

Definitely - also why we deal w/ local banks instead of giant corporations. I'm really bummed that my hometown bank can't do a lot loan or mortgage for me here, but their crazy policies like not lending outside the county, treating their clients well, and avoiding sub-prime are why they do so well. :D
 

30ashopper

SoWal Insider
Apr 30, 2008
6,846
3,471
56
Right here!
Definitely - also why we deal w/ local banks instead of giant corporations. I'm really bummed that my hometown bank can't do a lot loan or mortgage for me here, but their crazy policies like not lending outside the county, treating their clients well, and avoiding sub-prime are why they do so well. :D

scooterbug - this is something I've been wondering about. I've always gone through BofA simply becuase they have been my bank for years. I get the good service argument, but are there also big financial advantages to local banks over a big bank like BofA?
 

scooterbug44

SoWal Expert
May 8, 2007
16,732
3,330
Sowal
All I know is that I've banked with them while living in 2 other states and a foreign country because their level of service is so great.

The fees, low interest, and lack of service I've experienced with other institutions would make Shylock proud. If my one branch bank doesn't have to charge me an ATM fee in Austria, I don't feel that I should pay for using one in a bank's own lobby because they also charge for a teller! The credit card which AUTOMATICALLY sets up your payment to be late and charge you a fee if you pay online was another shock.

I haven't paid a fee to them in over a decade for credit cards, ATMs, they pay my postage to bank by mail, get a great interest rate, and I can pick up a phone and immediately talk to a person!

They're in it for the long haul, not the quick fee that screws the customer. For example, one time I called to check an account balance and they told me I needed to put it in a different account so I'd get more interest. Mom got a call because her employer's automatic payment system was wrong and they didn't want her to have a bunch of overdraft fees or returned checks. They lost out on a couple fees but kept lifelong customers happy.
 
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Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
I hate this market. I really do.

Any serious buyer should be loving this market, not hating it.

First one must teach the parents. :roll:

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We disagree so much on this idea. People get a little more than stuck in their own mental limitations and fear of change. If anyone can teach the parents, it is the children, but first, the children must me taught. ;-)

We also disagree about housing being an investment. I guess you just write it off as an expense? It is an expense, very much like rent, but it may also be an investment, as there is potential risk, up or down, involved, and rent doesn't have that risk.
 

beachmouse

Beach Fanatic
Dec 5, 2004
3,504
741
Bluewater Bay, FL
When we refinanced from a 30 year note to a 15 year, we cut our rate from 7% to 4.8%, and the amount the monthly payment went up was pretty negligable in gross income terms.

As for local lenders, if you're part of a membership class for one of the local military credit unions, (and membership class has come to mean you live or work somewhere in all of Walton or Okaloosa County) then they're often very good with customer service because they had to build their business competing with USAA, who gets many a rave over customer service. We bank and borrow from Eglin FCU, and they were grayt to work with on our mortgage and do very well on the day to day stuff.
 

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
We also disagree about housing being an investment. I guess you just write it off as an expense? It is an expense, very much like rent, but it may also be an investment, as there is potential risk, up or down, involved, and rent doesn't have that risk.

An "investment" is using money for the purpose of making more money. An "investment RISK" is the potential of one's investment to go up or down.

Yes, I believe a primary home IS an expense...one must live somewhere. And unless one is a "investulator," and is leveraged to the eyebrows in a hot housing market, most folks who've been living in their homes a long time and then sell will find that when they add up ALL the costs of primary homeownership...not just Purchase Price - Selling Price = Profit, they've made only very modest returns vs. other asset classes.

<However, this does discount the satisfaction of having access to one's personal pet cemetary.>

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