Posted by Don K on February 10, 2007, 7:48 pm
> wrote:
>>Is that a wise saying to follow?
> I think it is wise. Consider what houses would be like, if long-term
> financing was not available. The house would be far less expensive
> because people would only be willing to save up for it for a few
> years.
There was a time when there was no long-term financing. If I remember
my history correctly, a few people at the top lived in huge mansions on
large estates, and most of the others lived in squalid dwellings
owned by a landlord.
Easy financing is responsible for the lion's share of our
> currently ridiculous house prices. It would be good for our character
> if we had to save for ten years to buy a house. Most Americans can't
> save money if their lives depend upon it.
On the other hand, lack of financing is a major reason that people
in the poorest countries cannot rise out of their poverty.
Don
Posted by Rod Speed on February 12, 2007, 12:50 pm
> Queen Suzie [ Orman ] distinguishes between good and
> bad debt. Generally good debt is that which helps you
> advance in life like education, new business or a home.
> Bad debt is buying things without saving for them.
Thats also mindlessly superficial. With the 0% offers, you
might as well use the debt to get stuff earlier than you
otherwise would if you are going to 'save' for them anyways.
It can also be the most frugal way to deal with unexpected
events instead of insuring against them too. It will generally
be cheaper to use the cheapest debt you can find to cover
those events in the unlikely event that they do ever happen
than to pay for the insurance to cover them.
Posted by Don on February 21, 2007, 12:22 pm
>> "suzeq"> wrote
>> > As one of the writers here said, he bought it for so
>> > and so, sold it later and made his money back.
>>
>> That was me, let me expand on it.
>> Both my wife and I are self employed in our individual businesses and we
>> both work at home so much of our house payment, utilities and other
>> things
>> are tax deductible for business reasons.
>> In the 4 years we lived in that brand new home that we built the cost of
>> living there was minimal because of those deductions.
>> Also, because our credit was superlative we qualified for a *prime rate*
>> when securing the 30 year fixed rate loan.
>> That alone will dictate the rate of interest and the number of points in
> the
>> loan application and will be reflected in the evnetual monthly loan
> payment.
>> When applying for the loan we wanted a fixed rate because we intended to
>> live there permanently, but we also wanted to be able to pay the loan off
>> quicker if we wanted without being penalized with a prepayment clause. We
>> had automatic payments deducted from our bank account every 2 weeks,
>> which
>> accelerated the payoff period and increased our equity.
>> After 4 years we had the equivilent of 10 years of equity.
>> To be fair, the market prices on homes rose drastically during that
>> period
>> and homes started popping up all around us.
>> We paid $3500 for our vacant lot and 4 years later the adjacent lots were
>> selling for $100k.
>> This stuff enhanced the selling price last year.
>>
>> Anyway, not only did we get to live in a brand new custom designed and
> built
>> home with a pool and all the bells and whistles for a minimal cost we
>> also
>> unloaded it and made a substancial profit.
>> We then moved to another state and purchased an existing home on acreage
>> with cash and still have money left in our savings.
>>
>> The thing is we spent a decade prior making sure our credit was clean and
> we
>> had no outstanding debts and were making decent money at our respective
>> businesses.
>> When you are self employed the lenders tend to look at your record more
>> closely.
>>
>> "Plan your work and work your plan".
> I had much the same result, but my circumstances were different. We lived
> in our first house for 10 years, and when we sold it we got all of our
> mortgage payment dollars back - principal, interest, taxes, insurance,
> pmi.
> But we were more "normal" in that the house was where we lived, not where
> we
> made our living - we both had conventional jobs where we drove to the
> office
> each day. We had a conventional 30 year, fixed rate mortgage. Didn't
> prepay anything. We had really stretched to buy the house, the first few
> years money was too tight to prepay anything. But it sure beat paying
> rent.
Well, thats the thing right there Lou.
When you *buy* a house (and take care of it) you're paying yourself.
When you *rent* a property you're paying someone else, and losing big time
along the way.
It pays to sink some roots.
XML site map
>>Is that a wise saying to follow?
> I think it is wise. Consider what houses would be like, if long-term
> financing was not available. The house would be far less expensive
> because people would only be willing to save up for it for a few
> years.